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• WHAT IS A CONTRACT?
• TERMS OF A CONTRACT
• VITIATING FACTORS
• DISCHARGE OF CONTRACTS
IMPORTANCE OF LAW OF CONTRACT
For example : The contractor is obligated to do the job perfectly and to achieve the minimum level of work
quality. The employer is responsible for paying the contractor when the job has been completed.
CREATING A VALID CONTRACT
• The person making the offer is the offeror. The person who accepts the offer is the offeree.
An offer is a promise by the offeror to be bound in a contract on particular terms if there is a proper
An offer can be made to a particular person, group of people, and the whole world.
acceptance of the offer by the offeree
JOHN JIM
Offeror/ Offeree/
Promisor Promisee
Source: https://seqlegal.com
Knowledge of Offers
• You have to know about the offer before you can accept it.
For example : Mrs Smith promises to deliver a chair to Mr Jones’ office for RM150
Mr Johnson (Mr Jones’ employee) who is to sit on the chair cannot sue Mrs Smith if she fails to deliver. Only Mr
Jones could sue Mrs Smith for not delivering the chair.
If you find my lost dog and return it without knowing that I had offered to pay RM1000 to the
person who found it, then you cannot later claim the reward when a friend tells you about it
ACCEPTANCE
Definition
Acceptance is a statement of agreement to the terms contained in the
contract. The acceptance cannot try to introduce new terms.
Counter-Offers
• The offeree tries to change the terms of the offer in the acceptance - rejects the offer.
• The reversed position - The offeree becomes the offeror and the offeror becomes the
offeree
1. Wrench offered to sell his farm for £1,000. Hyde offered £950.
- Wrench rejected.
2. Hyde then told Wrench he would accept Wrench’s original offer.
The court said there was not contract.
3. The counter-offer of £950 ended the offer of £1,000 so it could no
longer be accepted.
4. Hyde was now making a new offer to buy the farm for £1,000.
- Wrench could choose to accept or reject this.
A valid contract is made.
If the parties continue negotiating then they could change roles several
times as offers and counter-offers are made.
• Exclusion clauses are terms of a contract which try to limit the liability of one of
the parties if they breach the contract.
• These clauses can create unfair situations where one party is able to insist they
are included in the contract because that party is much stronger than the other
party
• One area where the courts and Parliament have tried to control the effect of
exclusion clauses is in contracts between business and individual consumers.
• This is because the business is usually in a stronger position than the consumer.
Dealing with Exclusion Clauses
By signature
By notice
By custom
VITIATING FACTORS
• is the technical term for the things which make a contract void or voidable.
Mistake
Public Misrepre
Policy sentation
Vitiating
Factors
Undue Duress
Influence
Valid Contracts
• Not contracts at all. • Valid unless one of the • -Is a false statement
• Have no legal effect. parties has it set aside (ie whichv persuade/convince
• Important - you cannot declared void). someone to enter into a
enforce a void contract. • This could happen where contract - is then voidable.
one party is tricked into • Misrepresentation has 3
entering a contract by the parts :-
other party (ie a • A statement;
misrepresentation). • The statement is about a
fact which can be checked;
and
• The statement causes the
party to enter into the
contract.
• -An untrue statement of
fact, made by one party
to the other in the course
of negotiating a contract
Statement of Fact
• The representation must be a statement about a specific, existing fact or event which can
be checked.
• Not statements of fact :-
Advertising hype;
Statements of law;
Statements of opinion; and
Statements of intention.
Two Types of Misrepresentation
• Each party fulfilling completely his obligations under the contract. And The contract is
Performance not discharge for only one party has fulfilled his obligation.
• The mutual release of each party from his obligations under the agreement provides
Agreement the consideration for the agreement to discharge the contract.
• Entitles the injured party to an action in damages. But it may also entitle him to treat
Breach the contract as discharged, provided that the injured party is able to show that the
breach is of the whole contract or ‘goes to the root of’ the contract