Core Principles of Contract & Tort Law
Table of Contents
Contract Law: Pages 1-9
Tort Law: Pages 10-18
Formation:................................................................................................................................................1
Parties:.....................................................................................................................................................3
Contract terms:.........................................................................................................................................3
Vitiating factors:.......................................................................................................................................5
Termination:.............................................................................................................................................7
Remedies:.................................................................................................................................................8
Causation and remoteness........................................................................................................................9
Negligence:.............................................................................................................................................10
Defences:................................................................................................................................................13
Vicarious Liability...................................................................................................................................14
Occupiers’ Liability:.................................................................................................................................15
Product liability:.....................................................................................................................................16
Nuisance:................................................................................................................................................17
Contract Law
Formation:
Offer and Acceptance
Offer
- There must be a reasonable expectation that the offeror is willing to enter into a contract on the terms
- Offers must contain a promise/commitment rather than an invitation and they must be definite and
certain
- Requests for information and invitations to treat do not amount to offers
- Unilateral contracts will require specific performance of something in order to satisfy the offer
- Offers may be revoked indirectly if the offeree receives:
o Correct information
o From a reliable source
o Of acts done by the offeror
o Indicating to a reasonable person that they no longer wish to make the offer
- Offers can be revoked at any time up to acceptance
o In unilateral contract, contract becomes irrevocable once performance begins
- If an offer prescribes a method of communication, that method should be used unless the alternative
method is no less disadvantageous to the offeror
- An offeree can terminate an offer by rejecting it either expressly or impliedly
o A counteroffer is considered a rejection of the original offer
- Enquiries will not terminate an offer
- Offers may be terminated by the offeree’s failure to accept within a specified time limit
- Offers are terminated by law upon death, destruction of the matter, illegality or failure of conditions
,Acceptance
- Only the person to whom the offer is made can accept it
o Acceptance cannot be assigned unless the rules of agency apply
- Unless the offeror stipulates a method of acceptance, any reasonable manner will be allowed
o Any particular method is allowed apart from silence
o Acceptance must usually be communicated but this requirement can be waived by the offeror
- Unilateral contract acceptance will be once performance of the request is completed
o There is no obligation to complete the performance
- The postal rule
o Acceptance is complete at the moment of posting even if the letter is lost, unless:
It was not properly addressed and stamped
Post was nor reasonable
The offer stipulates acceptance is not effective until received
o Rule only applies to acceptance and not rejection or revocation
o Does not apply to email or text
- Where parties both wish to stipulate their own terms, contract will be formed after the last set of
terms has been sent and not objected to and performance has begun
Consideration
- Consideration must be provided by the parties themselves and must move from the promisee to the
promisor
- Consideration must be sufficient but need not be adequate
o Inadequate consideration can be evidence of a vitiating factor
- Consideration must not be wholly illusory
- Performance of an existing obligation owed under a contract is not consideration
o New consideration must be given for work going beyond the original obligation
- Consideration can include a practical benefit
- Performance of a statutory duty will not be consideration along with previously performed acts
- Implied understand of payment occurs when it is implied that fulfilling a request will result in payment
o Three conditions are required:
Act was done at promisor’s request
Parties understood the act was to be remunerated
Payment was legally enforceable if the promise was made in advance
Intention to Create Legal Relations
- There is a presumption that domestic and social arrangements do not have intention to be legally
bound
- There is a presumption that in commercial situations the parties do intend to be legally bound
o To rebut the presumption, the parties must state that the agreement is ‘binding in honour only’
or ‘subject to contract’
Capacity
- Minors can enforce contracts but they are not bound unless they ratify the contract upon turning 18,
except where:
o For necessary goods/services at a reasonable price
o Employment contracts that benefit the minor
o Acquisition of a permanent interest in property
- Contract entered into where there is a lack of mental capacity are voidable only if the other party knew
there was a lack of capacity
o The person can ratify the contract if they recover
o Exception is for necessities at a reasonable price
, Parties:
Privity of Contract
Definition
- Only parties to a contract have the right to enforce the contract
Exceptions
- Third parties can enforce the terms of a contract if they are named in the contract and a term is for
their benefit
o They must be expressly named or be a member of a benefitting class
- Where an agency relationship arises, the ultimate contract will be between the principal and the other
signing party, not the agent
- For assignment to be fully effective, notice must be given
o Only the benefit of a contract can be assigned, not the burden
- Insurers can be subrogated to the rights of policyholders if they must pay a claim to the policyholder
Rights of Third Parties
- Rights of third parties is a statutory right but it does not extend to employment contracts or articles of
association
- If a third party has rights and the following apply, the parties cannot agree to change the contract to
the detriment of the third party without their consent:
o Third party has communicated their agreement to the benefitting term
o Third party relied on the term and the promisor is aware of the reliance
o Promisor can be reasonably expected to have foreseen the reliance and the third party did rely
on the term
- If there is a collateral contract with a third party running parallel to the main contract, they will allow
third parties rights to enforce beneficial terms
- Trusts will also give rise to third party rights
Contract terms:
Express Terms
- Statements made by the parties by which they intend to be bound
- Contract can have express terms agreed:
o In writing
o Orally
o Mixture of both
- Statement made by parties during negotiations leading up to a contract are terms if they are:
o Statements of fact,
o Which the parties intend to be binding
Incorporation of Terms
- Terms can be incorporated by:
o A signed written contract
Exception: if signed document was not intended to have any contractual effect
o Incorporation by notice
Reasonable steps must be taken to draw terms to a party’s attention
Onerous terms must be clearly marked
o Incorporation by a court of dealing
o Other ways of agreeing express terms (oral conversation, email/text etc)
Table of Contents
Contract Law: Pages 1-9
Tort Law: Pages 10-18
Formation:................................................................................................................................................1
Parties:.....................................................................................................................................................3
Contract terms:.........................................................................................................................................3
Vitiating factors:.......................................................................................................................................5
Termination:.............................................................................................................................................7
Remedies:.................................................................................................................................................8
Causation and remoteness........................................................................................................................9
Negligence:.............................................................................................................................................10
Defences:................................................................................................................................................13
Vicarious Liability...................................................................................................................................14
Occupiers’ Liability:.................................................................................................................................15
Product liability:.....................................................................................................................................16
Nuisance:................................................................................................................................................17
Contract Law
Formation:
Offer and Acceptance
Offer
- There must be a reasonable expectation that the offeror is willing to enter into a contract on the terms
- Offers must contain a promise/commitment rather than an invitation and they must be definite and
certain
- Requests for information and invitations to treat do not amount to offers
- Unilateral contracts will require specific performance of something in order to satisfy the offer
- Offers may be revoked indirectly if the offeree receives:
o Correct information
o From a reliable source
o Of acts done by the offeror
o Indicating to a reasonable person that they no longer wish to make the offer
- Offers can be revoked at any time up to acceptance
o In unilateral contract, contract becomes irrevocable once performance begins
- If an offer prescribes a method of communication, that method should be used unless the alternative
method is no less disadvantageous to the offeror
- An offeree can terminate an offer by rejecting it either expressly or impliedly
o A counteroffer is considered a rejection of the original offer
- Enquiries will not terminate an offer
- Offers may be terminated by the offeree’s failure to accept within a specified time limit
- Offers are terminated by law upon death, destruction of the matter, illegality or failure of conditions
,Acceptance
- Only the person to whom the offer is made can accept it
o Acceptance cannot be assigned unless the rules of agency apply
- Unless the offeror stipulates a method of acceptance, any reasonable manner will be allowed
o Any particular method is allowed apart from silence
o Acceptance must usually be communicated but this requirement can be waived by the offeror
- Unilateral contract acceptance will be once performance of the request is completed
o There is no obligation to complete the performance
- The postal rule
o Acceptance is complete at the moment of posting even if the letter is lost, unless:
It was not properly addressed and stamped
Post was nor reasonable
The offer stipulates acceptance is not effective until received
o Rule only applies to acceptance and not rejection or revocation
o Does not apply to email or text
- Where parties both wish to stipulate their own terms, contract will be formed after the last set of
terms has been sent and not objected to and performance has begun
Consideration
- Consideration must be provided by the parties themselves and must move from the promisee to the
promisor
- Consideration must be sufficient but need not be adequate
o Inadequate consideration can be evidence of a vitiating factor
- Consideration must not be wholly illusory
- Performance of an existing obligation owed under a contract is not consideration
o New consideration must be given for work going beyond the original obligation
- Consideration can include a practical benefit
- Performance of a statutory duty will not be consideration along with previously performed acts
- Implied understand of payment occurs when it is implied that fulfilling a request will result in payment
o Three conditions are required:
Act was done at promisor’s request
Parties understood the act was to be remunerated
Payment was legally enforceable if the promise was made in advance
Intention to Create Legal Relations
- There is a presumption that domestic and social arrangements do not have intention to be legally
bound
- There is a presumption that in commercial situations the parties do intend to be legally bound
o To rebut the presumption, the parties must state that the agreement is ‘binding in honour only’
or ‘subject to contract’
Capacity
- Minors can enforce contracts but they are not bound unless they ratify the contract upon turning 18,
except where:
o For necessary goods/services at a reasonable price
o Employment contracts that benefit the minor
o Acquisition of a permanent interest in property
- Contract entered into where there is a lack of mental capacity are voidable only if the other party knew
there was a lack of capacity
o The person can ratify the contract if they recover
o Exception is for necessities at a reasonable price
, Parties:
Privity of Contract
Definition
- Only parties to a contract have the right to enforce the contract
Exceptions
- Third parties can enforce the terms of a contract if they are named in the contract and a term is for
their benefit
o They must be expressly named or be a member of a benefitting class
- Where an agency relationship arises, the ultimate contract will be between the principal and the other
signing party, not the agent
- For assignment to be fully effective, notice must be given
o Only the benefit of a contract can be assigned, not the burden
- Insurers can be subrogated to the rights of policyholders if they must pay a claim to the policyholder
Rights of Third Parties
- Rights of third parties is a statutory right but it does not extend to employment contracts or articles of
association
- If a third party has rights and the following apply, the parties cannot agree to change the contract to
the detriment of the third party without their consent:
o Third party has communicated their agreement to the benefitting term
o Third party relied on the term and the promisor is aware of the reliance
o Promisor can be reasonably expected to have foreseen the reliance and the third party did rely
on the term
- If there is a collateral contract with a third party running parallel to the main contract, they will allow
third parties rights to enforce beneficial terms
- Trusts will also give rise to third party rights
Contract terms:
Express Terms
- Statements made by the parties by which they intend to be bound
- Contract can have express terms agreed:
o In writing
o Orally
o Mixture of both
- Statement made by parties during negotiations leading up to a contract are terms if they are:
o Statements of fact,
o Which the parties intend to be binding
Incorporation of Terms
- Terms can be incorporated by:
o A signed written contract
Exception: if signed document was not intended to have any contractual effect
o Incorporation by notice
Reasonable steps must be taken to draw terms to a party’s attention
Onerous terms must be clearly marked
o Incorporation by a court of dealing
o Other ways of agreeing express terms (oral conversation, email/text etc)
