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Lecture 1

LAWS105 Lecture Notes - Lecture 1: Vending Machine, Fax, Cash Register


Department
LAWS
Course Code
LAWS105
Professor
Kunle Ola
Lecture
1

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LAWS105 – CONTRACT LAW
Wk. 1 – Introduction to Contract Law: Formation of Contracts
What is a contract? – it is a legally binding agreement. The law will compel the
person making the promise (promisor) to perform or to pay damages to compensate
the person to whom it was made (promisee) for non-performance.
What’s the difference between a promise and a contract? – for a promise to give rise
to a contract it must amount to an undertaking by the promisor in exchange for
something sought in return for the promisee.
Contractual obligations are private and self imposed – i.e. unlike criminal law
Some exceptions – mandatory contracts for certain insurance contracts
e.g. Third personal injury for motor vehicles and workers comp.
Parties to the contract decide between themselves:
their obligations under contract: and
the consequences of the breach of their obligations.
However the use of standard form contracts differs from this idea of the
parties negotiating terms.
Statute law can limit contractual freedom, for example, for the protection of
consumers.
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If contracts are private, voluntary undertakings-
why should the law enforces them?
Two main justifications (prof atiyah)
1. The law enforces contrcats because of the importance of ontracts to our
society (almost every transaction by a business will involve a contract?. The
law provides remidies for breach of contract
2. Justice can be served.
Australian Contract Law
Derived from England – but increasingly diverging with the development of
Australian common law and statute law
Common Law – contract law is largely judge-made law
Statutes: there is not an Australian ‘contract act’ like the indian contract act 1872,
however increasingly statutes in Australia are impacting on areas of contract law
eg, the Insurance Contracts Act 1984 (Cth) (with the stated purpose of
reforming the law “so that a fair balance is struck between the interests
of insurers, insureds and other members of the public”), and
eg, the Competition and Consumer Act 2010 (Cth) (which contains
provisions dealing with: misrepresentation, implied terms,
manufacturers’ liability and unconscionable conduct).
Formation of a Contract
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Agreement – about meeting of minds, what you are thinking is same as me
Capacity - are you bale to legally be party to this contract. A child gives you a key
asking if you want to but the car for $12, to take the keys would be highly
unreasonable, the law protects minors. The minor lacks the capacity to enter the
contract
Consideration or substitute – is the thing you exchange, it may not be a commercial
value, trading glasses for a high-five. The consideration is the highfives, it’s the
exchange.
Intention to create legal relations – did you intend to enter into a contract, once the
intention is lacking there is no contract.
Compliance with formalities - in entering contracting, legally some formalities must
be adhered to, if not there are legal ramifications, the absence of writing out
conditions means they are not contractually obligated.
Agreement:
Idea of agreement is that there is a meeting of minds,
When called upon to dermine whether agreement was reached – courts adopt an
objective approach ( would a reasonable person think that the parties reached
agreement?
Smith v Hughes 1871 LR 6 QB 597 old/new oats case
“If, whatever a man’s real intention may be, he so conducts himself that a
reasonable man would believe that he was assenting to the terms proposed by
the other party, and the other party upon that belief enters into a contract with
him, the man thus conducting himself would be equally bound as if he had
intended to agree to the other party’s terms”. See textbook p33.)
They need to be on the same page to have it be legally binding.
-Usually to determine whether an agreement was reached, the rules of offer ad
acceptance apply.
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