Mevan Kiriella Bandara LAW OF CONTRACT Mevan Kiriella Bandara

MAIN COMPONENTS OF A CONTRACT INTENTION TO CREATE AN AGREEMENT BETWEEN PARTIES AGREEMENT BETWEEN PARTIES: Offer and Acceptance CONSIDERATION/ REASONABLE CAUSE CAPACITY TO ENTER IN TO A CONTRACT AGREEMENT MUST NOT BE DEFECTIVE: cannot be affected by factors such as mistake, fraud, misrepresentation etc, (c) Mevan Kiriella Bandara

1. INTENTION TO CREATE LEGAL RELATIONS DOMESTIC/SOCIAL AGREEMENTS – General Rule - no legal intention Balfour v Balfour [1919] 2 KB 571 Exception Simpkins v Pays [1955] 1 WLR 975 PRESUMPTION IN FAVOUR OF LEGAL INTENTION IN AGREEMENTS BETWEEN BUSINESS PEOPLE (c) Mevan Kiriella Bandara

2. AGREEMENT BETWEEN PARTIES OFFER – What constitutes an Offer? Invitation to make an Offer Vs. Offer Pharmaceutical society of GB Vs. Boots [1953] 1 QB 401 Auction Sale – Payne Vs. Cave (1789) Lapse/Revocation/Rejection of an Offer (c) Mevan Kiriella Bandara

2. AGREEMENT BETWEEN PARTIES ACCEPTANCE – Offer must still be in force Acceptance must be absolute and unqualified Acceptance by acting on the Offer Postal Rule on Acceptance (c) Mevan Kiriella Bandara

2. AGREEMENT BETWEEN PARTIES Tenders: Invitation to treat - Tenderer’s reply to a Notice is an Offer Rewards: Acting in the offer without prior Notice of Acceptance. But knowledge of the “Reward” is mandatory Crown v Clarke (1927) 40 CLR 227 (c) Mevan Kiriella Bandara

3. CONSIDERATION / REASONABLE CAUSE The money value passed. To distinguish between moral and serious promises / Reasonable cause to contract Mutual benefit of Parties (c) Mevan Kiriella Bandara

(c) Mevan Kiriella Bandara 4. CAPACITY TO CONTRACT All persons have the Capacity to Contract. But the Law provides Protection to certain persons: Minors [below 18 years] Persons who supply “necessities” to Minors are entitle to recover a reasonable price Ratification of Contract by the minor after becoming a Major. Mentally Unsound Persons At the time of Contracting if insane, then Contract is null and void even though the other party has entered into the Contract without knowing – Soysa v Soysa 19 NLR 314 Persons who supply “necessities” to such persons are entitle to recover a reasonable price (c) Mevan Kiriella Bandara

(c) Mevan Kiriella Bandara WHAT IS IN A CONTRACT CONDITIONS AND WARRANTIES Condition – Vital term going to the foundation of the Contract. Warranty – a terms that is subsidiary – an obligation is something which must be performed but is not vital that a failure to perform will not affect the substance of the Contract TERMS AND REPRESENTATIONS Couchman v Hill 1947 KB 554 IMPLIED TERMS (c) Mevan Kiriella Bandara

FORMAL REQUIREMENTS IN A CONTRACT Certain Contracts must be in writing and notarially executed – S. 2 Prevention of Frauds Ordinance Sale, Transfer etc. of immovable property Contracts dealing with Guarantee or suretyship, mortgage of a Policy of Insurance must be in writing and signed by the person undertaking liability – S. 18 of Prevention of Frauds Ordinance (c) Mevan Kiriella Bandara

5. FACTORS AFFECTING A CONTRACT 1. MISTAKE A Contract is void on the grounds of mistake only when the mistake is such that there was no real Agreement. Eg: Mistake as to the Nature of the Contract Mistake as to the identity of the persons contracted with Mistake of the Quality has no effect (c) Mevan Kiriella Bandara

5. FACTORS AFFECTING A CONTRACT 2. MISREPRESENTATION: A Misrepresentation is relevant only if the following conditions are present Must be a representation of a material fact Must be made before conclusion of Contract to induce the Party Intention to misrepresent Misrepresentation must be acted upon Three types of misrepresentation Innocent Misrepresentation Negligent Misrepresentation Fraudulent Misrepresentation (c) Mevan Kiriella Bandara

5. FACTORS AFFECTING A CONTRACT 3. DURESS AND UNDUE INFLUENCE 4. LEGALITY OF CONTRACT (c) Mevan Kiriella Bandara

(c) Mevan Kiriella Bandara PRIVITY OF CONTRACT ie- Only Parties to a Contract may sue or be sued upon. Dunlop Tyre Company v Selfridge (1915) AC 847 – Third Parties are not subject to liabilities or restrictions under a Contract (c) Mevan Kiriella Bandara

DISCHARGE OF CONTRACTS Performance By Agreements Frustration Breach By Law ©Mevan Kiriella Bandara