Unit 16 Contract Law Snježana Husinec, PhD shusinec@pravo.hr

CONTRACT LAW How does a contract differ from a tort? Have you ever been a party to a contract? What kind of a contract was it? In what circumstances do individuals, businesses and governments enter into contracts? Which common contracts do you know of? What, do you think, are the essential elements of every contract? Do ex. II on p. 155.

CONTACT and CONTRACT LAW What is CONTRACT LAW? How would you define a CONTRACT? Find the definitions in the text: CONTRACT LAW = _______________________________ CONTRACT = ____________________________________

ESSENTIAL PRECONDITIONS OF EVERY CONTRACT Find in the section on the „Formation of a Contract” the essential preconditions of every contract. 1. ________________________________ 2. ________________________________ 3. ________________________________ + 4. _________________________________ 5. _________________________________

CONSIDERATION Common law jurisdictions Both parties to a contract must bring something to the bargain MONEY ANYTHING OF VALUE FOR THE PARTIES E.g. 1 E.g. 2 Party A – Farm (consid.) Pary A – Clerical works (consid.) Party B – a million dollars (consid.) Party B – Food and shelter (consid.) *Civil law jurisdictions – no consideration (a promise does not need consideration to be enforceable)

LEGAL CAPACITY Lawful capacity for an entity in its own name to enter into binding contracts, to sue and to be sued. Who lacks legal capacity? MINORS (under 18) MENTALLY INCAPACITATED PEOPLE PEOPLE UNDER THE INFLUENCE OF DRUGS OR ALCOHOL If a contract is made with sb who lacks the LEGAL CAPACITY to enter into contract, that contract is said to be VOIDABLE and can be annulled.

(EXCHANGE OF PROMISES) Form of a contract CONTRACT EXPRESS IMPLIED (EXCHANGE OF PROMISES) written oral

Structure of a contract EXPRESS TERMS = _____________________________________________________________________ E.g. 1: In an employment contract – pay, work hours, holidays. E.g. 2: In a sale of goods contract – price, type of goods, payment, quantity. IMPLIED TERMS = ______________________________________________________________________ E.g. 1: In a contract for the sale of goods - that the goods will be of a certain quality and, if sold for a particular purpose, will be fit fot that purpose. Such terms have been put into satutory form (eg. Ss 12 to 15 of the Sale of Gods Act 1979). Section 12: the person selling the goods has to have the legal right to sell them. Section 13: if you’re selling goods by description, e.g. from a catalogue or newspaper advert, then the actual goods have to correspond to that description. E.g. 2: Contracts for professional services - the professional must act with reasonable standards of competence – a lawyer must act in his client’s best interests; a doctor has a duty of confidentiality to his patients. E.g. 3: In an employment contract – equal pay, a duty of care, the duty of mutual trust and confidence.

Structure of a contract CONDITIONS = ____________________________________________________________ Ex. Sales contract – term that entitles the buyer to vacant possession of the property (in a state fit to be occupied). WARRANTIES = ____________________________________________________________ Ex. 1: The warranty as to quality and fitness. Ex. 2: The warranty that the goods are free of any charge. __________________ Breach of a condition = termination of contract and award of damages Breach of a warranty = award of damages

Structure of a contract – Common clause types Which clauses do you think, should be included in a contract? Study the the common clause types on p. 157.

DEFECTIVE CONTRACTS 1. VOID = 2. VOIDABLE = 3. UNENFORCEABLE =

ESSENTIAL PRECONDITIONS and DEFECTIVE CONTRACTS Find in the section on the „Formation of a Contract” the essential preconditions of every contract. 1. OFFER 2. ACCEPTANCE their absence makes 3. CONSIDERATION the contract VOID + 4. INTENTION TO BE LEGALLY BOUND - its absence = contract UNENFORCEABLE 5. LEGLA CAPACITY - its absence = contract VOIDABLE

Defective contracts Read the part of the text on Defective contract, fill in table – part A - on p. 159. Study the following example contracts and decide if they are void, voidable or unenforceable. E.g. 1: X says to Y, that he should sell his new bungalow to him at a nominal price otherwise, he will damage his property and Y enters into a contract due to fear. E.g. 2: A promises B to sell his horse after one month to B for 50,000 pounds. Before the completion of one month, the horse died. E.g. 3: Mary bought a house from Pete using a written purchase and sale agreement. After taking possession, Mary discovers a small leak in a pipe in the crawl space of the house, but takes an action against Pete four years later.  E.g. 4: A famous athlete pays a hitman to kill his wife.

A Sale of Goods Contract What form should a sale of goods contract take? Which conditions and warranties should be included in it? Find a sample of a Croatian sale of goods contract and compare it with the American one? What are the similarities and differences?