Law of ContractLinda & Fon

What is law?

• It’s a set of rules and regulations governing relationship among– Individuals– Between individuals– Their society

• One of the most important function of law in any society is to

provide stability so that people can be sure of how to order their affairs.

What is contract?

• It’s an agreement between 2 or more parties, to do or not to do from a particular thing in exchange for something of value.

• It can be written, using formal or informal terms, or verbal.

* Terms of contract – “who, what, where, when, how of the agreement”

define binding promises of each party to contract.

It is a type of civil law that protects us against

broken promises and tricksters

Essentials of a valid contract

• Offer + Acceptance = Agreement • Intention to Create Legal Relations• Lawful consideration• Capacity of parties—competency• Free and genuine consent• Lawful object

Offer + Acceptance = Agreement

• Rules of a valid offer:• Invitation to offer is not an offer. • Offer must be communicated• Special terms must be communicated in a special

manner • Offer should not contain a term the non- compliance

of which would amount to acceptance.

• Rules of a valid acceptance: • Mental acceptance is ineffectual. • It must given within a reasonable time. • It must be expressed in the prescribed manner or • in some usual manner.• It must succeed the offer

Intention to Create Legal Relations

• Parties must have intended to enter into a legally binding agreement.

• Agreement between friends or family members are not intended to be legally binding unless the contract is one of the commercial type.

• Selling a car to friends• Provide loan for relation.

Lawful consideration(The important of bargained exchange – “no consideration, no contract”)

• Both parties must receive something of value.• a promise of doing something or getting something must be some

advantages or benefit moving from one party to other.

Capacity of parties—competency

• “Essential ingredient of a valid contract is that the contracting parties must be competent” --- Sec.10

• Age of majority• Not mentally ill (Not crazy)• Not a prisoner• …etc

Free and genuine consent

• ‘Agreeing upon the same thing in the same sense’

• Consent is said to be free when it not caused by:• coercion• undue influence• fraud• misrepresentation

Lawful objectThe object of the agreement must be lawful.

• The object of the agreement:• Illegal• Immoral• Opposed to public policy

Case study 1: Engagement ring, a gift or a contract?

http://www.youtube.com/watch?v=yuuSkt6JA-c

• In Pavlicic v. Vogtsberger, a couple was engaged.  The man bought her house, two cars, and a diamond ring in anticipation of marriage.  He also lent her $5,000 to buy her own business.  The woman disappeared, only to resurface later having used the funds to buy a business in another city and marry another man.  The court ordered all of the gifts, including the engagement ring that the man had given to her, to be given back to him.   Pavlicic v. Vogtsberger, 136 A.2d 127, 130 (Penn. 1957).

Case study 2Mai hires a woman to wax his legs, she waxes everything but his legs.

Hiring her for a service is a simple type of contract.

Her screwing up the service for whatever reason is a breach of contract

What remedy may have?

case study 3

• The aggrieved party

• He can sue for damages, because fraud is a civil wrong and hence compensation is payable.

References• http://wiki.answers.com/Q/What_are_the_seven_elements_of_a_contract• http://www.lawhandbook.org.au/handbook/ch12s01s02.php#Ch125Se60983• http://www.expertlaw.com/library/business/statute_of_frauds.html• http://www.expertlaw.com/library/business/contract_law.html#2• http://www.lawhandbook.sa.gov.au/ch08s02s05.php• http://www.abazias.com/diamondblog/buying-engagement-rings/engagement-ring-for-love-or-

legal-contract• http://wiki.answers.com/Q/What_is_a_time_barred_debt• http://www.bcsalliance.com/y_debt_timebarred.html• http://www.allinterview.com/showanswers/76627.html• http://netk.net.au/Contract/04Consideration.asp• http://www.londoninternational.ac.uk/current_students/programme_resources/laws/subject_guide

s/law_contract/contract_chs1-4.pdf• http://www.newagepublishers.com/samplechapter/001048.pdf• http://www.ukessays.com/essays/law/contract-law.php• http://www.lawsociety.com.au/community/publicationsandfaqs/legalquestions/Whatisacontract/ind

ex.htm• http://www.lawfirm.in.th/violate.html

Thank you