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PP Chapter 4 - Contract Formation
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PROFESSIONAL PRACTICE IPROFESSIONAL PRACTICE IPROFESSIONAL PRACTICE IPROFESSIONAL PRACTICE I
[QSD 289][QSD 289][QSD 289][QSD 289]
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Mohammad Mohammad Mohammad Mohammad NasharudineNasharudineNasharudineNasharudine ShuibShuibShuibShuib
�INTRODUCTION
�OFFER
�ACCEPTANCEACCEPTANCE
�CONSIDERATION
�INTENTION TO CREATE LEGAL
RELATIONS
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‘a clear understanding of the contractformation process will lead to compilationof contract documents which are consistent& free ambiguity, even pitfalls, & thus mayassist in avoiding possible disputes fromdiffering interpretations & constructions.’differing interpretations & constructions.’
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� A legally binding agreement between two or
Sir William Anson, The Learned English Authority
On Law of Contract has defined a contract as:-
DEFINITION
� A legally binding agreement between two or
more parties, by which rights are acquired by
one or more to acts or forbearances on the
part of the other or others.
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CONTRACT
FORMATION
1. OFFER 4. INTENTION
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2. ACCEPTANCE 3. CONSIDERATION
DESIGN TEAM
CLIENT/EMPLOYER
BUILDING TEAM
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Architect
C&S Engineer
M&E Engineer
QS
Land Surveyor
Main Contractor
Domestic Sub-
Contractor
Domestic Sub-
Contractor
Nominated Sub-
Contractor
Nominated Sub-
Contractor
Nominated
Supplier
Nominated
Supplier
CLIENT/EMPLOYER
MOA CONTRACT
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DESIGN TEAM BUILDING TEAM
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� An offer must be made to someone - it may
be made to any number of people, even the
whole world:
DEFINITION
whole world:
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� A vague term of a contract may spoil it
because it is not certain what the acceptor is
actually accepting:
DEFINITION
actually accepting:
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� A valuable consideration may consist either in
some right interest profit or benefit accruing to
one party or some observance detriment loss of
responsibility given suffered or undertaken by
the other - Curries v Misa.
DEFINITION
the other - Curries v Misa.
� Consideration is in two lots with each party
suffering both a benefit and a detriment each
giving and receiving and thereby creating the
agreement.
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�Most consideration begins as a promise for a
promise. At that stage the consideration is said
to be executory.
� As each party performs his or her part of the
consideration it is said to be executed.
DEFINITION
consideration it is said to be executed.
� Sometimes there may be a considerable time
between the promise and the performance as in
the sale of land in other cases the promise and
performance may for both parties be
simultaneous as in the sale and purchase of
goods in a supermarket.
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�Unilateral contracts are unusual in that instead
of both the offer and the acceptance being
promises and executory, the promise of the
offer is executory consideration but the
performance of the acceptance is executed.
DEFINITION
performance of the acceptance is executed.
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� Provided consideration is real and genuine then
it need not be adequate. i.e. as long as there is
some consideration then the courts will not
RULES OF CONSIDERATION
some consideration then the courts will not
inquire as to whether the bargain is "fair".
�However although consideration may be small it
must not be a sham ( £1 for a Rolls Royce is a
valid bargain if the parties agree):
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� Agreements are either domestic and social or
commercial and business.
DEFINITION
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� Agreements are either domestic and social or
commercial and business.
DEFINITION
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