9084 · 3.1.1
Nature of a contract flashcards
Revision flashcards for Cambridge 9084 Nature of a contract (syllabus 3.1.1). Flip, recall, then mark a real past-paper question.
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What is a contract?
A legally binding agreement enforceable by law — not merely a social arrangement.
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Four elements of formation?
Agreement (offer + acceptance), intention, consideration, and capacity.
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Bilateral contract?
Both parties exchange promises — e.g. A promises to sell, B promises to pay (most commercial contracts).
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Unilateral contract?
One party promises in return for an act — acceptance by performance (Carlill v Carbolic Smoke Ball Co).
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Express vs implied terms?
Express — stated by parties; implied — read in by law, custom, or fact (The Moorcock).
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Freedom of contract?
Parties free to agree terms — limited by statute (UCTA, CRA), public policy, and illegality.
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What are the three essential elements for a legally enforceable contract?
1. Agreement (offer and acceptance); 2. Intention to create legal relations; 3. Consideration (the 'price' of the promise).
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What is the objective test in contract law?
The principle that the court determines the parties' intentions based on what a reasonable person would conclude from their words and actions, not their secret, subjective thoughts. See *Smith v Hughes* (1871).
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What is the legal presumption regarding 'intention to create legal relations' in commercial agreements?
There is a strong presumption that parties in a commercial or business context intend their agreements to be legally binding. This presumption is difficult to rebut, as shown in *Esso Petroleum v CCE* [1976].
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Distinguish between express and implied terms.
Express terms are those explicitly agreed upon by the parties (orally or in writing). Implied terms are not stated but are read into the contract by the courts (for business efficacy) or by statute (e.g., Consumer Rights Act 2015).
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What is the principle of 'freedom of contract'?
The classical contract theory idea that parties are free to negotiate and agree to any terms they choose without government interference. It presumes equality in bargaining power.
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Give two examples of statutory limits on freedom of contract.
1. The Unfair Contract Terms Act 1977 (UCTA) controls exemption clauses in business-to-business contracts. 2. The Consumer Rights Act 2015 (CRA) protects consumers against unfair terms and provides statutory guarantees.
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What is a contract made by deed (specialty contract)?
A formal written contract that must be signed, witnessed, and delivered. Its key feature is that it is enforceable even without consideration.
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What is the primary aim of awarding damages for breach of contract?
To compensate the innocent party for their financial loss and put them in the position they would have been in if the contract had been performed correctly. This is known as protecting the 'expectation interest'.