Void Ab Initio Contract - PowerPoint

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					            Contract defined
A contract can be defined as:
 ―An agreement concerning promises made
   between two or more parties with the intention of
   creating certain legal rights and obligations upon
   the parties to that agreement which shall be
   enforceable in a court of law.‖
 An agreement is NOT necessarily a contract
   because it may lack one of the principles
   governing contractual relations, e.g. intention,
   consideration, legality.
          Sources of contract law

Contract law in Australia is derived from:
     common law
         developed in the English common law courts
          i.e. case law decisions

     legislation
         such as the Statute of Frauds 1677 (Imp) and
          much later Commonwealth, State and Territory
          legislation which amended or supplemented the
          common law rules.
     Contract and agreement

   These terms are often used to mean the
    same thing.
   The traditional definition of a contract
    is: ‗a legally enforceable agreement‘.
   An agreement is NOT necessarily a
          Law of contracts

   Legality

       for legality, the agreement must
        contain a promise and must have
        been intended by the parties to
        be legally enforceable in a court
        of law.
                  Classification of contracts
      A formal or a simple contract?


                  Formal Contracts                                Simple Contracts

Contracts of record        Contracts under
  (e.g. court records)          seal                 In writing        Evidenced in        No
                           (e.g. deeds, gratuitous                      Writing       requirements
        Classification of contracts
   Formal contracts
       may not be the result of agreement or require
       validity comes from form alone, e.g. contracts of
        record and contracts under seal

   Simple contracts
       if it is not a formal contract, it must be a simple
       consideration must be present
       subject to statutory requirements, contracts can be oral,
        in writing, or a combination of these 2 forms
Elements in a simple contract

 Essential elements in a simple contract
                Determining validity
   Validity of apparent simple contract
       if the 3 essential elements:
           intention;
           agreement; and
           consideration
        have been satisfied, then
       for a contract to be valid the following 4 elements are required:
           legal capacity;
           consent;
           legality of purpose; and
           form
        Essential element is missing

    If one of these 4 elements is NOT satisfied, then
     the contract may be:

                          Status of
                   Apparent Simple Contract

    Voidable       Void           Unenforceable   Illegal
        Classification of contracts
   Contracts are classified according to:

       promise;
       enforceability;
       performance; and
       formation.
        Classification of contracts
According to promise:

   Depending on what the offeree must do to accept
    the offeror‘s offer, contracts may be classified as:

       bilateral – both parties have to perform their
        promises, i.e. ‗a promise for a promise‘; or

       unilateral – the offeror still has to perform their
        part of the bargain, i.e. ‗it is a promise for an act‘.
       Classification of contracts
According to enforceability:
      Valid – a contract which the law will enforce

      Voidable – the contract remains valid and binding unless and until
       it is repudiated by the injured party

      Void – no legal rights or obligations from the outset (void ab

      Unenforceable – valid on its face but no legal action can be
       brought on the contract, often because of a procedural defect

      Illegal – the purpose of the contract contravenes a statute or the
       common law, and generally treated as void
     Classification of contracts

   According to performance:

       executed contracts — where both parties
        have completed their respective
        obligations; or

       executory contracts — relating to an action
        in the future.
        Classification of contracts
   According to formation:

       express contracts — wholly in writing, wholly oral
        or a combination of the 2, but whichever way, all the
        terms are agreed upon;

       implied contracts — look at the circumstances
        surrounding the acts or conduct of the parties; or

       quasi-contracts — an obligation imposed by law on a
        particular person, usually to pay money to another
        on equitable grounds.

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