NCA Contracts cheat sheet

A contract is a legally binding agreement supported by offer, acceptance, consideration, and intention to create legal relations; the presence of all four elements is the minimum formation test.

Bilateral contracts exchange promises at formation; unilateral contracts exchange a promise for the performance of an act, so acceptance occurs only on complete performance of the stipulated act.

A deed is enforceable without consideration but requires writing, signature, attestation by a witness, and delivery; it is the standard exception to the consideration requirement.

Formation requires certainty of essential terms; an agreement leaving price, subject matter, or timing to future negotiation may be void for uncertainty rather than merely incomplete.

A condition precedent suspends the duty to perform until a specified event occurs; a condition subsequent discharges an existing duty when the event occurs.

An agreement to agree is generally unenforceable, but an agreement to negotiate in good faith may be enforceable where the parties intended it to create legal relations and prescribed clear criteria.

Pre-contractual negotiations are generally inadmissible to contradict a written contract, but may be admitted to establish a vitiating factor such as misrepresentation or rectification grounds.

The objective test governs formation: courts ask what a reasonable person in the position of each party would have understood from words and conduct, not the parties' unexpressed intentions.

An offer is a definite promise to be bound on specified terms, communicated to the offeree, with the intention that acceptance will create a binding contract; mere invitations to treat lack this intention.

Advertisements, price lists, catalogues, and auction notices are generally invitations to treat; a display of goods with a price tag is an invitation to treat, and the customer makes the offer at the till.

An offer may be terminated by revocation, rejection, lapse of time, death of the offeror (for personal offers), or failure of a condition; revocation is effective only when communicated to the offeree before acceptance.

A unilateral offer can be revoked before complete performance, but the offeror must take reasonable steps to bring the revocation to the attention of those who may be performing.

Acceptance must be unqualified and mirror the offer; a purported acceptance introducing new terms is a counter-offer that destroys the original offer.

The postal rule deems acceptance effective on dispatch where post is a contemplated mode of acceptance; instantaneous communications (telephone, email, fax) take effect on receipt.

Silence cannot constitute acceptance, and the offeror cannot impose a duty to reject by stating that silence will be treated as acceptance.

The battle of the forms is resolved by identifying the last unqualified counter-offer accepted by conduct, or by applying the terms incorporated by the party who fired the last shot.

Consideration must be sufficient but need not be adequate; courts do not assess the fairness of the bargain, only whether something of value was given in exchange for the promise.

Consideration must move from the promisee; a third party who has not provided consideration cannot generally enforce the promise, subject to statutory reforms allowing third-party enforcement.

Past consideration is not good consideration; an act performed before the promise was made cannot support it, unless the act was done at the promisor's request and payment was implied.

Performance of an existing contractual duty owed to the promisor is generally not good consideration for a fresh promise, but performing an existing duty owed to a third party can be.

Part payment of a debt is not good consideration for a promise to forgo the balance, unless the creditor accepts a different thing, an earlier payment, or a payment at a different place.

The practical benefit exception allows a promise to pay more for existing obligations to be enforceable where the promisor obtains a benefit and no duress or fraud is involved.

Intention to create legal relations is presumed in commercial agreements and presumed absent in domestic and social arrangements; both presumptions are rebuttable by evidence of the parties' intentions.

Honour clauses and express statements that an agreement is binding in honour only rebut the commercial presumption, rendering the arrangement unenforceable in law.

Minors are generally bound by contracts for necessaries (goods and services suited to their condition in life and actual requirements) and by beneficial contracts of employment, but other contracts are voidable at the minor's option.

A contract voidable by a minor remains binding unless the minor repudiates it during minority or within a reasonable time after reaching majority; failure to repudiate may ratify it.

A person lacking mental capacity is bound by contracts for necessaries, but other contracts are voidable if the other party knew or ought to have known of the incapacity.

Intoxication operates like incapacity: a contract is voidable where the intoxicated party did not understand the transaction and the other party knew or ought to have known of the condition.

Companies have capacity to contract but may be restricted by their constitution; acts beyond corporate capacity may be unenforceable against the company, subject to statutory protections for third parties.

Contracts for the sale or disposition of an interest in land must be in writing, signed by both parties, and contain all agreed terms; a written memorandum signed by the party to be charged may suffice.

Contracts of guarantee must be evidenced in writing and signed by the guarantor; the guarantee of a company's debt is subject to this formality, but indemnities are not.

Contracts that by law must be made by deed include transfers of land, leases over three years, and gratuitous promises; failure to use a deed renders them unenforceable.

Terms are incorporated by signature, by reasonable notice before or at the time of contracting, or by a course of dealing; unsigned documents bind only if reasonable notice of their terms was given.

A term is a representation if it induced the contract but was not intended to be binding; the distinction turns on timing, importance, and relative knowledge of the parties.

Conditions are essential terms whose breach entitles the innocent party to terminate and claim damages; warranties are minor terms whose breach gives damages only; innominate terms are classified by the seriousness of the breach.

The parol evidence rule excludes extrinsic evidence that varies or contradicts a complete written agreement, but exceptions allow evidence of vitiating factors, custom, and implied terms.

The contra proferentem rule construes ambiguous terms against the party who drafted them or who seeks to rely on them.

An exclusion clause must be incorporated, construed strictly to cover the loss in question, and survive statutory controls on unfairness and reasonableness.

A force majeure clause excuses performance on the occurrence of specified events beyond the parties' control; it is construed narrowly and does not cover mere hardship or increased cost unless expressly stated.

A time is of the essence clause makes timely performance a condition; failure to perform on time entitles the innocent party to terminate and claim damages for the whole loss.

A misrepresentation is a false statement of past or existing fact made by one party to the other which induces the contract; statements of opinion, law, or future intention are generally not actionable.

Fraudulent misrepresentation requires a knowingly false statement, or one made recklessly without belief in its truth; the remedy is rescission and damages for deceit.

Negligent misrepresentation requires a statement made without reasonable grounds for belief in its truth; the remedy is rescission and damages, subject to a defence of reasonableness.

Innocent misrepresentation requires a false statement made with reasonable belief in its truth; the primary remedy is rescission, and the court may award damages in lieu under statute.

A common mistake as to the existence of the subject matter or a shared fundamental assumption may render a contract void; a mutual mistake arises where the parties misunderstand each other, and a unilateral mistake where only one party is mistaken.

Duress requires illegitimate pressure that coerces the victim into the contract; the pressure must be a significant cause of entry, and the victim must not have affirmed the contract after the pressure ceased.

Undue influence arises where a relationship of trust and confidence is abused, or where a transaction calls for explanation; the presumption shifts the burden to the defendant to show the transaction was fair.

Illegality renders a contract void or unenforceable where its object is criminal, tortious, or contrary to public policy; the court may refuse to enforce it or allow restitution where the parties are not equally culpable.

The general rule of entire performance requires complete performance before payment is due; substantial performance permits recovery of the contract price minus the cost of remedying defects.

The doctrine of divisible contracts allows payment for each completed instalment where the contract is severable into distinct parts.

A breach is actual where performance is due and not rendered, and anticipatory where a party states before performance is due that it will not perform; the innocent party may sue immediately or wait.

A condition precedent must be satisfied before a duty to perform arises; a condition subsequent discharges an existing duty when the event occurs.

Discharge by frustration requires an event occurring after formation, without fault of either party, that renders performance impossible, illegal, or radically different from what was agreed.

Frustration does not apply where the contract expressly allocates the risk of the event, where performance is merely more expensive, or where the event was foreseeable.

A breach is repudiatory where it deprives the innocent party of substantially the whole benefit of the contract; the innocent party may accept the repudiation, terminate, and claim damages.

Discharge by agreement may take the form of a release (bilateral agreement supported by consideration or made by deed) or a variation; both require the formalities applicable to the original contract.

Damages aim to put the innocent party in the position it would have occupied had the contract been performed; reliance damages put it in the position it occupied before the contract.

Expectation damages are limited by causation, remoteness, and mitigation; the loss must flow naturally from the breach or be within the reasonable contemplation of the parties at formation.

Mitigation requires the innocent party to take reasonable steps to reduce its loss; losses avoidable by reasonable steps are not recoverable, but the burden of proving failure to mitigate lies on the defendant.

Liquidated damages clauses are enforceable if they represent a genuine pre-estimate of loss; a penalty clause, which is extravagant or unconscionable, is unenforceable.

Specific performance is an equitable remedy available where damages are inadequate, commonly for unique goods or land; it is discretionary and unavailable for contracts of personal service.

An injunction may restrain a breach of a negative covenant or enforce a negative stipulation, but the court will not grant it if it would compel performance of a contract of personal service.

Restitution is available where a contract is rescinded or unenforceable, allowing recovery of benefits conferred; the remedy is subject to change of position and bona fide purchaser defences.

Rescission restores the parties to their pre-contract positions; it is barred where restitution in integrum is impossible, where third-party rights have intervened, or where the contract has been affirmed.