Business Law: Contracts, Security and Instruments
Contract fundamentals
A valid contract needs offer, acceptance, consideration, intention to create legal relations and capacity, with no vitiating factor (misrepresentation, mistake, duress, illegality). Distinguish an offer from an invitation to treat (price lists, auctions, advertisements, tenders). Acceptance must be unqualified; a counter-offer destroys the original offer. Consideration must be sufficient but need not be adequate, and past consideration is generally no consideration. Remedies: damages (remoteness, mitigation), specific performance, injunction, rescission.
Credit and security law
Study agency (actual, apparent, ratification), the Sale of Goods implied terms (title, description, fitness, merchantable quality), nemo dat quod non habet, and negotiable instruments - cheques, bills of exchange, promissory notes - including crossing, endorsement and the holder in due course. Learn the difference between a guarantee (secondary, must be evidenced in writing, guarantor benefits from the debtor's defences) and an indemnity (primary liability). Also know charges and their registration/perfection, retention of title, hire purchase, set-off, and insolvency ranking.
Traps
- Saying a guarantee needs no writing - most statutes require written evidence.
- Treating a quotation or tender as an offer when it is an invitation to treat.
- Confusing apparent authority with actual authority.
- Ignoring that an unperfected security interest may lose priority on insolvency.
Rule of thumb
Postal acceptance is effective on posting; instantaneous acceptance (email, phone) is effective on receipt - and a well-drafted clause removes the doubt altogether.