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Formation of a Contract

Consideration, Privity and Legal Relations

  • 3 things to know
  • Paper 3

Overview

Recall questions on existing duties and part payment as consideration, privity and the Contracts (Rights of Third Parties) Act 1999, and the presumptions about intention to create legal relations in domestic and commercial agreements.

What you need to know

Answer each one before you reveal it.

Your recallNot started
Key term

Does performing an existing duty owed to the promisor constitute good consideration?

Key term

What is meant by privity of contract?

Key term

What presumption applies to domestic and social agreements regarding intention to create legal relations?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Does performing an existing duty owed to the promisor constitute good consideration?

    Model answer

    Generally no, unless a practical benefit is conferred on the promisor beyond the existing duty.

  2. 2

    Is part payment of a debt good consideration for a promise to release the balance?

    Model answer

    No, part payment alone is not good consideration unless accompanied by fresh consideration.

  3. 3

    What is meant by privity of contract?

    Model answer

    Privity of contract means only the parties to a contract can acquire rights or be subject to obligations under it.

  4. 4

    Can a third party who is not privy to a contract sue to enforce a benefit promised under it?

    Model answer

    Generally no; a third party who is not privy to the contract cannot sue to enforce a benefit promised under it.

  5. 5

    Under what circumstances does the Contracts (Rights of Third Parties) Act 1999 allow a third party to enforce a contractual term?

    Model answer

    A third party may enforce a term if the contract expressly provides for this or if the contract purports to confer a benefit on them.

  6. 6

    What is intention to create legal relations?

    Model answer

    It is the requirement that the parties intend their agreement to be legally binding.

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