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Contract and Sales Law: free practice, theory and problems
A contract is formed when an offer is met by an acceptance. Chapter 1 of the Contracts Act has the rules, and they apply to written, oral and digital agreements alike.
Contents
1. Forming a contract
What is it about?
A contract is formed when an offer is met by an acceptance. Chapter 1 of the Contracts Act has the rules, and they apply to written, oral and digital agreements alike.
Key concepts and rules
- Offer: a binding statement proposing an agreement. The offeror is bound once the offer has reached the offeree (sections 1 and 7).
- Acceptance: a yes to the offer. A late acceptance counts as a new offer (section 4).
- Deadline for acceptance: set by the offeror, otherwise "reasonable time" (section 3).
- An acceptance that does not match the offer counts as a rejection and a new offer (section 6).
- Revocation (section 7): the offer lapses if the revocation arrives before or at the same time as the offer.
- Adverts and price lists are usually only invitations to make offers.
- The main rule is freedom of form: an oral agreement is as binding as a written one, but it is harder to prove.
Example
Kari offers Ola her car for 50,000 NOK with a reply deadline of Friday. Ola replies on Monday. The acceptance is late, and Kari's offer no longer binds her.
2. Invalidity
What is it about?
Sometimes a contract is not binding even though it was formed. Chapter 3 of the Contracts Act lists the grounds of invalidity.
Key concepts and rules
- Duress (section 28): serious duress (violence) invalidates the contract even against a party in good faith. Other duress invalidates it when the other party is in bad faith.
- Fraud (section 30): one party tricks the other into the contract.
- Exploitation (section 31): someone exploits another's distress, recklessness or dependence and gains an unreasonable advantage.
- Clerical error (section 32): a typo does not bind if the recipient understood or should have understood that it was a mistake.
- Good faith (section 33): the contract cannot be enforced if doing so would be dishonest.
- The general clause (section 36): a contract can be set aside or modified if it is unreasonable. This is the most important rule in practice.
Example
An online shop writes 99 NOK instead of 9,990 NOK for a new TV. A customer who should have understood it was a mistake cannot demand the TV for 99 NOK (section 32).
3. Sales: defects and notice
What is it about?
When goods are not as agreed, the buyer has claims against the seller. The Sale of Goods Act applies between businesses and between private persons. The Consumer Purchases Act applies when a consumer buys from a business, and it cannot be departed from to the consumer's detriment.
Key concepts and rules
- Defect: the goods do not match what was agreed, or what the buyer could expect.
- Notice: the buyer must notify the seller of the defect within a reasonable time after discovering it.
- Absolute deadline: 2 years after the buyer took over the goods, or 5 years for things meant to last considerably longer (for example a washing machine or a car).
- For consumers, notice is never too late within 2 months after the defect was discovered.
- Remedies: repair or replacement, price reduction, termination (for a material defect), damages, and withholding payment.
- "As is": the goods still have a defect if they are in considerably worse condition than the buyer could expect.
Example
You bought a phone in a shop 2.5 years ago, and it stops working. A phone is not normally meant to last considerably longer than 2 years, so the deadline has probably passed.
Example problems with solutions
Here are some of the problems in contract and Sales Law. In the app, calculation problems get new numbers every time, so you can practise until it sticks – and take a graded practice exam before the real one.
Forming a contract: When does a contract become binding under the Contracts Act?
Answer: When an offer is accepted in time
Offer + acceptance. Writing is not required.
Invalidity: Which section lets the court modify an unreasonable contract?
Answer: Section 36
The general clause, section 36 of the Contracts Act.
Sales: defects and notice: What is the absolute notice deadline for ordinary goods?
Answer: 2 years
2 years after taking over the goods.
Forming a contract: The acceptance arrives after the deadline. What is it then?
Answer: A new offer
Contracts Act section 4.