CH 6 - Consensus and consideration

Question 1

Elements of a contract 1-3

Answer 1

1. Consensus: mutual agreement
2. Consideration: the price each party is willing to pay to
   participate in the contract
3. Capacity: legally capable of understanding

Question 2

Elements of a contract 4-5

Answer 2

Legality: object and consideration involved in the
agreement must be legal
5. Intention: must intend that legally enforceable
obligations will result from contract
* Verbal agreements are as binding as written ones

Question 3

Important Terms and Definitions

Answer 3

Formal and Simple Contracts
Formal - sealed contract with a wax stamp. Simple all other verbal written.
* Express and Implied Contracts
Express, parties express their agreement whichever way. Implied, is a contract like bag of chips for 2$ in a vending machine.

• Valid, Void, and Voidable Contracts

Valid - one thats legally binding by both parties. Void - not legally binding, element is missing. Voidable, one of the parties have the power to end it whenever they want. Ex coach.
* Unenforceable and Illegal Contracts

Unenforceable, statute of frauds but didnt get put in it. Illegal,

• Bilateral and Unilateral Contracts

Bilateral both parties make commitments, and obligations. ex salary for hours worked etc. Unilateral, no negotiations, only enforced one side. ex reward for dog, for ONLY the person who gets the dog back.

Question 4

Consensus

Answer 4

Essence of a contract is a meeting of the minds of
contracting parties
* Share an understanding of the bargain struck
* Be willing to commit themselves to terms
* Terms must be unambiguous
* Failure to read a contract is no excuse

Question 5

Offer

Answer 5

Offer must contain:
– All of the terms of the contract who what when how.
– A communication of willingness to be bound
– All significant terms of the proposed contract
 Terms can be implied
* An interim agreement may be binding
– If contains all essential terms
* An offer may contain a condition or “subject to”
clause
– Contract is not binding until conditions are satisfied

Question 6

Invitation to Treat

Answer 6

Invitation to Treat: an invitation to potential
customers to engage in the process of negotiation
– Advertisements or sales promotions are not binding
offers
– Articles displayed for sale are not offers but merely
invitations for customers to offer to pay the price of the
item

Displays of goods example

Question 7

Communication of an Offer

Answer 7

An offer must be communicated
* Only the person or group to whom an offer is
made can accept it
* For a contract to be binding, all important terms
must have been disclosed to the offeree
* Exemption clauses must be brought to the
attention of the person granting it
* Fundamental breach may void exemption clause

Question 8

The End of an Offer Reasons 1-3

Answer 8

1. qqOffer ends at a specified time
2. After a reasonable time (if time not specified)
3. At the death or insanity of the offeror

Question 9

The end of an offer reasons 4-6

Answer 9

4. Revocation of offer (withdrawn) before acceptance
   and revocation is communicated to the offeree
   - Dickinson. V. Dodds
5. When the offer is rejected
6. A counteroffer is put forward
   – A counteroffer is a form of rejection
   * If the subject matter is illegal
   * If the subject matter is destroyed

Question 10

Consideration

Answer 10

Consideration: the price one is willing to pay for a
promise of that benefit

Question 11

Adequacy of Consideration

Answer 11

Need not be fair, but:
– Unfair consideration may indicate undue influence,
insanity or fraud
* Courts show willingness to assist consumers
– Consumer protection statutes
* Must have a material value and be stated
specifically. Courts want to give us the freedom to contract to whatever we want. However, if something grossly unfair, ex undue influence, or fraud, then the courts will look at it to make sure its fair.

Question 12

Promissory Estoppel Examples

Answer 12

Bob owns a bakery and his lease is $1000/month. His landlord Larry says
because of Covid, Larry will agree/promise to accepting only $500/month for the
year of 2022. Bob is happy, he hires a worker in preparation for 2022 (he relies on the promise therefore accounts to hire an extra worker). 2022
comes along and and Larry changes his mind.
* Larry sues Bob for the full $1000/month
* Bob is successful (uses promise as a “shield”)
Bob used the fact he hired an extra worker as a sheild because he accounted for the fact that Bob was lowering rent. Relied on the promise.
Hai makes a promise to give all the students in MCS3040 an A+ in the class. Hai
gives Bob, a student in MCS3040, a B+.
* Bob sues Hai
* Bob is unsuccessful (uses promise as a “sword”)

Question 13

Primissory Estoppel Example 2

Answer 13

SEALED DOCUMENT
Hai makes a promise to give all the students in MCS3040 an A+ in the class
using a sealed document. Hai gives Bob, a student in MCS3040, a B+.
* Bob sues Hai
* Bob is successful, sealed documents do not require consideration