Ch.7 An Introduction to Contracts Flashcards
Contract
agreement made between two or more persons that is enforceable at law
Comes into existence when parties have established elements that make contract enforceable
Freedom of contract
General ability of parties to create their own “law”, which they are obliged to follow
Create specific rights and duties that courts will enforce
6 basic elements of a valid contract
- An intention to create a legal relationship
- Offer
- Acceptance
- Consideration
- Capacity to contract
- Legality
Contracts must be free of vitiating elements
Mistake
Misrepresentation
Undue influence
Duress
Requirements must be met for contract to be enforceable by the Courts
Certain types of contracts must be in writing, or take special form
Premise of Contract:
End result is meeting of the parties’ minds (consensual agreement)
Essential element is a promise
- Intention on the part of the promiser is to be bound by the promise made i.e. create a legal relationship
Intention is a presumption at law
Presumptions in contract law
Strangers intend to be bound by their promises
Family members and close friends do not intend to be bound in contracts
Both are presumptions that can be rebutted
Invitation to do Business
Advertisements are not offers
Invite offers that seller may accept or reject
In text
Key to the decision was the deposit of money in order to pay the reward
Prior to this decision advertisers could make any claim and stand behind it as ‘puffery’
Now, most promises in ads follow this precedent although advertisers still have great scope in claims like ‘works great’ or ‘best product’
Nature of an offer
Only a promise made with intention of creating a legal relationship may be enforced
A promise is tentative, until the other party accepts proposal i.e. to comply with the condition(s)
Acceptance
- a statement or act given in response to and in accordance with an offer
RULES OF ACCEPTANCE
RULE: Acceptance of the offer must be communicated to the offeror in the manner requested or implied by the offeror in the offer
RULE (for an offer accepted by the post): the acceptance of the offer takes place when the letter of acceptance, properly addressed and the postage is paid, is placed in the postbox
Nature of Acceptance
Must be clear and unconditional
Counteroffer is a new offer and a rejection of original offer
Silence cannot be considered acceptance unless there is a pre-existing agreement
Legislation (Common Law) protects consumers:
- Public not obliged to pay for unsolicited goods
- Not liable for goods lost or damaged while in their possession
Unilateral agreements
offers that require oferees to complete their part of the contract as a mode of acceptance
- An offer made to the world at large
- Completing or performing the act is acceptance
- Offeror cannot revoke offer so long as offeree is in the course of performing their part
Location of the Transaction
Place of offer/acceptance determines location of contract and jurisdiction that governs it
Data messages are deemed dispatched from the originator’s place of business
Deemed received at the addressee’s place of business
Location of contract determines:
- Jurisdiction whose laws apply to contract
- Applicable sales or income taxes
Effect and Timing of the Click
Electronic business contracts must include valid offer and acceptance
- Radio button and click box
- Click wrap agreement
Click wrap agreement
internet click box of “I agree” which constitutes valid acceptance of enumerated contractual responsibilities
Lapse
termination of an unaccepted offer by the passage of time, a counteroffer, or the death of a party
- Until offer accepted, no legal rights or obligations
- If offer rejected outright, it lapses and cannot be received except by offeror
- Offers may also lapse by passage of time
Stated in the offer expires
If not stated, after a reasonable period of time
Revocation
termination of an offer by noticed communicated to the offeree before acceptance
Offeror may revoke the offer at any time prior to the acceptance
Revocation must be communicated to the offeree
Can be communicated in any form as long as it is communicated and received
Option
a separate promise to keep an offer open for a period of time
Requires consideration or signed under seal
Indirect revocation:
Revocation can be communicated through someone else (indirect)
Must prove offeree had notice of revocation indirectly from a reliable source
