Chapter 10 – The Law of Contract

Question 1

What is a contract?

Answer 1

An agreement between two or more persons which creates an obligation to do or not to do a particular thing

Question 2

What is a contract of purchase and sale?

Answer 2

A contract of purchase or sale of land which contains the obligations of the vendor and purchaser with respect to the purchase and sale

Question 3

What are a contracts seven essentials?

Answer 3

• offer
• acceptance
• consideration
• legal intention
• capacity
• legal object
• genuine consent

Question 4

What is a void contract?

Answer 4

A contract which never had any legal existence or effect and which is not capable of being enforced

Question 5

What is a voidable contract?

Answer 5

A contract which exists until repudiated by a party entitled to do so at which time it becomes void

Question 6

What is an offer?

Answer 6

A proposal to do or refrain from doing some specified thing usually followed by an expected acceptance, counter offer, return promise or act. The person who makes the offer is called the offeror. The recipient of the offer is called the offeree

Question 7

What is an invitation to treat?

Answer 7

A type of advertisement used by one to induce the public or some individual to submit their own offers. An invitation to treat is not an offer capable of acceptance to form a contract

Question 8

What are Standing Offers?

Answer 8

There is an exception to the above principle. Certain offers known as “standing” offers can be made to the public at large. These can be accepted by anyone. An example of this type of offer would be the offering of a reward to the public for providing information

Question 9

What is a Revocation?

Answer 9

The term for the cancellation of an offer communicated by the offeror to the offeree prior to acceptance

Question 10

What is an Option Agreement?

Answer 10

It is possible to ensure that an offer will be kept open for the stipulated time period by using a type of contract known as an option agreement. Separate consideration is given to keep the offer open. In effect, a separate contract must be formed. “Consideration” is discussed later in the chapter; however, to understand the principle, think of consideration as a payment of money.

Question 11

What is a counter-offer?

Answer 11

A statement by the recipient of the offer which has the legal effect of rejecting the offer and of proposing a new offer to the offeror (who then becomes the recipient of the “new” offer)

Question 12

What is a consideration?

Answer 12

The legal term for something of value that is bargained for, and received by, each party to a contract. Consideration may be in the form of a right, interest, profit or benefit accruing to one party. It may also be in the form of an agreement not to do something, or loss suffered by the other

Question 13

What is a seal?

Answer 13

A contract made without consideration can still be enforceable if it is made under seal.

Question 14

What is quantum meruit?

Answer 14

“as much as he deserves”. A doctrine that no one who benefits by the labour and materials of another should be unjustly enriched thereby; under those circumstances, the law implies a promise to pay a reasonable amount for the labour and materials furnished, even though a specific contract price may not have been agreed to

Question 15

What is an infant?

Answer 15

A person under 19 years of age which, generally speaking, is the age of legal competence

Question 16

What is misrepresentation?

Answer 16

A false assertion of fact which, if accepted, leads one to an incorrect belief about a given situation

Question 17

What is a caveat emptor?

Answer 17

A Latin phrase translation to “let the buyer beware”, and used in the real estate context to describe the obligation on the buyer of real property to conduct appropriate due diligence on a property before purchasing it

Question 18

What is a patent defect?

Answer 18

A defect in real property that is visible to the eye or that can be discovered by conducting a reasonable inspection and making reasonable inquiries about the property

Question 19

What is a latent defect?

Answer 19

A defect in real property that cannot be discovered by conducting a reasonable inspection and making reasonable inquiries about the property

Question 20

What is a mistake and what are the 3 main ones?

Answer 20

A legal term which describes the situation where a person, under some erroneous conviction of law or fact, does, or omits to do, some act which but for the erroneous conviction, he would not have done or omitted doing
* common mistake;
* mutual mistake
* unilateral mistake

Question 21

What is a duress a situation?

Answer 21

Where a person is forced to enter into a contractual relationship against his will by the threat of imprisonment either to himself or his family, or the threat of actual physical force

Question 22

What is undue influence?

Answer 22

Any improper or wrongful constraint, manipulation, or persuasion whereby the will of a person is overpowered and he is induced to do or refrains from doing an act that he would not do or would do if left to act freely

Question 23

Reasons for a contract to be terminated?

Answer 23

• performance
• agreement to waive performance or substitute another agreement
• nonfulfillment of a condition precedent;
• frustration
• breach of a condition of the contract which is accepted by the injured part

Question 24

What is a condition precedent?

Answer 24

A legal term for a “subject to” clause. In contract law, a condition precedent calls for the happening of some event or the performance of some act before the contract shall be binding upon the parties

Question 25

What is frustration?

Answer 25

A legal doctrine that provides that where the existence of a specific thing is necessary for performance of the contract, the duty to perform is discharged if the thing, for reasons beyond anyone’s control, is no longer in existence at the time for performance

Question 26

What is breach of contract?

Answer 26

Failure, without legal excuse, to perform any promise which forms the whole or part of a contract

Question 27

What does it mean to “assign”

Answer 27

To transfer over to another (e.g., “I assign all right, title and interest in Blackacre to my wife, Elaine”)

Question 28

What are the 4 main remedies the court grants?

Answer 28

damages
specific performance
injunction
quantum meruit

Question 29

What is specific performance?

Answer 29

The court, rather than granting damages in lieu of performance, orders that the terms of the contract be carried out by the party in default