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Business Law (Focus Areas) > Chapter 2 > Flashcards

Chapter 2 Flashcards

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1
Q

What are the types of contracts?

A

Special contract and Simple contract.

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2
Q

What is a special contract? It is also known as ___.

A

Also known as deeds, it needs to be in writing as required by the law. It has to be signed, sealed and delivered in a required format.

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3
Q

What is a simple contract?

A

It may be oral, in writing or a mixture of both. At times, it may be implied by conduct.

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4
Q

Define contract.

A

An agreement giving rise to obligations which are enforced or recognized by the law.

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5
Q

Are agreements and contracts the same?

A

All contracts are agreements but not all agreements are contracts.

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6
Q

What is the other definition of contract?

A

An agreement made between 2 or more persons for an intended purpose. The intention being, to create a legally binding contract that is enforceable by law.

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7
Q

What is the key distinguishing factor when comparing agreements and contracts? It is also known as _____.

A

Parties’ intentions. Meeting of minds.

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8
Q

What does Parties’ intentions/Meeting of minds mean?

A

The intention to be bound to the obligations that arise from the agreement.

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9
Q

What are the basic elements of a valid contract?

A

(1) Offer
(2) Acceptance
(3) Consideration
(4) Intention to create legal relations

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10
Q

How is an agreement formed?

A

When an offer is made by one party and the offer is accepted by another party without any modifications.

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11
Q

In other words, what does a simple contract require?

A

An offer is made by one party and accepted by the other. Valuable consideration from either party. Common intention that the agreement should be legally binding.

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12
Q

When is an offer made?

A

When the offeror makes it clear by his words or actions that he intends to be bound to the offeree as soon as he accepts it.

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13
Q

What happens when the offeree accepts the offer?

A

There will be a binding agreement between the offeror and the offeree.

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14
Q

How should an offer be communicated? Why?

A

Clearly, without ambiguity or uncertainty. It distinguishes an offer from a mere enquiry or provision of information.

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15
Q

Who can offers be made to?

A

One person, many people or the world at large.

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16
Q

Offers made to the world at large is also known as ____.

A

Unilateral contract

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17
Q

What is an example of a unilateral contract?

A

Reward cases.

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18
Q

What are invitations to treat?

A

Invitation to initiate negotiations or to make an offer

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19
Q

What are examples of invitations to treat?

A

Advertisements, menus, display of goods for sale, auctions and tenders

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20
Q

How are auctions invitations to treat?

A

Invitation to treat- request for bids by auctioneer
Offer- bids
Acceptance- fall of hammer

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21
Q

What are tenders?

A

Public authorities are required by the law to invite tenders for many reasons.

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22
Q

How are tenders invitations to treat?

A

Invitation to treat- request to submit tenders
Offer- submitted tender
Acceptance- tender accepted

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23
Q

Once there is a valid offer, an agreement is only formed once there is _____.

A

Acceptance of that offer.

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24
Q

Acceptance can be made _____.

A

Orally, in writing or by conduct.

25
Q

How should the offeree accept the offer? This makes the acceptance ____.

A

The offeree must accept the offer without any amendments or modifications. Final and unconditional.

26
Q

What is the general rule of acceptance?

A

Acceptance must be communicated to the offeror. If there is a specified method of acceptance, it has to be adhered to.

27
Q

What is the first exception to the general rule of acceptance?

A

Silence- Both parties must agree that silence is to be construed as acceptance before it is effective.

28
Q

Why is silence an exception?

A

Silence typically does not amount to acceptance.

29
Q

What is the second exception to the general rule of acceptance?

A

Postal acceptance rule- acceptance is deemed to be complete once the letter is posted, even if it arrives late or never arrives

30
Q

When is the Postal acceptance rule used?

A

When acceptance by post has been requested or post is an appropriate and reasonable means of communication between the parties.

31
Q

What is required for the Postal acceptance rule to be applied?

A

The letter of acceptance must be posted, addressed and stamped properly.

32
Q

Why was the Postal acceptance rule created?

A

(1) Letter of acceptance spends some time in the postal system, which inevitable creates a period of uncertainty for one party or another. (2) Offeror can always protect himself by specifying another mode of acceptance.

33
Q

Who does the Postal acceptance rule protect?

A

Offeree

34
Q

When does the Postal acceptance rule not apply? (Acceptance of offer MUST be communicated to the offeror)

A

(1) Instantaneous communication and electronic transactions. (2) Exclusion of Postal acceptance rule (3) Unreasonable to use post

35
Q

For instantaneous communication and electronic transactions, what is the mode of acceptance?

A

Receipt rule: Acceptance takes place when the offeror receives it.

36
Q

What is the Electronic Transactions Act?

A

“Offer” of goods on the internet are invitations to treat unless the offeror makes it clear that he intends to be bound by it.

37
Q

When is the Postal acceptance rule excluded?

A

Where the terms of the offer expressly or impliedly state that the use of the Postal acceptance rule is to be excluded.

38
Q

When is it unreasonable to use post?

A

Where the application of the rule will produce a clear absurdity.

39
Q

What is the third exception to the general rule of acceptance?

A

Waiver of communications.

40
Q

What is the waiver of communications?

A

When the rules to acceptance are modified. The requirement of communicating acceptance to the offeror is waived. Performance of an act may be required by the offeror.

41
Q

What is the general rule of an offer?

A

An offer can be terminated before acceptance takes place.

42
Q

What happens after an offer has been terminated?

A

Acceptance after an offer has been terminated is ineffective.

43
Q

What is the first way to terminate an offer? It is also known as ____.

A

Revocation. Withdrawal.

44
Q

Revocation is the ____ way to end an offer.

A

First

45
Q

How should revocation be communicated? (who, when)

A

Revocation should be communicated to the offeree before acceptance is made.

46
Q

What must occur for revocation to be effective?

A

The offeree should receive notice of the revocation.

47
Q

Who communicates revocation?

A

It does not have to be directly from the offeror, it can be from a reliable third party.

48
Q

What is the second way to terminate an offer? (2)

A

Rejection or Rejection through a counter-offer.

49
Q

What is rejection?

A

It is an outright rejection of an offer.

50
Q

What is rejection through a counter-offer?

A

It is the modification of the conditions of an offer.

51
Q

What is the third way to terminate an offer?

A

Lapse of time.

52
Q

Explain what is a lapse of time.

A

An offeror may state in his offer that his offer is opened only for a reasonable period of time. Hence, acceptance has to take place before this reasonable period of time lapses.

53
Q

What is a reasonable period of time?

A

It depends on the subject matter, trade or industrial practices.

54
Q

What is the fourth way to terminate an offer? (who, when)

A

Death of an offeror or an offeree before acceptance.

55
Q

What happens if there is death of an offeror or an offeree after acceptance?

A

It does not affect the contract unless the personal services of the deceased are crucial to the contract.

56
Q

What if the offeree knows of the death of the offeror?

A

The offer cannot be accepted.

57
Q

What if the offeree accepts the offer in ignorance (lack of knowledge) of the offeror’s death?

A

The contract may still be valid.

58
Q

What is the fifth and last way to terminate an offer?

A

Offer subject to conditions.

59
Q

What is an offer subject to conditions?

A

If there are conditions attached to an offer, and these conditions are not met, the offer is automatically terminated.

Business Law (Focus Areas) (10 decks)

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