Chapter 3 Flashcards
Contract
An agreement that is legally enforceable
Essential elements of a contract
Capacity - the parties involved must be legally competent to make a contract
Offer - proposal on clear terms to start negotiations
Acceptance - a clear indication to accept offer
Consideration - a ‘price’ for the agreement
Intention - intend to be legally bound by the agreement
Must a company be properly incorporated before it can make a contact ?
Yes
When is a contract made ?
When a person who has received an offer unequivocally and validly accepts it
Invitee
A person invited to make an offer
Offeror
A person who makes an offer
Offeree
A person to whom an offer is made
Acceptor
An offeree who accepts an offer
Difference between an offer and an invitation
Invitation opens up discussions towards a possible agreement but only an offer can lead to an agreement
When can an offer cease to be in force ?
If it is rejected by the other party, if it lapses or is withdrawn by the one who made the offer
An offer is rejected if the offeree turns it down
Explicitly or by making a counter offer
Is a counter offer acceptance ?
No
What is a counter offer
Where the offeree accepts the offer but with qualifications or in terms different from those on which it is made
Can an offer lapse ?
Yes if it is not accepted within any time limit specified on it. If not time limit is specified then it lapses if not accepted within a reasonable time.
Also if the offeror becomes incapable of honouring it eg death
What are the rules of acceptance ?
An offer can be accepted anytime while it is in force
Acceptance must be motivated
Acceptance must be communicated. It cannot be imposed through the silence of one of the parties
Acceptance must be a true response to the offer and an unequivocal agreement to its terms
Why must the offeror be put on notice of the acceptance ?
Because acceptance has to be communicated
Waiver
The offeror’s voluntary surrender of the right to receive communication. It specifies that the offeree has to perform an identifiable act in response to the offer
Example of a waiver
If a lost dog is missing and a reward is put up for it
Unilateral contract
When an offeree accept an offer by carrying out the required act without having to tell the offeror first
What are the four rules of acceptance
It must be motivated
It must be communicated
It must be unequivocal and a true response to the offer
An offer can be accepted any time while it is in force
Explain the postal rule
When does the postal rule apply
In the acceptance of an offer
Rules for consideration
It can be executed or executory
Past consideration is no consideration
It must be lawful
It must move between the parties
It must be sufficient
In commercial dealings,
It is presumed the parties do intend to be legally bound unless they other wise agree
What is consideration
An element of value that both parties must bring to the table.. Give and take
Explain what it means for consideration to not be adequate but sufficient
Adequate means of equal worth. Common law does not require the parties consideration to be of equal worth but it is sufficient if it can be expressed in economic terms
What is executed consideration
Consideration is completed simultaneously with the party making an offer or acceptance
Green paper
Proposal for new law
White paper
After comments received; A draft for the new law
How laws are made
Green paper - proposal for new law
White paper - after comments received, draft for a new law
First reading - introduction to the house
Second reading - debate about proposed legislation
Committee stage - party committee discusses and amends draft
Report stage - amended draft presented to the house for approval
Third reading - final approved by the house
Royal assent
If your actions are in accordance with an existing duty they’re not sufficient to support the title. They have to be above their legal, contractual and natural duty
True
Privity of contract
Only those who were involved in the contract have a right to enforce it/sue but there are exceptions (agents, insurers)
