Chapter 3 Flashcards
Contract
a written or oral promise exchanged for another promise or for a performance that the law will enforce
6 Essential Elements of a Contract
offer acceptance consideration intention capacity legality
Unilateral Contracts
promise for performance. the performance brings the contract into existence
Bilateral
promise for a promise. The exchange of promises brings the contract into existence)
Invitation to Treat
inviting another person to make an offer
Offer
a tentative promise
may be conditional
Lapse Offers
offeree fails to accept by deadline
offeree fails to accept w/in a reasonable time if there is no deadline
a party dies, or loses the capacity to contract
Option
A agreement by an offeror to leave an offer open for a specific time periods
Revocation of an Offer
can be revoked before it is accepted
has no legal consequence
Counter Offer
if an offere amends or changes the terms of the contract
Acceptance
2nd essential element of a contract
offeree accepts the fastest method. must be made in a timely fashion.
Consideration
the exchange of benefits
the price one party is willing to pay for the promise of another.
need not be fair, can be represented by a seal (bind w the absence of considerations)
Gratuitous promises
a promise w/ no consideration in return. typically have no remedy in law. typically don’t involve a contract
Seals
Binding (for contracts) even when there are no considerations
Unconscionable Transactions
When a Judge feels the considerations are UNFAIR b/c of:
lopsided bargaining power
abuse of power
breach of fiduciary duty
Intention (to create a legal relationship)
OBVIOUS
each party must intent to create a contract.
language may be used to express intent
intent can be inferred.
Capacity
Both of the parties must have the capacity to enter into the contract.
If one of the parties lack the capacity to enter into the contract the contract maybe VOID/VOIDABLE
Repudiate
deny the application of a contract of deal
Factors to consider w/ capacity (list)
Mental illness, substance intoxication, senility Minors Agents & Principles Power of Attorney Spouses/ Cohabitants Business Partners Corporations Native People Diplomatic Immunity Enemy Aliens Bankrupts
Mental Illness (Capacity)
If a person can prove that at the time of contract they were incapacitated they may REPUDIATE or choose to enforce the contract
Minors (Capacity)
Only enforceable when the contracts are beneficial to the minor.
contracts for employment
necessity of life such as legal/medical advice
Designed to protect minors.
Agents & Principles
Agents are authorized by principles to act on their behalf and enter into contractual agreements
think hockey players and agents
Power of Attorney (Capacity)
Special agreement, where by the donor in writing grants power to the attorney to act on his behalf.
Business Partners (Capacity)
partners can bind, and be bound by other partners.Unless the partners conduct is out of scope of the partners authority to the knowledge of the affected third party. Retired business partners may still be liable
Corporations (Capacity)
Can not act except through authorized officers. But not necessary to verify that person is an officer- needs to only appear to have authority
Native People (Capacity)
Cannot be bound by a contract on reserve land
Democratic Immunity
beyond the jurisdiction of canada. renting a hall example- not bound to pay by canadian law
Enemy Aliens
Peacetime ( defined by residency not citizenship) have the same contractual rights as canadians
During hostility they lose their capacity to contract unless the contract is of clear benefit to canada.
Legality (Essential Element 6)
The purpose of a contract must not be illegal or against public policy
8 Contracts that must be in writing
Land
Marriage
Co-signing (debt)
Estate trustees promise to pay out of own pocket
Agreements with minors that must be ratified (when they are of age)
Sale of goods over a specific value
Agreement to deliver goods at a future date
Privity of Contract
Only those who are parties to a contract can enforce the rights and obligations it contains
8 Exceptions to the Privity Contract
Torts Law Bypass Principals of Agents Vicarious Liability Corporations formed by Amalgamation Collateral Warranties Novation (replacing a person w/ a new person who assumes the obligations) Interests in Land Assignments of Rights Trusts Life Insurance Policies
Allocation of Risk
COD- seller remains title
FOB- buy acquires title
CIF- buyer acquires title but the seller is responsible for the cost/risks of delivery
Voidable Contracts
Have No Legal effect.
Happen when 1 of the 6 essential elements of a contract is missing, or if the contract is defective
The innocent party may
rescind the contract
insist on performance
Contra Proferentum
interpretation in standard form is strictly against the drafting party
Parole Evidence Rule
Once a contract is written it cannot be changed w/o consent of both parties
Disclaimers
contra proferentum
Discharge of Contracts (4)
Performance
Agreement
Frustration
Operation of Law
Impeachment of Contracts (5)
Duress Under the Influence Mistake common, mutual, unilateral Misrepresentation innocent, fraudulent, negligent When the utmost good faith was not demonstrated
It’s not my deed
non est factum
to describe a difference in signed contracts
Breach of Contract
When a major term or condition is breached
repudiation (innocent can sue for damages)
failure to perform (partial to complete)
sabotage
Remedies for a Breached Contract (6)
Rectification (fix typos) rescission (returned to pre contract state) damages (general, punitive, exemplary) injunction specific performance quantum meruit
Reasonable worth of a good
quantum meruit
Duty to Mitigate
an injured party has the responsibility to mitigate (contain) the damages as much as reasonably possible
