Chapter 3.3: Law Of Contract Flashcards
An offer is what?
A promise made to specific group person or group
2 exceptions to an offer
1) standing offer
2) invitation to treat
A Standing offer is what?
Open to many, can be accepted by anyone!
Such as a open listing
An invitation to treat is what
An invitation to treat is an invitation for others to make an offer. It is not an offer itself but an indication that one is open to negotiating a contract.
Examples include displaying goods for sale or advertising a product. Listing a house on the MLS
What is the acronym to know the 7 components to a contract!
COCA-COLA
What are the 7 essential elements needed in a contract
Acronym: COCA-COLA
Consideration
Offer
Capacity
Acceptance
Consent
(Legal) object
Legal intention
A
Essential element of a contract: offer
A promise made to specific group / person
2 exceptions: standing offer, invitation to treat
Essential element of a contract: acceptance
If the offer specifies how it should be made, the offeree should accept by that method
Example: email sent out, and email to reply
If the offer says nothing, the offeree should accept by the same method as the offer was given
Proper acceptance can be either __________ or ___________
Oral or written!
Both work 100% fine
The acceptance is considered effective when ______________, not when received
Communicated/sent
For an acceptance to an offer, no postal acceptance rule (stamp) is allowed, meaning what!
The second it is dropped into the mailbox the offer is considered accepted, not when it is received
Essential element of a contract: consideration
Something of value, such as money, a signature, or a family seal
Family seal does what?
A family seal serves as a traditional form of authentication and authority, often used to validate and signify approval on contracts.
Consideration does not have to be _______
Money $€£¥
What does “Past consideration is no consideration” mean
Means that something given or promised in the past, before the current agreement, cannot be used as valid consideration for a new contract. Consideration must be current and part of the agreement.
Consideration is not an _________ agreement
Option
Options agreement
An options agreement is a contract giving one party the right, but not the obligation, to buy or sell an asset at a specified price within a certain period.
Essential element of a contract: (legal) object
Refers to the purpose or subject matter of the contract, which must be lawful and not against public policy. This means the contract’s terms and goals must comply with the law for it to be enforceable.
Essential element of a contract: legal intention
Must have serious intention to create a contract
No social agreement such as a hand shake works fully
Essential element of a contract: capacity
Capacity refers to the legal ability of parties to enter into a contract. This means they are of sound mind, not minors, and not under duress or undue influence.
Essential element of a contract: consent
- parties are in mutual agreement
- genuine consent
- have a clear understanding of the contract
What is duress?
Actual physical act
The party of the contract has been robbed of free will
Against your will (held hostage)
Release / expiry of a contract can happen in many ways, such as?
- Time limit
- Reasonable time has passed
- Offer rejected
- Counter offer
- Revoke before acceptance
- Insanity or death
- Changes to offer by seller
A counter offer does what?
Terminates the original offer
With duress, there is no need to
Actually harm the person,
This includes threats and imprisonment
Undue influence is what?
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 which he would not do or would do if left act freely
Example: Caregiver shows up in will
Example: must be vaccinated to work
Disclosure of defects, 2 types of defects
Patent
Latent
Latent defects
- later!
- cannot be discovered upon reasonable inspection
- must be disclosed
- the disclosure must be separate from any agreement of purchase and sale
Examples, mould in attic, ant infestation under garage
Patent defects
- Present
- should be discoverable upon reasonable inspection
- doesn’t have to be disclosed
Caveat emptor
Buyer beware
A Defect is what!
A defects impact on property’s value can be objectively determined through appraisals
Stigma effect is what!
A stigma effect on property value depends on an individuals subjective considerations
Such as murder, haunted, crime, death
Stigma = subjective
Mistakes
Where a mistake has occurred, the contract may be ________ or __________
Void or voidable
Voidable contract
Has an option to be cancelled
Such as duress
Void contract
Never existed in the first place
3 types of mistakes
Common
Mutual
Unilateral
Common mistake
Both make the mistake about the fundamental term of the contract
Mutual mistake
Both parties make a mistake, but the mistake is different
Innocent
Unilateral mistake
One party is mistaken, the other party is aware but does nothing
Deceit
5 component that can lead to termination of a contract
- frustration
- performance
- agreement
- nonfulfillment of conditions
- breach of contract
Frustration
Happens after the contract is signed
Could be the house flooding, burning down, something to stop the contract dead in its tracks
Termination of a contract: Performance
Party stops performing their duties / obligations
Termination of a contract: Agreement
1 type of termination
Both parties agree to end the contact and stop
Termination of contract: Nonfulfillment of conditions
1 type of contract termination
Allows for contract to cancel naturally
Termination of a contract: Breach of contract
1 type of termination
When you go directly against outlined terms in contract
Common mistakes and frustration, the order and specifics
June 4th - common mistake
June 5th - contract signed
June 6th - frustration
June 10th - completion date
Contract performed = closed
C comes before F
Doctrine of privity
Only the parties to a contract have a right to sue or be sued under it
Aka- Kendra couldn’t sue on my behalf if I was in a contract
With the doctrine of privity, what isn’t involved?
Land! Land isn’t involved
2 exceptions to the doctrine of privity
1) assignment
2) interests in land (doesn’t apply to land transactions)
__________________: A person can assign away benefits under a contract to a third-party, and the third-party can sue to enforce those benefits
Assignment
With assignment, you cannot assign ____________
Liabilities
Two types of assignment
1) statutory - based on law
2) equitable
Statutory assignment legal requirements
- in writing
- for the whole amount (whole contract / debt)
- given to promissor
3 people in assignment
1) promissor
2) assignor
3) assignee (third party)
Promissor
- The person who owes money to the assigner (aka Kale with his telus contract)
- consent is not needed from this person
- Cannot assign the debt (liability)
Assignor
- The original party to the contract (aka telus, aka the people you haven’t paid)
- can assign benefits under the contract
Assignee (3rd party)
- Receives the rights and obligations under the contract, but wasn’t an original party to the contract
- can sue to enforce the benefits
Example: collection agency 
Common law remedies to assignment
Damages- for breach of contract
The injured parties does not have a duty to mitigate damages (aka keep losses at a minimum)
Equitable law remedies to assignment
•cannot be given if damages are awarded
- specific performance
- injunction
- mandatory injunction
- quantum meruit
Equitable law remedy: specific performance
A remedy for a breach of contract or if the property is unique and there is no substitute
Cannot be awarded if damages are given
Example: castle like property, truly 1 of a kind 
Equitable law remedy: injunction
It can stop from doing something (selling property to someone else)
Equitable law remedy: mandatory injunction
Require to do something
Equitable law remedy: quantum meruit
The law implies a promise to pay a reasonable sum
As much as is deserved
Alex puts an advertisement in the local newspaper offering to sell his property for $1 million. This advertisement is known at law as
An invitation to treat
Doug makes a written offer to ask. Which of the following will not release Doug’s offer
1) Doug discovers later that Ash is illiterate
2) ash fails to accept the offer before the expirery of the time limit specified on the offer
3) ash makes the counter offer
4) Doug revoke his offer to Ash via telephone
1) he is illiterate
Revocation can be made prior to or after acceptance
 false
Only prior
The method of revocation should be exactly the same as the method used in the offer
False, should be, but not mandatory/must
Unless consideration is paid to keep an offer open for a specific time, revocation can be made at any time prior to acceptance
True!
If an offer is made by telegraph and the acceptance is mailed when is the acceptance effective
When it is posted/mailed
Frustration can only occur after a contract has been made
True, C comes before F
Common mistake before contract
Frustration after contract
Frustration occurs where both parties to a contract have made a fundamental mistake about the contract, but each makes a different mistake
False, this describes a mutual mistake
True or false… An assignment terminates the original contract between the assigner and the third-party
False… It cancels it between the assigner and the promiser
True or false… A person can assign both the benefits and liabilities under a contract
False… Only the benefits, no liabilities
True or false… BC‘s law and equity act prohibits assignment of contracts which creates an interest in land
False… It is difficult to do, but still allowed at 100%
