Chapter 3.3: Law Of Contract Flashcards by Richie Sakhon

An offer is what?

A promise made to specific group person or group

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2 exceptions to an offer

1) standing offer

2) invitation to treat

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A Standing offer is what?

Open to many, can be accepted by anyone!

Such as a open listing

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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

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What is the acronym to know the 7 components to a contract!

COCA-COLA

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What are the 7 essential elements needed in a contract

Acronym: COCA-COLA

Consideration
Offer
Capacity
Acceptance

Consent
(Legal) object
Legal intention
A

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Essential element of a contract: offer

A promise made to specific group / person

2 exceptions: standing offer, invitation to treat

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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

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Proper acceptance can be either __________ or ___________

Oral or written!

Both work 100% fine

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The acceptance is considered effective when ______________, not when received

Communicated/sent

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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

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Essential element of a contract: consideration

Something of value, such as money, a signature, or a family seal

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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.

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Consideration does not have to be _______

Money $€£¥

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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.

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Consideration is not an _________ agreement

Option

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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.

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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.

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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

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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.

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Essential element of a contract: consent

parties are in mutual agreement
genuine consent
have a clear understanding of the contract

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What is duress?

Actual physical act

The party of the contract has been robbed of free will

Against your will (held hostage)

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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

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A counter offer does what?

Terminates the original offer

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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%