Chapter 6 and 7 Flashcards
A contract must be (4)
- an agreement – offer and acceptance
- complete
- deliberate ( intention to create legal relations present)
- supported by mutual consideration
offer
starting point, the promise to enter into a contract on specified terms. – all the essential terms are set out.
invitation to treat
communication expressing a wish to do business – no legal consequences.
- not an offer
- only treated as an expression of willingness to do business in law
- advertisements and display of goods are invitations to treat
retail purchases and the law
display of goods (invitation to treat)
customer takes item to cash register( offer to purchase at sticker price)
clerk takes payment ( acceptance of offer)
standard form contract
take it or leave it
- customer agrees to a set of terms that favor the other side.
- law expects people to take care of themselves, it is critical to read and understand a contract before signing
offerer
party who makes offer
offeree
person whom offer is made to
What are the types of terminations for an offer (5)
- revocation
- lapse
- rejection
- counter offer
- death or insanity
revocation
withdrawal of offer anytime before acceptance, the offeree must be notified and the offer then ceases to exist
option agreements
exchange for payment - the offerer is obligated to keep an offer for a specified amount of time– a seperate contract that may or may not lead to acceptance of an offer, commonly seen in real estate
revocation in tendering situations - what is the call for tenders
-offer of a preliminary contract
the tender and owner are obligated to follow the rules governing the tender selection process.
-the tenderer cannot withdraw its tender - everyone who submits a tender is accepting the offer of a contract to govern the relationship between parties
Lapse
offer may expire on specified date
- if there is no specified date - it remains open for a reasonable amount of time and it depends on the circumstances of the case
rejection
offer is terminated if it is rejected by the offeree- can only then be accepted if revived by the offerer with a new or revived offer
counter offer
-form of rejection that terminates the original offer - the offeree is turning down the offer – proposing a new onein its place
acceptance
- unqualified willingness to enter into a contract on the terms in the offer
- the offer is unconditionally and unequivocally accepted by the other party
- it must be communicated effectively to be accepted
communication of acceptance
if method of acceptance is specified then it is mandatory to communicate it in that way
- if it is not specified then it must be reasonable under the circumstances
- lost in the mail is called the post box rule and does not invalidate acceptance
UECA
uniform electronic commerce act - basis for ecommerce legislation - it removes the barriers to electronic commerce– acceptance of an offer can be made electronically with the I agree button
consideration of an offer
price paid for a promise
- each party must give something of value for receiving something of favlue from the other
- buyer promises to pay thepurchase price in exchange for the sellers promise to provide
gratuituous promise
promise
no consideration or contract given
it has not been purchased
-may be something other than money like goods and services that has value - or even a promise not to do something like not to sue in a settlement
-adequacy of consideration not normally open to challenge
what are the 3 enforceable promises without consideration
- promise under seal
- promissory estoppel
- partial payment of a debt
promise under seal
seal affixed on paper is evidence of serious intent and acknowledgement that the contract is enforceable
– no further consideration necessary– replaces need for consideratoin
promissory estoppel
relying on gratuitous promise may not be able to enforce it – it is only used as a defence to legal claims made by the promis breaker
partial payment of a debt
customer cannot pay but offers an amount to settle
-once lesser amount is agreed upon and paid the creditor cannot later claim the full amount in most provinces
intent to contract
- the promise at issue must have been intended to be a contractual one, if a it’s a business relationship intention is presumed by the courts – in family agreements, common law presumes that promise are non- contractual but presumption is subject to rebutal
contact terms classifications
- express terms - state or make explicit one parties promise to another
- implied terms- not expressly included in contract but are necessary to give effect to the parties intention - the judge may imply terms in a contract to make it workeable
- express terms - state or make explicit one parties promise to another
interpretation of contracts
- courts are required to enforce the contract as it is written and to rely on plan, ordinary meaning of words that both parties have chosen.
- the court assigns as reasonable a meaning as possible to vague or ambiguous terms.
- if the contract has been drafted by one of the parties any ambiguity in language will be construed against that party in favour of the other
terms of a contract
conditions- major terms in a contract - if breached the contracts end
warranties - minor terms of contract, if breached obligations may continue, the non breaching party may seak damages
substantial performance
substantially all obligations have been fulfilled but a condition is breached in a minor way- whole contract is not breached but they may seek compensation for the remaining part
condition precedent
event/ circumstance that, until it occurs, suspends the parties obligations to perform their contractual obligations, the contract begins only if the conditions are met– subject to clause
condition subsequent
-event / circumstance that, when it occurs, brings the existing contract to an end. the terms specify when continuing obligations will end.
limitation of liability clause
term of a contract that limits liability for breach to something less than what would be recoverable
exemption clause
term that identifies events causing loss for which there is no liability
liquidated damages clause
- term that specifies how much one party must pay to the other in the event of breach.
- parties have decided beforehand on compensation
- If clause sets reasonable compensation terms, it is enforceable
- if unreasonable it becomes a penalty clause and is disregarded in court
