Chapter 6 and 7

Question 1

A contract must be (4)

Answer 1

1. an agreement – offer and acceptance
2. complete
3. deliberate ( intention to create legal relations present)
4. supported by mutual consideration

Question 2

offer

Answer 2

starting point, the promise to enter into a contract on specified terms. – all the essential terms are set out.

Question 3

invitation to treat

Answer 3

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

Question 4

retail purchases and the law

Answer 4

display of goods (invitation to treat)
customer takes item to cash register( offer to purchase at sticker price)
clerk takes payment ( acceptance of offer)

Question 5

standard form contract

Answer 5

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

Question 6

offerer

Answer 6

party who makes offer

Question 7

offeree

Answer 7

person whom offer is made to

Question 8

What are the types of terminations for an offer (5)

Answer 8

1. revocation
2. lapse
3. rejection
4. counter offer
5. death or insanity

Question 9

revocation

Answer 9

withdrawal of offer anytime before acceptance, the offeree must be notified and the offer then ceases to exist

Question 10

option agreements

Answer 10

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

Question 11

revocation in tendering situations - what is the call for tenders

Answer 11

-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

Question 12

Lapse

Answer 12

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

Question 13

rejection

Answer 13

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

Question 14

counter offer

Answer 14

-form of rejection that terminates the original offer - the offeree is turning down the offer – proposing a new onein its place

Question 15

acceptance

Answer 15

• 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

Question 16

communication of acceptance

Answer 16

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

Question 17

UECA

Answer 17

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

Question 18

consideration of an offer

Answer 18

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

Question 19

gratuituous promise

Answer 19

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

Question 20

what are the 3 enforceable promises without consideration

Answer 20

1. promise under seal
2. promissory estoppel
3. partial payment of a debt

Question 21

promise under seal

Answer 21

seal affixed on paper is evidence of serious intent and acknowledgement that the contract is enforceable
– no further consideration necessary– replaces need for consideratoin

Question 22

promissory estoppel

Answer 22

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

Question 23

partial payment of a debt

Answer 23

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

Question 24

intent to contract

Answer 24

• 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

Question 25

contact terms classifications

Answer 25

- 1. express terms - state or make explicit one parties promise to another 2. 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

Question 26

interpretation of contracts

Answer 26

- 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

Question 27

terms of a contract

Answer 27

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

Question 28

substantial performance

Answer 28

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

Question 29

condition precedent

Answer 29

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

Question 30

condition subsequent

Answer 30

-event / circumstance that, when it occurs, brings the existing contract to an end. the terms specify when continuing obligations will end.

Question 31

limitation of liability clause

Answer 31

term of a contract that limits liability for breach to something less than what would be recoverable

Question 32

exemption clause

Answer 32

term that identifies events causing loss for which there is no liability

Question 33

liquidated damages clause

Answer 33

- 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