Chapter 6 revised Flashcards
What is a contract? What is the role of contract law?
A contract is a promise or set of promises that the court will enforce
. voluntary legal relationships
Sometimes inequality of bargaining power or expertise between parties results in unfair contacts. Contract law has rules to address these situations.
What are the six basic requirements to form a legally enforceable contract?
- definite offer
- definite acceptance
for example: the peas at the store, was acceptance when picked from display or is acceptance at cash? - consideration (something of value going both ways)
- capacity (capable of entering into a contract
- intention
- legality
What is an offer? when does it become a contract?
Indication of one party that he/she is willing to enter into a binding arrangement with the other party and will be bound to perform one accepted
A contract is created when accepted
offeror: person making the offer
offeree: recipient of the offer
Can advertisements be offers?
Usually not > they are invitations to treat.
display of goods in invitation to pay price
exception: if ad lists a particular quantity and a price could be seen as an offer
How can an offer be communicated?
The form of an offer is not important as long as it is heard and understood.
In most situation, an offeror communicates orally or in wrtiting, but she can also express an offer by conduct without words.
Example. a taxi driver opening the door of her cab or a bidder raising his finger at an auction may also be offers.
What are terms that apply to offers?
Rules that apply to offers
> Knowledge (that it is an offer)
> Lapse (a period of time where the offer will lapse. specified or reasonable)
> Revocation (the offeror can revoke the offer at any time before acceptance. only valid when actually communicated to offeree)
> Option (a “seperate contract” that for example could leave contract open longer (an option) with consideration)
> counter offer and rejection. (changing the terms. a contract has to be accepted as is)
What are standard form contracts? What are some examples?
An offer prepared in advance by the offeror, including terms favorable to the offeror that cannot be changed by the offeree. Also known as contract adhesion.
Take it or leave it. example: tickets for theatres or airlines, hotel booking, credit card agreements
Can have onerous terms but must be attention drawing. example: exclusionary clauses. where one party is essentially dictating terms
What is the best way to prove that a customer has been notified/has knowledge of terms in a standard form contract?
> The best way of proving this is by written document signed by the party to be bound.
> Another way is handling him, before or at the time of the contract, a written notice specifying certain terms and making it clear to him the contract is in those terms.
> A prominent public notice which is plain for hims to see when he makes the contract, would, no doubt, have the same effect.
What is lapse of an offer? how may it occur?
The termination of an offer when the offeree fails to accept it within a specified time. or if no time is specified., then within a reasonable time.
An offer may lapse in any of the following ways.
a. when the offeree fails to accept within a time specified in the offer
b. when the offeree fails to accept within a reasonable time, if the offer has not specified any time limit.
c. when neither of the parties dies or becomes insane prior to acceptance
What is notice of revocation?
An offeror may be able to revoke an offer at any time before acceptance, even when it has promised to hold the offer open for a specified time. The offeror must provide notice of revocation to make it effective.
What is an offer option? Explain how it works?
A contract to keep an offer open for a specified period of time in return for a sum of money.
How does a counter offer amount to rejection of the original offer?
When an offeree receives an offer and, though interested, chooses to change some of the terms, he has not accepted; rather he has made a counter offer of his own, amounting to rejection of the offer.
How must an offer of revocation be communicated?
Revocation must reach the offeree.
Revocation by post is only effective when notice is actually received by the offeree, not when the sender drops it in the mailbox.
unless the offeror knows or ought to have known that the revocation will not reach the offeree at her usual address, delivery at that address establishes the fact and time of revocation; the offeree is deemed to have notice from that time.
What are onerous terms?
> tickets can have onerous terms that are not read. people do not read these terms.
if the offeree want to make sure that the offeror accepts they must draw attention to the terms in some manner. example: signs pointing out onerous terms in a visible location
Distinguish between offers and invitation to treat
invitation to treat - offer to the public to begin bargaining process
Factors to consider
> language used > words appropriate to promise?
> addressed to particular person or group?
> definiteness of proposal?
example: ads usually not an offer > display of goods is an invitation to pay price
