Chapter 7 Flashcards
Contract definition
Legally enforcible agreement through a meeting of minds resulting in an exchange of value
Everyone has to be on the same page
Can be written or oral aim to protect, reasonable exchanges
Elements of a contract
Intend to create legal relations
Offer and acceptance
Exchange of consideration
Intent to create legal relations (test and social versus commercial)
Objective test: what a reasonable person believes the parties intended their promises to be enforced
Social/family context: Do not intend legal relations
Commercial context: intend legal relations
What is a comfort letter?
A letter that can provide informal assurance, but is not a contract.
Moral not legal obligation. (not enforceable, but can impact business reputation.)
What is an offer?
Indication of willingness to enter contract on certain terms
An offer means the expected next communication would be acceptance and formation
Invitation to treat
An indication of a willingness to receive an offer/ invitation for others to make offer
Judged by reasonable person test
Revoking an offer
As long as it is not been accepted, it can be revoked
Must be reasonably communicated to the offeree
Life of an offer: doesn’t remain open forever
Rejection: offeree refuses to offer
Counter offer: response to offer with different terms (rejects, and creates new offer)
Lapse: when deadline passes or a “reasonable” length of time passes
Death or insanity
The offer is typically considered revoked if the offeror or offeree dies or goes insane
Unless the contract is not directly involved, the dead or insane person (if a painter dies the company still has to finish the job)
Acceptance
I contract comes into existence as soon as an offer is accepted
Elements of acceptance
Acceptance must be:
Response to an offer
Communicated to offeror
Unequivocal (no conditions)
Correspond to exactly the terms offered (any alterations as a counter offer)
Acceptance by conduct
Your actions infer you accept the offer
Postal rule
When acceptance is communicated in a non-instantaneous way it is effective when and where it is sent (when it’s put in the mail)
Only applies to acceptance
If the mail is lost It is still demed accepted as soon as it is sent.
Postal rule for offer
Offer is valid when recipient receives it
Postal rule for acceptance: when is it accepted?
When acceptance puts it in the mail
Silence
Silence alone cannot be acceptance
Silence plus previous conduct/agreement, however, can amount to acceptance (continuing subscriptions)
Tenders (contract a and contract b)
Contract A: govern the parties rights, and obligations during the selection process
Contract B: actual contract to perform the construction for an agreed price
Only one contract B
Bilateral contract
Promise exchanged for another promise
Bound as soon as promises are agreed to
Unilateral contract
I promise exchange for an act
Not bound unless offeree fully performs the act
Must perform the act with the offer in mind (lost dog example)
