Chapter 7

Question 1

Explain the elements of a contract.

Answer 1

1) agreement - offer and accept
- must be a definite offer and the offer must be accepted
- acceptance must be definite and communicated
- both offer and acceptance must be seperate
- acceptance communicated is usually made in the same manner as the offer (written, oral, performance)
- change of terms (counter offer) invalidates original offer
- lack of action cannot be deemed as consent

lapse and revocation possible when:

i) offer not accepted within specified time
ii) offer not accepted after the passing of a reasonable time (if limit is not specified)
iii) offer not accepted before either party dies/ mentally incapacitated
iiii) offer may be revoked at any time before acceptance by the offeror but the revocation must be communicated before its effective

2) capacity of parties to a contract
- those lacking the ability to enter a contract include:
i) minors or infants (less than 18)
ii) diminished contractual capacity (unsound mind, intoxicated, drugs)
iii) native people living on the reserve is limited and set out in the Indian Act.
iiii) corporations - have same capacity as natural persons in their ability to contract

3) consideration
- what one party gives or promises to give in exchange for the act or promise of the other party
- evidence of genuine intention (bound by contract)
- must have some monetary value
- must be a present or future consideration otherwise it is not legally binding

4) genuine intention
- genuine intention of parties to enter into a legally binding contract
- commercial agreements are presumed that a legally binding contract has been made
- domestic agreements don’t typically entail legal binding but a court would infer the language of a contract between a husband and wife to see whether intention existed

5) legality of object
- the the object of a contact is to commit an act that violates either common law or statute law, the court will rule it void, and possibly illegal

Question 2

Define a voidable contract.

Answer 2

• can be affirmed or rejected at the option of the aggrieved party.

Question 3

Define a void contract.

Answer 3

• one that is treated as if it never exitsed.

- cannot confer rights on anyone and does not have any legal effect

Question 4

Define contract.

Answer 4

• is an agreement between legally capable parties for a consideration demonstrating intent to do something which is legal.

Question 5

What are reasons for voiding a contract?

Answer 5

1) Mistake
i) about terms of a contract
ex) typography mistake, misunderstanding of certain words
ii) in assumptions about important facts related to a contract
- fundamentally affect the nature of the contract made
ex) mistake about existence of the subject matter of insurance

2) Misrepresentation
i) innocent misrepresentation
- incorrect statement made innocently concerning a material fact which influences other party to enter into contract
ex) disclose you have 2 speeding tickets instead of 3
ii) fraudulent misrepresentation
- a false statement made deliberately or knowingly ot with reckless disregard for the truth or as an intentional half-truth
ex) not disclosing you added an addition onto your house

3) Undue influence
- occurs when one of the parties to the contract can demonstrate that the contract was signed because of the overpowering influence of another person.
- usually seen in special relationships such as husband/wife, doctor/patient, lawyer/client.
- contract is voidable at the option of the victim

4) Duress
- when a party is induced into entering a contract by the use of violence or threat of violence, injury, threat of imprisonment, crinimal prosecution or civil action
- contract is voidable at the option of the victim

Question 6

What are the different methods of discharging a contract?

Answer 6

1) performance
- completion by both parties
- parties to contract have fulfilled their obligations under the contract in accordance with its terms, the contract is performed and the obligations under it are discharged

2) agreement
- parties to contract can agree to terminate it
- promise to call off the agreement is necessary consideration for the new agreement

3) frustration
- certain circumstances may make it impossible for one party to fulfill her/her obligations under a contract
- if fault is not the cause of either party, court will likely declare the contract discharged
ex) concert cancelled

4) operation of law
- a change in law renders the contract impossible to complete
- becomes illegal for one party to complete their obligations to the contract
ex) rebuilding with a ramp, wiring code

5) breach
- occurs when one party fails to perform all or part of his/her obligations or states that he/she does not intend to carry out obligations under contract
- a partial breach of contract by one party will not allow the other party to repudiate all liability on contract if he/she has benefited from the contract
- when a contract is discharged by breach, the injured party is excused from further performance and entitled to damages for any loss suffered
- courts may force performance or set monetary value on the contract

Question 7

What are non-disclosure and concealment considered?

Answer 7

• a form of misrepresentation

- means the failure to disclose a material fact

Question 8

What is a material fact?

Answer 8

• a fact that is so basic and important to the contract that withholding this fact could alter the terms of the contract or even cause it not to be made.

Question 9

What is a gratuitous promise?

Answer 9

• when a person makes a promise to another when the element of bargain is completely absent
• does not constitute a contract and is not enforceable at law

ex) a promise to make a gift or to perform some service free of charge
- shovel neighbours snow