Chapter 7: Nature And Creation Of Contracts Flashcards
Contract
Parties enter into an agreement that contains legally enforceable rights and obligations
Meeting of the minds
A shared decision to enter into legal transaction on a particular basis
Exchange of value
Both parties have given up something as part of the deal
Requirements for every contract
- Parties must have intention to create legal relations
- They must reach a mutual agreement through the process of offer and acceptance
- The must enter into the bargain by each giving consideration
Intention to create legal relations
Reasonable person test:
Would a reasonable person think the parties intended to create legal relations?
Rebuttable
Presumptions negated by facts
Comfort letter
Document that provides assurance that a debtor will pay their debts
Moral obligation
Offer
An indication of a willingness to enter into a contract on certain terms
Offeror
Person who offers to enter into a contract
Offeree
Person who accepts offer
Invitation to treat
Indication of a willingness to accept an offer
In this case:
Offeror responds to invitation
Offeree presents the invitation
Revocation
Party who made offer withdraws it
Firm offers
Offer that the offeror has promised to hold open for a limited time
Under seal
An offer that has a stamp or “seal” that says offer cannot be revoked
Option/ optional contract
A contract in which offeree provides something of value in exchange for offeror’s promise to hold an offer open for a certain period of time
Tender
An offer to take a project on certain terms
Contract A
Process contracts
Govern parties rights and obligations during the selection process
- offeree has separate contract A with each offeror that submits tender
- prohibits offeree acting unfairly and offeror from revoking tender
Contract B
Only with offeree chosen
Requires fulfillment of tender and terms
Lapse
When either the deadline or a reasonable length of time has passed
Counter offer
Offeree responds by willingness to enter a contract on different terms
-this rejects existing offer and causes parties parties to switch roles
Harmless inquiry
Depends on context but means original offer still open
Battle of the forms
Each party claims to have entered contract on the basis in its own standard form document
Standard form document
A company uses for each transaction, preprepared and non-negotiable
Bilateral contract
Most contracts, promise exchange promise
Acceptance
Offeree agrees to enter into contract
Unilateral contract
Act exchanged for a promise
No contract until act is performed
Offeree must perform act with the offer in mind
Posts rules
- Acceptance is effective where and when it’s sent
- Lost letters: rule 1 is still true
- Offerors liable for failing to perform tasks they don’t know about
- acceptance letter only effective when/if it’s received - Cannot revoke offer that’s still in system
Exceptions to postal rule
Counter offers, revocations, and rejections
These actions are only effective when received
Acceptance by performance
Perform stipulated act=accepting an offer
