Chapter 7: The Nature and Creation of Contracts Flashcards
Contract
An agreement that contains legally enforceable rights and obligations.
Meeting of the Minds
Is s shared decision to enter into a legal transaction on a particular basis.
Exchange of Value
Occurs when the parties each give something up.
What are the three elements required for a contract?
- Intent to create legal relations.
- Offer and acceptance.
- Consideration.
Intention to Create Legal Relations
Arises if a reasonable person would believe that the parties intended to create a legally enforceable agreement.
Rebuttal of Presumption
Disproval of a presumption (such as that contracts usually occur in a commercial setting).
Comfort Letter
A business owner sends a letter to a bank promising to help out even if the company folds in order to get a loan. Creates a moral obligation, but not a legal one.
Offer
An indication of a willingness to enter into a contract on certain terms.
Offeror
A party who offers to enter into a contract.
Offeree
A party who receives an offer to enter into a contract.
Invitation to Treat
An indication of a willingness to receive an offer.
Revocation
Occurs if the offeror withdraws an offer. Has to be communicated to the offeree.
Firm Offer
Occurs when the offeror promises to hold an offer open for acceptance for a certain period.
When can a firm offer not be revoked?
When the promise was placed under seal, or if the offer paid for the right to accept within a certain period.
Option
A contract in which the offeror is paid in exchange for a binding promise to hold an offer open for acceptance for a specific period.
Tender
An offer to undertake a project on particular terms.
Why do cities use tenders instead of normal contracts?
It need assurance that the offers will remain open while it considers them.
Contract A
Offer by city to hold a fair tendering process.
Acceptance by company of offer.
Contract B
Invitation to treat issued by city.
Offer by company to build library.
Acceptance by city of offer.
How long is an offer typically open?
For a reasonable period.
An offer is automatically revoked if either the offeror or the offeree dies. True or false?
Most of the time it is true.
What is an exception to the rule that an offer is automatically revoked if either the offeror or the offeree dies.
If the contract pertains to the sale of land (as opposed to the performance of a concert).
Rejection
Occurs when the offeree refuses an offer.
Can you change your mind once you reject a contract?
No.