Contract Flashcards
What is required for a valid offer?
(1) Clear and certain
(2) Offeror shows an intention to be legally bound
What 4 things are required for valid acceptance?
(1) Acceptance must be in response to the offer
(2) Mirror image rule
(3) Follow a prescribed mode of acceptance (maybe)
(4) Acceptance must be communicated
When must an offer be accepted by? What 3 possibilities need to be considered?
Before termination i.e.
-Rejected?
-Lapsed? (Passage of time or death of party)
-Revocation? For bilateral offer, effective upon actual notice reaching offeree (no postal rule); for unilateral, prior to completion of required act, where reasonable steps to communicate have been provided, except if partly performed and willing/able to complete; can be communicated by 3rd party
When does a prescribed mode of acceptance need to be used?
Contract prescribes mode of acceptance + stipulation as to mode is clearly mandatory and excludes all other options
What happens if contract prescribes mode of acceptance + stipulation as to mode is NOT clearly mandatory and excludes all other options?
Offeree can use any mode which is no less advantageous for offeror if reason is made clear, or ‘equally expeditious’ if reason is not made clear
How must acceptance be communicated?
-Silence is insufficient
-3rd party requires offeree’s authority
-Postal rule
-Instantaneous communication
-Waived for unilateral contracts
What is the test for certainty? Is it objective or subjective?
Objective: have the parties agreed all the terms they consider to be a precondition to creating legal relations?
ITCLR: when is ITCLR presumed, when is it not, and when is presumption rebutted?
-Objective test
-Commercial agreements: to rebut, need clear wording in agreements; e.g., ‘s.t. contract’
-Social, family and other domestic agreements: consider circumstances and language
What are the 4 requirements of consideration?
- Consideration must not be in the past
- Consideration must move from the promisee
- Consideration need not be adequate
- Consideration must be sufficient
What is the exception to the general rule that consideration must not be in the past?
(1) Act done at promisor’s request
(2) Parties understood that the act was to be rewarded either by payment or conferment of some other benefit because of express/implied agreement
(3) Payment/conferment of other benefits was legally enforceable if promised in advance
What are the 5 circumstances in which the postal rule does not apply?
- Not contemplated that post would be used
- Concerns email communications
- Concerns letter revoking offer
- Acceptance is incorrectly addressed
- Disapplied by offeror
What is the general rule surrounding communication by instantaneous means? What are 2 exceptions?
General rule: acceptance takes place at moment the acceptance is received by the offeror
Exceptions: does not apply if
-Offeror’s fault for not receiving the message + offeree has reasonable belief that message was received
-Offeror did not hear properly on phone + did not tell offeree to repeat
Consideration: if there is an existing contract between the same parties, what is the general rule and what are the 2 exceptions?
-General rule: agreeing with Party A again to do that thing is not generally good consideration for a new contract
-Exception 1: fresh legal consideration e.g., exceed existing contractual obligation
-Exception 2: factual consideration
What are the 5 requirements for factual consideration?
(i) A has entered into a contract with B to do work for, or to supply g/s to, B in return for payment by B
(ii) At some stage before A has completely performed his obligations under the contract, B has reason to doubt whether A will (be able to) complete his side of the bargain
(iii) B promises A an additional payment in return for A’s promise to perform his contractual obligations on time
(iv) As a result of giving his promise, B obtains in practice a benefit, or obviates a disbenefit
(v) B’s promise is not given as a result of economic duress or fraud on the part of A
Consideration: what is the general rule regarding public duties?
Merely carrying out a public duty imposed by the law will not amount to sufficient consideration
Consideration: is an existing contract with a 3rd party good consideration? What is the risk?
Yes
Double liability: action from 2 parties if fails to meet obligation
Consideration: what is the general rule regarding part payment of a debt? What are the exceptions to this rule?
General rule: a debtor promising to pay part of their debt in return for a release from the remainder of their liability is not good consideration - debtor remains liable even where creditor has agreed to release them from liability
Exceptions:
1) New element introduced into payment
2) Payment of a lesser sum by a 3rd party: creditor cannot sue debtor for the difference
What is promissory estoppel?
Promise (to accept reduced payment) can be enforced in the absence of consideration, provided that the promisee had relied on the promise
What 4 elements are required for promissory estoppel?
(1) Acts as a shield, not a sword
(2) Clear and unequivocal promise that strict legal rights will not be fully enforced
(3) Promisee relied on the promise/ representation
(4) Inequitable to allow promisor to go back on their promise
PE: What is required to demonstrate that the promisee relied on the promise/representation? What is not required?
A change in position in reliance on the promise: some reliance + causal connection
-Part-payment of debt may be the act of reliance, as long as the promise influenced the part-payment
Detrimental reliance is not required (but a factor in favour of demonstrating that it is inequitable to allow promisor to go back on their promise)
PE: What is required for it to be inequitable to allow promisor to go back on their promise?
-Clean hands: courts consider both parties’ conduct (e.g., intimidation)
-Balancing exercise
PE: when may promisor’s right to resume their strict legal rights arise?
- Resumption of right to periodic payments once period over which PE operates ceases
- Resumption of promisor’s full legal rights after giving reasonable notice of their intention to do so (note: notice is not always necessary where it is clear when period of suspension terminates)
- (Potentially) it has become impossible for, or inequitable to require, the other party to meet the obligation
Capacity: what is the general rule regarding minors?
A person is not bound by a contract entered into <18 even if other party contracting does not know of this fact or minor has lied about their age
Capacity: when will a contract be binding on a minor?
Minor ratifies contract once 18