Contracts

Question 1

What is a contract?

Answer 1

A voluntary exchange of promises, creating obligations that, if defaulted on, can be enforced or remedied by the courts.

Question 2

Does a contract need to be a written document?

Answer 2

No, although a written doc may be good evidence that a contract exists.

Question 3

What is the freedom of contract principle?

Answer 3

Parties are free to negotiate whatever terms they like.

Question 4

What is the court’s function in contract law?

Answer 4

To enforce the agreement as it stands, not re-write the agreement so that it is fair.

Question 5

What are the 5 elements of a contract?

Answer 5

1. Consensus
2. Consideration
3. Capacity
4. Legality
5. Intent

Question 6

What does voidable mean as opposed to void?

Answer 6

Void - no contract exists because one or more of the required elements are missing.
Voidable - contract exists and is valid, but can be terminated by one of the parties.

Question 7

Why would a contract be valid yet unenforceable?

Answer 7

A contract exists but there is no remedy available from the courts, because of no evidence, for example.

Question 8

What is consensus?

Answer 8

A meeting of the minds, identified by an offer and an unconditional acceptance.

Question 9

What is the definition of an offer?

Answer 9

A tentative promise, subject to a condition or containing a request made by the offeror to the offeree.

Question 10

What is the difference between and invitation to treat and an offer?

Answer 10

An invitation to treat is more of a “come see what we have”, no tentative promise is made. Advertisements are examples of this.

Question 11

What are the three essentials of an offer?

Answer 11

1. Certain (unambiguous)
2. Complete (parties, property, price)
3. Communicated

Question 12

What are the 4 main ways in which an offer may be terminated?

Answer 12

1. Lapse/time-expiry
2. Revocation/withdrawal
3. Rejection
4. Counter-offer (implies rejection)

Question 13

When is a contract formed?

Answer 13

The INSTANT the offer is accepted.

Question 14

Where is a contract formed, generally?

Answer 14

At the place where the acceptance is received.

Question 15

What are the three essential requirements for acceptance?

Answer 15

1. Positive form (not silence), positive showing of acceptance
2. Unconditional & unequivocal (clear)
3. Communicated to the offeror, unless conduct signifies acceptance

Question 16

What is an exception to the general rule of where a contract is formed? Explain this rule and its limitations.

Answer 16

The Post box rule. The contract is formed WHEN and WHERE the acceptance is mailed. Only old-fashioned mail, no text or email.

Question 17

What are the two stages in contract law?

Answer 17

1. Contract formation, made after CCCLI applies

2. Performance of the contract

Question 18

What are the two forms of contract? Explain the two of them. Which is more common?

Answer 18

1. Unilateral: One promise, offer requires acceptance to take the form of performing the condition contained in the offer.
2. Bilateral: Two promises, offer requires acceptance to take the form of a promise.

Bilateral is more common.

Question 19

What is a standard form agreement? Give an example.

Answer 19

A “take it or leave it” type of bilateral contract. Airline tickets, insurance policies, parking tickets.

Question 20

How will the courts interpret the terms of a standard form agreement?

Answer 20

In favour of purchaser.

Question 21

What kind of fees do the courts NOT enforce?

Answer 21

Non-gratuitous (free) promises. Doesn’t necessarily have to be $.

Question 22

What is consideration?

Answer 22

The price or payment element of a contract.

Question 23

What is capacity?

Answer 23

The state in which a person is in when making a contract.

Question 24

What are some examples of when a contract is voidable due to lack of capacity?

Answer 24

1. Minor
2. Mental disability
3. Intoxicated or drugged

Question 25

What should a person claiming mental impairment as a lack of capacity show?

Answer 25

1. They didn’t know what they were doing
2. The other person knew or ought to have known of the lack of capacity
3. They took steps to repudiate once sanity/sobriety regained

Question 26

What is an exception to a lack of capacity being an argument for a voiding of a contract?

Answer 26

All individuals are liable for necessities BUT only for a reasonable price.

Question 27

What is legality, in terms of needing it for a contract?

Answer 27

If contract violates law or offends public policy, courts will NOT enforce the contract.

Question 28

What is intention, in terms of needing it for a contract?

Answer 28

Both parties must actually intend to follow through with contract. If no stated intention, courts apply a reasonable person test.

Question 29

Are verbal contracts binding?

Answer 29

Yes.

Question 30

What are examples of some contracts that NEED to be in writing to be upheld?

Answer 30

1. Contracts for longer than one year
2. Contracts for title to land
3. Guarantees
4. Marriage
5. Promise of an executor to pay a debt of deceased our of their own pocket
6. Contracts for the sale of goods where the value of the goods exceeds $50.