Contracts Flashcards
What is a contract?
A voluntary exchange of promises, creating obligations that, if defaulted on, can be enforced or remedied by the courts.
Does a contract need to be a written document?
No, although a written doc may be good evidence that a contract exists.
What is the freedom of contract principle?
Parties are free to negotiate whatever terms they like.
What is the court’s function in contract law?
To enforce the agreement as it stands, not re-write the agreement so that it is fair.
What are the 5 elements of a contract?
- Consensus
- Consideration
- Capacity
- Legality
- Intent
What does voidable mean as opposed to void?
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.
Why would a contract be valid yet unenforceable?
A contract exists but there is no remedy available from the courts, because of no evidence, for example.
What is consensus?
A meeting of the minds, identified by an offer and an unconditional acceptance.
What is the definition of an offer?
A tentative promise, subject to a condition or containing a request made by the offeror to the offeree.
What is the difference between and invitation to treat and an offer?
An invitation to treat is more of a “come see what we have”, no tentative promise is made. Advertisements are examples of this.
What are the three essentials of an offer?
- Certain (unambiguous)
- Complete (parties, property, price)
- Communicated
What are the 4 main ways in which an offer may be terminated?
- Lapse/time-expiry
- Revocation/withdrawal
- Rejection
- Counter-offer (implies rejection)
When is a contract formed?
The INSTANT the offer is accepted.
Where is a contract formed, generally?
At the place where the acceptance is received.
What are the three essential requirements for acceptance?
- Positive form (not silence), positive showing of acceptance
- Unconditional & unequivocal (clear)
- Communicated to the offeror, unless conduct signifies acceptance
What is an exception to the general rule of where a contract is formed? Explain this rule and its limitations.
The Post box rule. The contract is formed WHEN and WHERE the acceptance is mailed. Only old-fashioned mail, no text or email.
What are the two stages in contract law?
- Contract formation, made after CCCLI applies
2. Performance of the contract
What are the two forms of contract? Explain the two of them. Which is more common?
- Unilateral: One promise, offer requires acceptance to take the form of performing the condition contained in the offer.
- Bilateral: Two promises, offer requires acceptance to take the form of a promise.
Bilateral is more common.
What is a standard form agreement? Give an example.
A “take it or leave it” type of bilateral contract. Airline tickets, insurance policies, parking tickets.
How will the courts interpret the terms of a standard form agreement?
In favour of purchaser.
What kind of fees do the courts NOT enforce?
Non-gratuitous (free) promises. Doesn’t necessarily have to be $.
What is consideration?
The price or payment element of a contract.
What is capacity?
The state in which a person is in when making a contract.
What are some examples of when a contract is voidable due to lack of capacity?
- Minor
- Mental disability
- Intoxicated or drugged
What should a person claiming mental impairment as a lack of capacity show?
- They didn’t know what they were doing
- The other person knew or ought to have known of the lack of capacity
- They took steps to repudiate once sanity/sobriety regained
What is an exception to a lack of capacity being an argument for a voiding of a contract?
All individuals are liable for necessities BUT only for a reasonable price.
What is legality, in terms of needing it for a contract?
If contract violates law or offends public policy, courts will NOT enforce the contract.
What is intention, in terms of needing it for a contract?
Both parties must actually intend to follow through with contract. If no stated intention, courts apply a reasonable person test.
Are verbal contracts binding?
Yes.
What are examples of some contracts that NEED to be in writing to be upheld?
- Contracts for longer than one year
- Contracts for title to land
- Guarantees
- Marriage
- Promise of an executor to pay a debt of deceased our of their own pocket
- Contracts for the sale of goods where the value of the goods exceeds $50.
