Lecture 3 - Formation of contracts Flashcards
What is a Contract?
A voluntary exchange of promises or commitments that are enforceable in our courts
Where are contract laws mostly developed?
in the courts
What is a consensus
Process of offer and understand - where parties come to a common understanding
The person who makes the offer in a consensus is called?
Offeror
The person who accepts the offer is called?
Offeree
What is an offer
Tentative promise that contains the terms of the anticipated contract
An offer must contain what elements?
Parties - (the people involved in the contract)
Property
Price
Most advertisements, catalogues and displays can be classified as ______ not ______
A) invitational treat
b) Offer
Offers are only supposed to be in writing. T or F
False, the offer does not have to be in writing
If an exemption clause is added after the time of entering the contract or it a place where the other party cannot see it, is it still valid?
No, it is not
What are the different ways an offer can end?
end of a specific time, end of reasonable time, death or insanity of offeror, revocation (if communicated), rejection, counter-offer (rejection), option agreement (keeps offer open for a specified time)
What do standard form contracts entail?
No bargaining power,
controlled by the statute
and if the contract has any unclear terms, the judge favors the offeree because of lack of bargaining power when accepting the contract
If I accept an offer but start changing some terms a little bit, to make it more suitable for myself is it still valid?
The acceptance is not valid, instead it turns into a counter offer
An acceptance is confirmed when the offeree accepts the terms even tho the offeror is not yet aware?
False, the acceptance is only confirmed when it is communicated to the offeror, then the contract begins. if the acceptance is not communicated before the end of a specific time, the offer is invalid
What is the post box - rule
An exception of the rule that acceptance must be communicated (only applies to acceptance not offers and etc)
- when use of mail is a reasonable form of acceptance, acceptance is effective when and where posted. (reasonable form of acceptance means they ask you to respond via mail, or they send the offer through mail)
Excluding mail, what else does the post - box rule and what does not it not apply to?
It applies to telegrams and possibly couriers and not facsimile or email
Name the big parts required to fill up a contract
An offer, acceptance, consideration, capacity, legality, intention and requirement of writing
Explain the term consideration?
- an exchange of benefits is required (may be money, services, promises etc.)
- The benefit must be specific
The consideration must be possible, legal and of some value. T or F
- True
exception for services - quantum meruit - must pay a reasonable amount for services requested and received
If consideration has already been given, can it be continued in another contract?
NO, past considerations are no considerations
A gratuitous promise is not legally binding on the promisor, except in some cases. What are the cases?
- taking less in full satisfaction of debt is binding by statute
- Promissory Estoppel - (reliance on the gratuitous promise may be used as a defense only)
- with a seal, no need to establish consideration
Explain the term Void Contract
There was never a contract and both parties are free from obligations
- every consideration already exchanged goes back to the original owner
- third party does not get to keep the consideration if party A to party B is a void contract and party b to third party is valid
Explain the term voidable contract
One party has the right to escape the contract (called rescission); contract valid until this is done
- the third party gets to keep the consideration if the exchange from party a and party b was voidable and party b to third party was valid
Can being an infant turn a contract voidable?
Yes
