The Law of Contract

Question 1

Offer

Answer 1

• Promise made to another with the intention to be bound
• must be made in clear and unambiguous terms

Question 2

Invitation to treat

Answer 2

Display of goods, advertisements
- Not an offer, it is a request for an offer

Question 3

Release or expiry of offer

Answer 3

• If time limit specified, at the end of time limit
• If not time limit, after a reasonable time
• Person who made offer revokes offer before accepting
• either party becomes insane or dies
• offer is over when counter-offer is made. If counter offer is not accepted, the first offer cannot be accepted
• offer is rejected

Question 4

Option Agreement

Answer 4

• Can keep offer open for a certain period of time.
• Separate consideration is made to keep offer
• Request for information does not terminate offer.

NOTE: Cannot be revoked

Question 5

Consideration

Answer 5

• Means exchange of something of value
• “Past consideration” not effective
• Contract can be without consideration, if made under seal.
• Seal substitutes for consideration

Question 6

Acceptance

Answer 6

• Must be positive
• Should be made in manner specified in offer
• If offer is silent. Should be accepted the same way the offer is made
• If by instantaneous means (Phone) it is not effective until receiving party hears it

Question 7

Postal Acceptance Rule

Answer 7

• Your acceptance is effective as soon as you posted it

Note: Best to avoid using post to accept offer

Question 8

Capacity

Answer 8

Incapacity can arise:
-Infancy: Contract unenforceable against infant
- Voidable by infant
EXCEPTIONS:
- Infant can affirm contract after turning 19
- Infant performs contract after turning 19
- Infant does not repudiate contract after turning 19

Question 9

Insanity and Intoxication

Answer 9

• Any person under influence is not competent to enter into contract
• person must know of insanity or intoxication

Question 10

Legal Object

Answer 10

• Object under contract should be legal object

NOTE: All illegal contracts are void

Question 11

Genuine Consent

Answer 11

• Parties have clear understanding of substance of contract
• Should be no violence or threat of violence to make contract

Question 12

3 elements to prove missrepresentation

Answer 12

1. Statement of fact is made
2. Fact is false
3. Induced one to enter into contract

NOTE: Does not have to be in writing

Question 13

3 elements to prove missrepresentation

Answer 13

1. Statement of fact is made
2. Fact is false
3. Induced one to enter into contract

NOTE: Does not have to be in writing

Question 14

Disclosure of Defects

Answer 14

Vendor required to disclose any latent defects.

Question 15

Common Mistake

Answer 15

Must occur before contract is entered into
- both parties make same mistake and contract is void

Question 16

Frustration

Answer 16

Happens after contract is entered into

Question 17

Termination of Contract

Answer 17

Performance: Ends when performance occurs
Agreement: Both parties agree to terminate contract
Non-fulfillment of a condition precedent: Condition must be satisfied before contract performed

Question 18

Latent defects

Answer 18

Unknown to purchaser and are crucial to enjoyment of property
- Cannot be discovered upon inspection of property
- Vendor and licensee liable to purchaser even after completion

Question 19

Patent defects

Answer 19

• Visible to eye
• Discoverable by reasonable inspection
• Vendor and licensee not liable
• Principle of “Caveat emptor” Applies

Question 20

Assignment

Answer 20

• Can assign benefits under contract to third party- Privity
• Only parties to contract have rights and obligations to contract