Topic 7 - Contract Law

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 have to be a written document?

Answer 2

No, a contract does not have to be a written document (there are some exceptions), although a written document may be evidence that a contract exists

Question 3

Can the Court re-write a contract/agreement so that it is fair?

Answer 3

No, the courts must enforce the agreement as it stands

Question 4

What are the 5 elements of a contract? (CCCLI)

Answer 4

1. CONSENSUS: A meeting of the minds, identified by an offer and an acceptance.
2. CONSIDERATION: The price that each party is willing to pay for a promise of the other party (does not have to be $).
3. CAPACITY: The parties must be legally competent.
4. LEGALITY: The purpose of the contract and consideration must be legal and not against public policy.
5. INTENT: The parties must have an intention to be legally bound.

Question 5

To reach consensus what 2 things must be fulfilled?

Answer 5

1. there must be an offer
2. an unconditional acceptance

Question 6

if there is no __________ there is no contract

Answer 6

consensus

Question 7

What is an offer?

Answer 7

An offer is a tentative promise, subject to a condition or containing a request, made by the offeror to the offeree. (ie. The offeror promises to do something or give something to the offeree IF……… the offeree does something or gives something in return).

Question 8

Is an invitation to do business an offer?

Answer 8

No

Question 9

What are the 3 essential things of an offer (3 C’s)

Answer 9

1. Certain: terms of the contract must be clear otherwise contract is VOID
2. Complete: all significant terms must be covered (at least 3 P’s: parties, property and price)
3. Communicated: orally, in writing or by conduct (offeree cannot accept an offer made to someone else)

Question 10

When can an offer be terminated?

Answer 10

An offer can be terminated any time prior to being accepted

Question 11

What are the 4 main ways an offer can be terminated?

Answer 11

1. Lapse: specified time expires, reasonable time expires or the offeror dies or loses mental capacity
2. Revocation: withdrawal (must be communicated to the offeree)
3. Rejection: terminates the offer
4. Counter-offer: implies a rejection (an inquiry to whether the terms are the best possible is not a counter-offer)

Question 12

The contract is formed when…

Answer 12

the offer is accepted (when received by the offeror)

Question 13

Where is the contract formed?

Answer 13

General rule is that a contract is formed at the place where the acceptance is received by the offeror

Question 14

What are the 3 essential requirements for acceptance? (PUC)

Answer 14

1. Positive Form
2. Unconditional & unequivocal
3. Communicated to the offeror, unless conduct signifies acceptance

Question 15

The General Rule:

Contract is formed when and where the acceptance is __________

Answer 15

Received

Question 16

What is an exception to the General Rule?

Answer 16

the Post Box rule

Question 17

What is the Post Box rule?

Answer 17

If Post Box rule applies, the contract is formed when and where acceptance is mailed

If offer is mailed, acceptance by mail is suggested. (Courts have extended the post box rule to include acceptance sent by courier.)

**The post box rule has not been extended to acceptances made using instantaneous forms of communication, such as fax, email, and text

Question 18

The post box rule does not apply to what?

Answer 18

Revocations