Unit 12- Formation of contract Flashcards
How is a contract formed
A contract is formed by the meeting of an offer and an acceptance by which the parties demonstrate their will to be bound
When is a proposal an offer?
- It is intended to result in a contract
- Contains sufficient definite terms to form a contract
What is an invitation to treat?
It is less than an offer and instead is a statement indicating that you are willing to receive offers
Is the display of goods an offer?
It is treated as an offer to supply at that price until the stock of goods is exhausted
Withdrawal of the offer in civil vs common law
Civil: revocation of offers is typically banned
Common: until the other offeree has accepted the offer, it can be revoked
What is an irrevocable offer?
It cannot be canceled or withdrawn by the offering party, even if they change their mind or receive a more favorable offer from another party
Irrevocable offers in civil vs common law
Civil law: suffices that the offeror unilaterally promises to keep open the offer
Common law: a proper contract shall be concluded between the negotiation which is called an OPTION
What is an option?
An option is a preliminary contract through which one party binds themselves to their offer and the other party is given the right to close unilaterally the deal
What two types of option contracts are there?
- Call option –> right to purchase
- Put options –> right to sell
What is an acceptance of a contract
Any form of statement or conduct by the offeree is an acceptance if it indicated assent to the offer
When is contract closed in civil vs common law?
Civil: concluded when acceptance is notified to/ received by and offeror (KNOWLEDGE RULE APPROACH)
Common: concluded when acceptance is posted (POSTAL RULE APPROACH)
Why are some contracts required to be in writing?
To be concluded
To be evidenced
