Unit 4 Final Exam

Question 1

What do contracts do for us?

Answer 1

1. They allow us to plan into the future ( create certainty )
2. Provide a way to have enforceable promises ( we get what we bargain for )
3. We can save time, money and help prevent misunderstandings and harm to relationships if we take proper measures to create enforceable contracts

Question 2

What is a contract?

Answer 2

A voluntary agreement between two or more parties that can be enforced in court

Question 3

Law of contract

Answer 3

Consists mostly of common law example precedent mostly

Question 4

Challenges inherent in contract law

Answer 4

Overriding goal unequal bargaining power

should the court remake contracts where one party makes a poor bargain or the deal is unfair

Question 5

Caveat

Answer 5

Certain behavior is not permitted in contract law such as fraud, undo influence, and we protect people with reduced capacity to contract

Question 6

What is consideration and why is it important

Answer 6

Consideration is the price paid to secure the other party’s promise

The key feature that makes something a contract is that a bargain was made each party was trading something to the other called consideration

Question 7

Offer definition

Answer 7

An indication of willingness to enter into a contract on certain terms

Question 8

The elements of the contract

Answer 8

Consensus is an essential element of a contract achieved through process of offer and acceptance

Question 9

When does a legally binding contract come into legal existence?

Answer 9

Fundamental rule; a contract will come into existence when a complete offer is unconditionally accepted by the other side

Question 10

How long is an offer alive?

Answer 10

Expires on a deadline
Expires if rejected
If a counter offer is made
Death or Insanity
Lapse automatically in a reasonable period of time

Question 11

Rules for offers

Answer 11

No particular format is required
Must have all key terms or it will fail for uncertainty
Parties, subject matter, price
Must give the other party the opportunity to reject the offer

Question 12

Can you revoke your offer?

Answer 12

After acceptance, no

Before acceptance, yes, but must communicate the revocation to the other side for it to count

Question 13

Can you make an offer irrevocable?

Answer 13

Yes by
Entering into an option agreement, this is a separate contract to keep an offer open for a period of time

Having an offeror put a seal on their offer

Question 14

Rules for acceptance of an offer

Answer 14

Must be communicated to the other party to count, but see potential rule exception

Mirror rule - they acceptance must exactly match the offer or it is a counter offer

Must use the method of acceptance specified in the offer

Question 15

The postal rule

Answer 15

An exception to the rule requiring communication to the offeror

Has also been applied to courier delivery

Question 16

Rules for arms length parties

Answer 16

Presumption is that party’s intend to be legally bound

Can be rebutted but test will be what would a reasonable bystandard think

Question 17

Rule for family

Answer 17

Presumption is that parties do not intend it to be legally bound

Can be rebutted by showing the party’s meant to form a binding contract

Question 18

Jurisdiction of a contract

Answer 18

Common law rule, the jurisdiction will be determined by the place of acceptance