Chapter Six-Contracts

Question 1

Elements of a contract

Answer 1

• offer
• acceptance
• consideration
• capacity
• legality
• intention
• and sometimes writing

Question 2

Valid contract

Answer 2

Is a legally binding contract on both parties

Question 3

Void contract

Answer 3

Is a contract missing an essential element that makes it unbinding

Question 4

Voidable contract

Answer 4

Exists and has legal effect but be if the parties had the option to end the contract.

Question 5

Unenforceable contract

Answer 5

Is usually a contract that must be in writing under the statute of frauds and doesn’t meet the requirement.

Question 6

Illegal contract

Answer 6

Is unenforceable

Question 7

What is a valid offer?

Answer 7

Contains all of the terms to be included in the contract the other party just has to consent or deny the contract

Question 8

An interim agreement

Answer 8

An agreement which parties agree to put in a more formal document later on, it is binding

Question 9

Invitation to treat

Answer 9

Is an invitation to potential offered to engage in the process of negotiation- encouragement to make an offer, not the offer itself

Question 10

What is an offer by conduct?

Answer 10

When one’s conduct displays their wanting to participate in a contract

Question 11

Communication of an offer

Answer 11

Must be communicated to you first

Question 12

Exemption clause

Answer 12

Is binding only when it has been reasonably brought go the attention of the offeree

Question 13

The ending of an offer

Answer 13

• can be accepted
• end of specific time
• expiration of reasonable time
• death or insanity of offeror
• revocation (anytime before acceptance & communicated)
• rejection and counteroffer

Question 14

Offers that cannot be revoked

Answer 14

An option agreement which has separate consideration given to the offeror in exchange for a commitment to keep the offer open

Question 15

Standard form contract

Answer 15

Is an offer which holds fixed terms that the customer is invited to accept (usually one-sided terms favouring business)

Question 16

Communication of acceptance

Answer 16

• offer can accept by conduct where specified or implied
• if the offeror tries to revoke his offer before or during the partial acceptance the courts would look for a subsidiary contract requiring that once the performance starts the offer can not be revoked
• silence is not acceptance
• contract is formed when and where offeror learns of acceptance

Question 17

Postbox rule

Answer 17

• Used in difficulties in non-instantaneous forms of communication
• Acceptance is effective when and where it is deposited in mailbox
• for a period of time when the letter of acceptance is still in the mail, the offeror is bound by contract but is unaware.

Question 18

What is consideration?

Answer 18

Defined as the price one pays for the promise of another- “what one gets out of the contract”

Question 19

What is a gratuitous promise?

Answer 19

An agreement that is one sided and is unenforceable

-includes existing duty, past consideration, creditor relief, and illegal consideration

Question 20

Quantum mercuit

Answer 20

As much as is deserved

Question 21

Promissory estoppel in consideration

Answer 21

When a person promised to do something in the further but is one sided, promise may incur exactly in anticipation of promise (can be used as defence)

Question 22

What happens to consideration in event of a seal?

Answer 22

Existence of seal eliminates need for consideration in order to be binding