ch 6: contracts Flashcards
contracts
What are the fundamentals of a contractual relationship?
Contracts require consensus, consideration, capacity, legality, and intention.
What is consensus in a contract?
A “meeting of the minds” where both parties agree on the terms.
What makes an offer valid?
it must include all terms, show willingness to be bound, and have clear conditions.
How is an acceptance effective?
It must be unconditional, not introduce new terms, and be properly communicated.
What is consideration?
The value exchanged between parties in a contract.
What is a contract?
A voluntary exchange of promises creating obligations, which if defaulted on can be enforced and remidied by courts
What are the essential elements of a contract?
Consensus, consideration, capacity, legality, and intention.
Do all contracts have to be in writing?
No, most contracts can be verbal unless the law requires them in writing.
What are the different types of contracts?
Formal vs. simple contracts
Express vs. implied contracts
Valid, void, and voidable contracts
Bilateral vs. unilateral contracts
What is an invitation to treat?
It is not an offer, but an invitation to negotiate (e.g., advertisements).
How can an offer be made?
By conduct (e.g., taking goods to checkout) or direct communication.
How does an offer end?
If not accepted in time, if revoked, rejected, countered, or becomes illegal/impossible.
When is an acceptance effective?
When communicated unless the postbox rule applies (effective when mailed).
Can silence be acceptance?
Generally, no—unless in an ongoing business relationship.
What is consideration?
A promise or something of value exchanged in a contract.
Does consideration have to be fair?
No, but unfair consideration may suggest undue influence or fraud.
What is NOT valid consideration?
Existing duty, past consideration, illegal contracts, or partial debt payment.
What are exceptions to the need for consideration?
- Promissory estoppel (reliance on a promise)
- Contracts under seal (formal agreements).
Why can’t some offers be revoked?
In cases like tenders or unilateral contracts being performed.
How do new communication methods affect contract consensus?
It complicates when and where a contract is considered formed.
Case Study: A marina owner promises a boat as a gift but later demands payment for moorage. What will the judge decide?
The promise lacks consideration, but promissory estoppel may apply if the friend relied on it.
what is promissory estoppel
Promissory estoppel prevents a party from going back on a promise if the other party relied on it to their detriment.
example of promissory estoppel
A landlord promises a tenant they don’t have to pay rent for three months. The tenant relies on this. Later, the landlord demands payment. Promissory estoppel may prevent the landlord from enforcing payment.
What is a contract under seal
A contract under seal (also called a deed) is a formal contract that does not require consideration to be enforceable because it is signed and “sealed” as an official commitment.
