chapter 6 Flashcards
(22 cards)
Define consideration
1
Discuss the irrelevance of the adequacy of consideration
1
Consider why gratuitous promises are not consideration
1
Present some examples of valid consideration
1
Outline two exceptions to the general rule that consideration is required if a promise is to be enforceable
1
CONTRACT
A contract is a voluntary exchange of promises, creating obligations which, if defaulted on, can be enforced and remedied by the courts
Consensus
A meeting of the minds of contracting parties
Share an understanding of the bargain struck
Be willing to commit themselves to terms
Terms must be unambiguous
Failure to read a contract is no excuse
Comprised of Offer and Acceptance
Consideration
Bargaining – trading promises for promises
“In consideration for title to your widget, I will pay you a ducet”
Consideration: the price one is willing to pay for a promise
All parties must derive some benefit from the deal Need not be fair, but
Unfair consideration may indicate undue influence, insanity or fraud
More willingness to assist consumers
Consumer protection statutes
Must be material value and specific
Existing Duty - a change in the contract requires new consideration
Past consideration is no consideration
Paying less to satisfy a debt
Contracts with illegal consideration are void
Capacity
Some vulnerable people receive special protection
Ability to contract is
Limited, or
Eliminated
Infants - under age of majority
Online jurisdictional issues regarding age
Exception - necessaries
infant bound
pay fair price only
Exception - beneficial contracts of service
E.g. Contracts of apprenticeship
Adults bound Voidable by minor Ratification when reach majority Expressly Implied (by obtaining benefit) Complete
Legality
A contract performed illegally (regulatory), may be enforced by the court
Unless contrary to public policy
As opposed to a contract formed illegally
Object of agreement must be legal
Not contrary to law, E.g. drug deals
Not against public policy, E.g. Prostitution
If contract is performed illegally or against public policy, the Court may order
Contract is void and restore parties to their original positions
Severance of the illegal performance
Enforcement, if violation is procedural and not substantive
Illegal contracts involves unacceptable or immoral conduct
Court will not assist by returning parties to their original positions unless one is innocent
Examples include contracts to commit a crime, for illegal gambling, in restraint of marriage, to fix prices
Intention
Not all agreements are legal contracts
Intention to create legal relations
Protects reasonable expectations or intentions clearly stated in contract
Intention presumed in commercial relationships
No intention presumed in social or domestic relationships
Reasonable person test applied in cases of exaggerated claims
Objective test
Formal and Simple Contracts
Some forms prescribed by statute or regulation
E.g. Transfer of Land
Verbal contracts are binding
But writing or record recommended for evidence
However, the Statute of Frauds requires written evidence of contracts that are:
longer than one year
for land transactions
guarantees
promises in consideration of marriage
promises of an executor to pay a debt of deceased from the executor’s own assets
Express and Implied Contracts
1
Valid, Void, and Voidable Contracts
1
Unenforceable and Illegal Contracts
1
Bilateral and Unilateral Contracts
1
offer
Offer must contain:
All of the terms of the contract
A communication of willingness to be bound
Terms of offer must be clear
Terms can be impliedAn interim agreement may often be binding
Contains all essential terms
An offer may contain a condition or “subject to”
If not satisfied the parties are not bound to proceed with the contract
invitation to treat
Not an offer to sell
An invitation to the general public to engage in the bargaining process
Advertisements or sales promotions are not binding offers
Articles displayed for sale are not offers but merely invitations for customers to offer to pay the price of the item
acceptance
Must be unconditional
Must not specify any new terms
Court will interpret any ambiguities in the offer to give effect to the intentions of the parties
Will not overcome the defect of an incomplete or defective offer
Unilateral contract accepted by performance
Usually by communication to the offeror
Effective at time acceptance is communicated
Sometimes by conduct
If you take the benefit of the offer, you are deemed to have accepted it, by conduct.
Silence is not acceptance (unless part of on-going business relationship)
Law used to enforce the contract
The contract is formed
When; and
Where
the offeror learns of the acceptance
post box rule
When acceptance is mailed, it is effective when and where it is posted
Rule applies only when response by mail is appropriate
New methods of communication make the expansion of the post box rule unnecessary
Promissory estoppel
Can only be used as “a shield but not as a sword”
Must show reliance on a gratuitous promise and resulting damage
Sealed documents
Courts will not address the issue of consideration if contract has been executed under seal (a Deed)
