Chapter 7: Nature And Creation Of Contracts

Question 1

Contract

Answer 1

Parties enter into an agreement that contains legally enforceable rights and obligations

Question 2

Meeting of the minds

Answer 2

A shared decision to enter into legal transaction on a particular basis

Question 3

Exchange of value

Answer 3

Both parties have given up something as part of the deal

Question 4

Requirements for every contract

Answer 4

1. Parties must have intention to create legal relations
2. They must reach a mutual agreement through the process of offer and acceptance
3. The must enter into the bargain by each giving consideration

Question 5

Intention to create legal relations

Answer 5

Reasonable person test:

Would a reasonable person think the parties intended to create legal relations?

Question 6

Rebuttable

Answer 6

Presumptions negated by facts

Question 7

Comfort letter

Answer 7

Document that provides assurance that a debtor will pay their debts

Moral obligation

Question 8

Offer

Answer 8

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

Question 9

Offeror

Answer 9

Person who offers to enter into a contract

Question 10

Offeree

Answer 10

Person who accepts offer

Question 11

Invitation to treat

Answer 11

Indication of a willingness to accept an offer

In this case:

Offeror responds to invitation

Offeree presents the invitation

Question 12

Revocation

Answer 12

Party who made offer withdraws it

Question 13

Firm offers

Answer 13

Offer that the offeror has promised to hold open for a limited time

Question 14

Under seal

Answer 14

An offer that has a stamp or “seal” that says offer cannot be revoked

Question 15

Option/ optional contract

Answer 15

A contract in which offeree provides something of value in exchange for offeror’s promise to hold an offer open for a certain period of time

Question 16

Tender

Answer 16

An offer to take a project on certain terms

Question 17

Contract A

Answer 17

Process contracts

Govern parties rights and obligations during the selection process

• offeree has separate contract A with each offeror that submits tender
• prohibits offeree acting unfairly and offeror from revoking tender

Question 18

Contract B

Answer 18

Only with offeree chosen

Requires fulfillment of tender and terms

Question 19

Lapse

Answer 19

When either the deadline or a reasonable length of time has passed

Question 20

Counter offer

Answer 20

Offeree responds by willingness to enter a contract on different terms

-this rejects existing offer and causes parties parties to switch roles

Question 21

Harmless inquiry

Answer 21

Depends on context but means original offer still open

Question 22

Battle of the forms

Answer 22

Each party claims to have entered contract on the basis in its own standard form document

Question 23

Standard form document

Answer 23

A company uses for each transaction, preprepared and non-negotiable

Question 24

Bilateral contract

Answer 24

Most contracts, promise exchange promise

Question 25

Acceptance

Answer 25

Offeree agrees to enter into contract

Question 26

Unilateral contract

Answer 26

Act exchanged for a promise No contract until act is performed Offeree must perform act with the offer in mind

Question 27

Posts rules

Answer 27

1. Acceptance is effective where and when it’s sent 2. Lost letters: rule 1 is still true 3. Offerors liable for failing to perform tasks they don’t know about - acceptance letter only effective when/if it’s received 4. Cannot revoke offer that’s still in system

Question 28

Exceptions to postal rule

Answer 28

Counter offers, revocations, and rejections These actions are only effective when received

Question 29

Acceptance by performance

Answer 29

Perform stipulated act=accepting an offer