Contract Law

Question 1

what is a contract?

Answer 1

voluntary exchange of promises, creating obligations that, if defaulted on, can be enforced or remedied by Courts.
- does not have to be written, although written document is evidence that a contract exists.

Question 2

what two things are needed in a contract?

Answer 2

offer (tentative promise) and acceptance (promise to do the act requested by the offeror)

Question 3

what is the underlying assumption of contract?

- courts role?

Answer 3

parties are free to negotiate whatever terms they like.

• if dont want to take it, leave it
• court enforce agreement as it stands, will not re-write the agreement to be fair.

Question 4

5 elements of a contract?

Answer 4

1. consensus
2. consideration
3. capacity
4. legality
5. intent

Question 5

what is consensus in a contract?

Answer 5

meeting of minds btw offerror + acceptor

Question 6

what is consideration of contract?

Answer 6

the price each party is willing to pay for a promise of the other party.

Question 7

what is capacity of a contract?

Answer 7

parties need to be legally competent

Question 8

what is legality of a contract?

Answer 8

purpose of the contract and consideration must be legal and not against public policy

Question 9

what is intent of a contract?

Answer 9

parties must have intention to be legally bound

Question 10

what is a valid contract?

Answer 10

all 5 elements are satisfying, contract exists and parties are bound

Question 11

what does void mean?

Answer 11

no contract exists because one or more required elements are missing

Question 12

what does voidable mean?

Answer 12

there is a contract, but one party has the option of backing out of the contract.

Question 13

what does enforceable contract mean?

Answer 13

contract exists + either party can get a remedy from the courts if the other party defaults.

Question 14

what is a valid but unenforceable law?

Answer 14

a contract exists but there is no remedy available from the court.

Question 15

offeror vs offeree?

Answer 15

offeror: party making an offer
offeree: party decides whether they accept the offer

Question 16

express vs implied contract?

Answer 16

expressly communicated: oral, writing, explicit

implied: if conduct suggests you’re participating in contract, then u are.

Question 17

what needs to happen to reach consensus?

Answer 17

• must be an offer (sets out terms)
• unconditional acceptance
• agreeing to continue negotiation =/= contract.

Question 18

what is an offer?

Answer 18

tentative promise, subject to a condition or containing a request, made by offeror to the offeree

Question 19

what are NOT offers? 2 examples

Answer 19

1. invitation to do business =/= offer

2. advertisements =/= offers, are invitations.

Question 20

3 c’s needed for a valid offer?

Answer 20

1. certain (unambiguous)
2. complete (all terms are covered = parties, property, price; agreement to agree =/= contract)
3. communicated (oral, writing, conduct - offeree cannot accept an offer made to someone else)

Question 21

when can an offer be terminated?

Answer 21

1. any time prior to acceptance; termination = null offer, cannot be accepted

Question 22

4 ways in which an offer may be terminated?

Answer 22

1. lapse
2. recovation
3. rejection
4. counteroffer

Question 23

what is lapse of an offer?

Answer 23

specified, or reasonable time expires.

- offeror dies or loses mental capacity

Question 24

what is revocation of an offer?

Answer 24

• offer taken off the table; need to clearly communicate that to offeree
• communication may not have to be direct; but best if direct.

Question 25

what is rejection of an offer?

Answer 25

kills/terminates the offer | - offeror not obligated to accept the same terms they offered in the first place.

Question 26

what is a counter-offer?

Answer 26

rejection + new offer proposed. | - reverses roles, previous offeree now becomes offeror with the counter offer

Question 27

when and where is contract formed

Answer 27

contract formed WHEN offer is accepted WHERE acceptance is received.

Question 28

how to choose the jurisdiction that governs the contract?

Answer 28

if not in province, can make it part of contract to be bound by laws in X jurisdiction.

Question 29

three essential requirements for acceptance?

Answer 29

1. Positive form (not silence) 2. unconditional + unequivocal (no conditions, clear acceptance) 3. communicated to offeror, unless conduct signifies acceptance (acknowledge deal is made)

Question 30

exception to communication of acceptance?

Answer 30

post box rule: acceptance occurs when and where the acceptance is mailed from. bound to contract on that day, even if gets notice days later

Question 31

other stipulations of agreements?

Answer 31

1. offeror may request HOW the offer is to be accepted (fax, phone etc) 2. silence may count as acceptance, use reasonable person test 3. if offeree takes benefit in conduct, they have accepted the contract

Question 32

two stages in contract law

Answer 32

1. contract formation | 2. performance of the contract

Question 33

whats required to form a contract?

Answer 33

5 "ingredients" 1. consensus 2. consideration 3. capacity 4. legality 5. intention

Question 34

what may happen with the performance of the contract?

Answer 34

1. parties fulfill obligations to perform 2. failure to perform = breach 3. breach = enforce/remedy

Question 35

two forms of contracts?

Answer 35

1. bilateral (two promises, contract before performance | 2. unilateral (one promise, offer requires performance/action to satisfy acceptance)

Question 36

what are standard form agreements?

Answer 36

offeree isn't able to negotiate, take it or leave it.

Question 37

when may an offer not be binding in a standard form agreement?

Answer 37

1. offeree ignorant of terms when agreement was made | 2. offeror didn't take sufficient steps to bring them to offeree's attention.

Question 38

consideration in a contract?

Answer 38

give + get. - no contract if there's a gratuitous promise - adequacy of consideration is irrelevant

Question 39

4 elements where there's lack of consideration?

Answer 39

1. past consideration (can't pay retroactively) 2. illegal consideration 3. impossible consideration 4. gratuitous promises

Question 40

what is capacity?

Answer 40

with diminished capacity cannot make contract. - courts protect them a lil extra. - diminished capacity seeks protection. - contracts are voidable

Question 41

individual with mental impairment must show 3 things to get out of contract?

Answer 41

1. didn't understand what he was doing 2. other person knew or ought to have known of the lack of capacity 3. he took steps to back out of contract once sanity/sobriety regained

Question 42

legality of contract?

Answer 42

if violates the law or offends public policy, courts will not enforce the contract

Question 43

intention of contract?

Answer 43

- both parties must genuinely enter into the deal - need intent from both parties - if there's disagreement over intent, use reasonable person test. - if there's agreement that neither party can sue in the event of a breach, then there's no intent to form a legally enforceable bargain

Question 44

general rule of requiring writing

Answer 44

no formal requirements of having contract in writing. | - verbal agreements are binding.

Question 45

what is statute of frauds?

Answer 45

requires certain types of contracts to be in writing | - failure to comply = courts will not enforce.

Question 46

types of contracts under the statute of frauds?

Answer 46

1. contracts longer than 1 year 2. title to land 3. guarantees (assuming responsibility on the loan) 4. Marriage (prenup) 5. Promise of an executor to pay debt of deceased 6. Sale of goods where the value of goods exceeds $50 (need receipt, purchase order, invoice etc)