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BU231 MIDTERM > Contracts > Flashcards

Contracts Flashcards

1
Q

Elements Necessary for the formation of a contract

A
  1. Offer
  2. Acceptance
  3. Consideration
  4. Intention to create legal relations
  5. Capacity
  6. Legality
  7. Certainy of terms
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2
Q

What is a Contract?

A
  • A promise, or a set of promises that the law will enforce
  • There must be mutual obligation – both parties must give something of value, both sides need consideration
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3
Q

Offer

A
  • Must be intended to the accepted – tell the other person for the purpose of them accepting it
  • It is a tentive promise made by one party, subject to a condition or containing a request to the other party
  • Must be definite and certain (terms must be clear)
  • Must be communicated to the intended recipient
    It is intended to be binding on both parties as soon as it is accepted
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4
Q

Offer vs. Invitation to Treat

A
  • invitation for people to create an offer
  • Ex – advertisment, garage sale (where you can bargain the prices)
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5
Q

Standard Form Contracts

A
  • Also called a “contract of adhesion” and is a take it or leave it offer
  • No room for negotiation over terms of the contract (Ex – Terms and conditions)
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6
Q

Standard Form Contracts Advantage

A

highly efficient (fast/easy)

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7
Q

Standard Form Contracts Disadvantage

A
  • inequality of bargaining power, no room for negotiation (ex - terms and conditions)
  • Therefore, Contra Proferentum – reading the contract against the contra (the person who drafted it), if it is something that a reasonable person would not expect, they have an obligation to bring it to their attention, or else the courts will not accept it
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8
Q

Counter-offer

A
  • Counter-offer is the rejection of the original offer and a new offer is formed that can be accepted or rejected by the counter-party
  • Once someone makes a counter-offer, they have rejected the original offer and not it is open to the other side to accept, reject, or make their own counter offer
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9
Q

Acceptance

A
  • Final unqualified consent to the terms of the offer
  • Must accept everything and cannot offer a counter offer
    -Must be communicated to the offeror with by word or by conduct (cannot silency accept something)
    -Unilateral contracts can only be accepted by performance (ex – reward for finding a lost pet)
  • When the offer is received it is accepted – every moment up until that the offer can be rescinded
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10
Q

Timing of Acceptance – Revoking an Offer

A
  • offerer can revoke the offer at any time prior to its acceptance
  • Expectations
    (a) Where an offeree has paid money to keep and offer open
    (b) Where the offer was made under seal
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11
Q

Postal acceptance rule

A

once the contract is dropped in the mail box it is accepted

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12
Q

Lapse

A

where the offer stipulates a time by which the offer must be accepted and that time passes, then the offer is deemed revoked

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13
Q

Communication of Acceptance

A

Offeror must receive acceptance for it to form a contract

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14
Q

Jurisdiction of Contract - General rule

A

the place where a contract is formed is determined by when it is formed, and presumably the courts of the place where it is formed have jurisdiction over disputes

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15
Q

Consideration

A
  • the value being transferred between the parties
  • The price is paid for the contract
  • Usually money but doesn’t always have to be (patent)
  • Price can be performance
  • Price can be the goods and services in trade
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16
Q

Gratuitous Promise

A
  • No consideration = no contract
  • It is not enforceable, cannot sue because there is no contract
17
Q

Past Consideration

A
  • Past consideration = no consideration
  • After the contract is formed, and they say they will add something else, you cannot sue because the contract has already been formed
18
Q

Debtor/Creditor Rule

A
  • A new contract is not formed when a debtor promises to reduce their debt
  • Mercantile Law Amendment Act
19
Q

Mercantile Law Amendment Act

A

when a creditor accepts part performance (i.e a lesser some of money) in a settlement of a debt, and the debtor actually pays the reduced amount, the entire debt is extinguished

20
Q

Consideration Alternative (Seals)

A
  • A stamp to seal the document – sealed means it has taken thought
  • A promise made under the seal of the promiser does not require consideration to make it binding
21
Q

Intention to Create Legal Relations

A

Reasonable bystander test: did the outward conduct of the parties lack serious intention to create legal obligations?

22
Q

Capacity

A
  • Need the mental capacity to enter a contract
  • Some parties lack the necessary legal capacity to enter contracts or holding diminished capacity
23
Q

Minors (<18 years old)

A
  • incapacitated to enter a contract
  • Still bound by any contract for supply of necessary/ essential goods and services – quantum meruit, only; or beneficial contracts of service (employment/apprenticeship)
  • Minor can always back out of any contract
24
Q

When they reach the age of majority - voidable

A

ex - installments (phone bill)
- must back out immediately, so every is distinguished going forward

25
Q

When they reach the age of majority - ratified

A
  • buying something where payment happened after the date of majority; the contract is ratified if paid
26
Q

Mentally Incopetent

A
  • same rule as minors
  • Ex – schizophrenic person eneter into various contracts while having a manic episode
27
Q

Void

A
  • it never existed, failed formation, no contract
  • The contract never existed from the beginning
  • Ex – an illegal contract, illegal drugs
28
Q

Void

A
  • it never existed, failed formation, no contract
  • The contract never existed from the beginning
  • Ex – an illegal contract, illegal drugs
29
Q

Voidable

A
  • existed, but can be made void at the option of one of the parties
  • The moment someone exercises their right to void, there are no more obligations going forward
  • Ex – minors
30
Q

Legaility

A

the object of the contract cannot be illegal

31
Q

When is a contract illegal

A

when it is in violation of an act
- criminal code - crime will not be enforced
- income tax act - not enforced if it avoids taxes
- Competitors act - no restraint on trade
- law society act

32
Q

Violation of Common Law of Public Policy

A
  • Indemmity for commiting torts is not allowed (insurance expected)
  • Contracts considered to be immoral, a perveison of justice, or prejudicial to the interests of the Canadian public
33
Q

Certainty of Terms - Void for uncertainty

A
  • vauge of incomplete agreements can be deemed “void” by a court, therefore no contract was ever formed
  • No contract if it was too vauge (ex - no date)
34
Q

Vauge terms

A
  • “fair value”, as opposed to explaining how $$ should be determined
  • Incomplete contracts – missing essential terms (price, what goods are to be purchased)

BU231 MIDTERM (10 decks)

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