Law Notes
Chapter 1: Contract Formation
o Contracts can be written or oral. A contract which does not need to be written in order to be
enforceable is known as a simple contract. Simple contracts must be supported with
considerations.
o Certain types of contracts must be in writing in order to be valid and enforceable. These
include: bills of exchange, guarantees, regulated consumer credit agreement and transfers of
land – specialty contract.
o If a minor enters into a contract, the contract is voidable at their choice. Individuals of
unsound mind/drunk do not have the capacity to enter a contract.
o VOID: A void contract is not a contract at all.
For example, a contract that is intended to achieve an illegal purpose or goes against public
policy.
o VOIDABLE: a contract that can be set aside at the choice of the injured party.
For example, if a minor has entered the contract, an individual has entered a contract under
duress, or if one party mak es a statement which caused the other party to enter the
contract and this statement is untrue or a misrepresentation, or if they weren’t in the right
frame of mind (drunk).
o UNENFORECEABLE: This is a valid contract but if either party fails to fulfil their part, the
other party may not be able to compel them to do so.
For example: the contract is not in the correct form, or the transfer of land/property which is
not in writing.
If one party seeks an unfair advantage as a result of a stronger bargaining position of the other party,
the court or legislation may intervene. For example LEGISLATION INTERVENING to change the
terms of a contract.
Essential Elements of a Contract:
1. OFFER: a definite promise to be bound on specific terms. An offer can be made in any form
but must be communicated to the offeree. The offeree can be one person, a group of persons
or even the whole world.
What is not an offer?
An INVITATION TO TREAT is not an offer, it is an invitation to someone else to make an
offer to you; adverts, shop windows, company prospectus or tenders.
A statement made early on in negotiations is not an offer.
A statement of an intention to sell is not an offer.
Vague/uncertain statements are not offers.
Termination of an offer:
Once an offer has been terminated, it cannot be accepted. It can be terminated by: rejection,
revocation, time lapse or failure of precondition.
REJECTION: offeree turns down the original offer. Rejection can be expressed by a
COUNTER OFFER.
Note: a request for more information is NOT a rejection of the offer.
REVOCATION: this is when the offeror withdraws their offer. This can be done any time
before acceptance and can be done even if the offeror had agreed to keep the offer open.
Revocation must be communicated to the offeree – by the offeror or a third party.
Note: Postal rule does NOT apply to revocation. Revocation is not accepted until it is
received.
Two cases where revocation cannot occur:
Collateral Contract: the offeree had paid the offeror to keep the offer open. A revocation
Chapter 1: Contract Formation
o Contracts can be written or oral. A contract which does not need to be written in order to be
enforceable is known as a simple contract. Simple contracts must be supported with
considerations.
o Certain types of contracts must be in writing in order to be valid and enforceable. These
include: bills of exchange, guarantees, regulated consumer credit agreement and transfers of
land – specialty contract.
o If a minor enters into a contract, the contract is voidable at their choice. Individuals of
unsound mind/drunk do not have the capacity to enter a contract.
o VOID: A void contract is not a contract at all.
For example, a contract that is intended to achieve an illegal purpose or goes against public
policy.
o VOIDABLE: a contract that can be set aside at the choice of the injured party.
For example, if a minor has entered the contract, an individual has entered a contract under
duress, or if one party mak es a statement which caused the other party to enter the
contract and this statement is untrue or a misrepresentation, or if they weren’t in the right
frame of mind (drunk).
o UNENFORECEABLE: This is a valid contract but if either party fails to fulfil their part, the
other party may not be able to compel them to do so.
For example: the contract is not in the correct form, or the transfer of land/property which is
not in writing.
If one party seeks an unfair advantage as a result of a stronger bargaining position of the other party,
the court or legislation may intervene. For example LEGISLATION INTERVENING to change the
terms of a contract.
Essential Elements of a Contract:
1. OFFER: a definite promise to be bound on specific terms. An offer can be made in any form
but must be communicated to the offeree. The offeree can be one person, a group of persons
or even the whole world.
What is not an offer?
An INVITATION TO TREAT is not an offer, it is an invitation to someone else to make an
offer to you; adverts, shop windows, company prospectus or tenders.
A statement made early on in negotiations is not an offer.
A statement of an intention to sell is not an offer.
Vague/uncertain statements are not offers.
Termination of an offer:
Once an offer has been terminated, it cannot be accepted. It can be terminated by: rejection,
revocation, time lapse or failure of precondition.
REJECTION: offeree turns down the original offer. Rejection can be expressed by a
COUNTER OFFER.
Note: a request for more information is NOT a rejection of the offer.
REVOCATION: this is when the offeror withdraws their offer. This can be done any time
before acceptance and can be done even if the offeror had agreed to keep the offer open.
Revocation must be communicated to the offeree – by the offeror or a third party.
Note: Postal rule does NOT apply to revocation. Revocation is not accepted until it is
received.
Two cases where revocation cannot occur:
Collateral Contract: the offeree had paid the offeror to keep the offer open. A revocation
