Chapter 1: Contract Formation
Simple Contracts – oral. Does not need to be written to be enforceable
Specialty Contracts – written (Guarantees, Exchange of Bills, and Transfers of Land).
VOID = not a contract
VOIDABLE = can be set aside at the choice of the injured party (misstatement, duress)
UNENFORECABLE = contract but cant be enforced – not in the correct form)
LEGISLATION INTERVENING = court intervening when one party is in a strong bargaining
position
Elements of a contract
1) OFFER:
invitations to treat, a statement saying an individual has an intention to sell, statements made
early in negotiations and vague statements are not offers
Termination of an offer:
- rejection/counter offer; note a request for more info is not a rejection.
- revocation; must be communicated (can be by a third party), can revoke anytime before
acceptance, even if they had agreed to keep the offer open. Don’t need to communicate –
unilateral, collateral contracts.
- time lapse
- failure of pre condition
2) ACCEPTANCE:
- email = unclear
- postal rule
- fax = when received
- must be communicated
3) CONSIDERATION: simple contracts must be supported by considerations
EXECUTED CONSIDERATIONS: an act in exchange for a promise
EXECUTORY CONSIDERATIONS: a promise in exchange for a promise
sufficient but not adequate
Invalid Considerations:
- past
- contractual duty (unless over and beyond)
- statutory duty (unless over and beyond)
- illegal acts
Payment of a lesser sum in satisfaction for a greater sum is not allowed apart from: bargaining
between creditors, alternative consideration and payment by third party.
4) INTENTION TO CREATE LEGAL RELATIONS
- domestic – rebuttable (not happily living together)
- commercial – rebuttable
PRIVATY OF CONTRACT – only a person who is a party to a contract has enforceable rights
under it. Exceptions:
- named or described in the contract
- agents
TERMS - written into a contract and must be enforced
REPRESENTATION – said by offeror to induce someone into a contract; if untrue – breach of
contract, unenforceable and can sue for misrepresentation
IMPLIED TERMS – due to type of contract, parliament, custom and usage, business efficacy
Simple Contracts – oral. Does not need to be written to be enforceable
Specialty Contracts – written (Guarantees, Exchange of Bills, and Transfers of Land).
VOID = not a contract
VOIDABLE = can be set aside at the choice of the injured party (misstatement, duress)
UNENFORECABLE = contract but cant be enforced – not in the correct form)
LEGISLATION INTERVENING = court intervening when one party is in a strong bargaining
position
Elements of a contract
1) OFFER:
invitations to treat, a statement saying an individual has an intention to sell, statements made
early in negotiations and vague statements are not offers
Termination of an offer:
- rejection/counter offer; note a request for more info is not a rejection.
- revocation; must be communicated (can be by a third party), can revoke anytime before
acceptance, even if they had agreed to keep the offer open. Don’t need to communicate –
unilateral, collateral contracts.
- time lapse
- failure of pre condition
2) ACCEPTANCE:
- email = unclear
- postal rule
- fax = when received
- must be communicated
3) CONSIDERATION: simple contracts must be supported by considerations
EXECUTED CONSIDERATIONS: an act in exchange for a promise
EXECUTORY CONSIDERATIONS: a promise in exchange for a promise
sufficient but not adequate
Invalid Considerations:
- past
- contractual duty (unless over and beyond)
- statutory duty (unless over and beyond)
- illegal acts
Payment of a lesser sum in satisfaction for a greater sum is not allowed apart from: bargaining
between creditors, alternative consideration and payment by third party.
4) INTENTION TO CREATE LEGAL RELATIONS
- domestic – rebuttable (not happily living together)
- commercial – rebuttable
PRIVATY OF CONTRACT – only a person who is a party to a contract has enforceable rights
under it. Exceptions:
- named or described in the contract
- agents
TERMS - written into a contract and must be enforced
REPRESENTATION – said by offeror to induce someone into a contract; if untrue – breach of
contract, unenforceable and can sue for misrepresentation
IMPLIED TERMS – due to type of contract, parliament, custom and usage, business efficacy
