Law 122: Chapter 7 The nature and creation of contracts.docx
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Published on 27 Nov 2012
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Chapter 7: The nature and creation of contracts
Contract
-An agreement that creates rights and obligations that can be enforced in law
A meeting of the minds
-Is a shared decision to enter into a legal transaction on a particular basis
Exchange of value
-Occurs when the parties each give up something
Creation of a contract
The creation of a contract requires 3 important aspects
1. The parties must have an intention to create legal relations
2. They must reach a mutual agreement through the process of offer and acceptance
3. They must enter into a bargain by each giving consideration
1. Intention to create legal relations pg. 156
- Arises if a reasonable person would believe that the parties intended to create a legally enforceable
agreement.
This is objective because it depends on whether an outside person would find the contract was intended
to create a legally enforceable agreement and not the people who actually made it. Courts usually do
not believe this when it comes to family members although it can be rebutted.
2. They must reach a mutual agreement through the process of offer and acceptance pg. 158
Offer
-An indication of a willingness to enter into a contract on certain terms
- Creating an offer is risky because once accepted it is legally binding
Invitation to treat:
- An indication of a willingness to receive and offer.
- More explained on page. 158
Communication of an offer:
-a statement is not an offer unless it is communicated and received as an offer.