LAW 122 Lecture Notes - Lecture 7: Contract, Posting Rule
16 Oct 2016
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A contract is an agreement that that contains legally enforceable rights and obligations. The parties must have an intention to create legal relations: arises if a reasonable person would believe that the parties intended to create a legally enforceable agreement, ex. Meaning that the courts will likely find that the parties would have formed a contract but did not actually do so. A bank that fears a company will not be able to pay back money will ask for a guarantee which is a separate contract that allows the bank to from the director if the company is not held responsible. If the director is not willing to take responsibility he may persuade the bank to take a comfort letter which says that he will help out if necessary. A comfort letter creates moral obligation but not a legal one. Invitation to threat is an indication of a willingness to receive an offer.
