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Law 122 - Chapter 7.docx

5 Pages

Law and Business
Course Code
LAW 122
Gil Lan

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Chapter 7 November-10-11 10:33 PM Intention to Create Legal Relation  parties must intend to create legal relations  objective test of intention  what would a reasonable person believe?  test applied at time of purported contract  commercial context: presume intent If during a business setting   social and family context: presume no intent  During a social setting Contract:  An agreement that creates rights and obligations that can be enforced in law  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  promises and contracts  simple promise is not legally enforceable  contractual promise is legally enforceable  Distinct steps to contract:  The parties must have an intention to create legal relations  They must reach a mutual agreement through the process of offer and acceptance  They must enter into a bargain by each giving considerations Meeting of the minds:  contract requires a “meeting of the minds”  parties must mutually agree to terms  one party proposes terms through an offer  other party agree to terms through an acceptance Nature of an Offer  offer = willingness to act on certain terms  offeror = party making offer  offeree = party receiving offer  offeror is the master of the offer  offeror can set (almost) any terms desired Invitation to Treat  It not an offer but an indication of a willingness to receive an offer It is an invitation for others to make offer   offers vs invitations to treat  objective reasonable person test  advertisements + catalogues: presumed to be invitations Communication of Offer  requirement of communication  offer must be communicated o eg offer contained in undelivered letter ineffective  offer must be communicated as offer o eg offer received as typing assignment ineffective  communication may take many forms  written document  oral statement  conduct The Life of an Offer  offer turned into contract by acceptance  offer may be terminated before acceptance  revocation  lapse of time  death or insanity  rejection  counter offer  Revocation  Occurs if the party who made the offer withdraws it  The offeror is the master of offer, and they can withdraw the offer anytime  BUT the revocation is not effective unless it is reasonable communicated to the offeree  Firm Offer  Occurs when the offeror promises to hole an offer open for acceptance for a certain period  A firm offer is not included in the contract and cannot enforced by law  Option  Is a contract in which the offeror is paid in exchange for a binding promise to hold an offer open for acceptance for a specific period This will allow both parties, some point in the future, to enter into a contract   AND it would create an entirely separate contract which require the offeror to wait while you decide whether to enter into the contract or not  Tender  tender process: a common business practice  eg city wants to construct new library o city needs to attract offers from builders o potential builders need to prepare offers  parties’ concerns in tendering process  potential for waste or procedural injustice o city worried about withdrawn bids o bidders worried about fair selection process  factual process  city calls for tenders (offers)  builders submit tenders  city selects winning tender  facts (usually) support two sets of contracts  Contract A: contract to select winning tender  Contract B: contract to build libr
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