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Law and Business
LAW 122
Nick Iannazzo

CHAPTER 7 THE NATURE AND CREATION OF CONTRACTS Law 122 Contract: is an agreement that creates rigts and obligations that can be enforced in law Meeting of the Minds: is a mutual agreement to enter into a legal transaction on a particular basis Exchange of value: occurs when parties each give up something Every contract requires a number of distinct steps: 1. The parties must have the 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 COMPARING TORTS AND CONTRACTS 1. INTENTION TO CREATE LEGAL RELATIONS Intention to create legal relations: arises if a reasonable person would believe that they parties intended to create a legally enforceable agreement - test is objective rather and subjective - Two reasons for that rule 1. a test of subjective intentions would be difficult to apply because a Person could easily lie at trial 2. an important goal of the law of contracts is to protect reasonable expectations  a reasonable person simply ignores unrealistic and exaggerated proposels 3. OFFER  Parties must also enter a mutual agreement through the process of offer and acceptance  Offer: is an indication of a willingness to enter into a contract on certain terms  Offeror: party who is offerning to enter into a contract  Oferee: party who is entitled to accept or rejet an offer to enter into a contract Invitation to treat  Invitation to treat: is an indication of a willingness to receive an offer  Distinction between an offer and an invitation to treat depends on an objective test  Ex. Display of item on shop floor, or price tags are invitation to treat Communication of an Offer:  A statement is not an offer unless it is communicated and recived as on offer  Written or verbal The Life of an Offer  Offer does not last forever, it may cease to exit in a variety of ways o Revocation o Lapse of time o Death or insanity o Rejection o Counter offer Revocation  : occurs if the party who made an offer withdraws o Offerer generally entitled to revoke it at any time o Revocation is not effective unless it is reasonably communicated to the oferee  Firm offers: occurs when the oferror promises to hold an offer open for acceptance for a certain period  A firm offer is not very firm at all  The offeror can revoke it at any time  A firm offer cannot be revoked if the offeror promise was placed under seal or if the offeree paid for the right to accept within a certain period  Option: is a contract in which the offeror receives something of value in exchange for a binding promise to hold an offer open for acceptance for a specific period  Would accomplish two things o It would allow the offeror at some point in the future to create a contract for the sale of land o It would immediately create an entirely separate contract requiring the offeror to wait while you decided whether to buy the land Tenders  Tender: is an offer to under take a project on particular terms  Ex. The city wants to build a fence so it calls for tenders on whic
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