LAW 122 Lecture Notes - Lecture 6: Posting Rule, Tonne, Objective Test
5 Jun 2018
School
Department
Course
Professor
Contracts
Essential Elements of a Contract
• Intention to create legal relations
• Meeting of the minds (offer and acceptance)
• Exchange of value (consideration)
• Examples of day-to-day contracts
o Buying a coffee
o Taking the ttc
o Paying for parking
Overview of Contracts
• Intention to Create Legal Relations
• Offer
• Acceptance
• Consideration
o Exchange of value
• Privity
o Who can enforce the contract
Intention to Create Legal Relations
• Rule:
o Parties must intend to create legal relations
• Objective test:
o Would a reasonable person think that the parties intended to create a
legally binding agreement
• Presumptions in Law
o Families/social: presume there is no intent
o Commercial: presume that there is intent
Meeting of the Minds
• Must be a meeting of the minds
o Shared decision to enter into a legal agreement on specific terms and
conditions
• Offeror: Person who makes the offer
• Offeree: Person who receives the offer
o Exercises the power of acceptance
• Offer = willingness to contract on stated terms
o Must be communicated
▪ Written document
▪ Oral statement
▪ Conduct
• Risk Management Issue
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o Once the offeror communicates the offer, a contract comes into
existence as soon as reasonable notification of acceptance is given to
the offeror
▪ Once the contract exists, neither party can change in
unilaterally
o Making an offer carries risk
▪ What if you change your mind, but the offeree already
accepted?
▪ What if you make the offer to more than one person and they
all accept at the same time?
• Invitation to Treat = willingness to receive offers
o Person responding to invitation makes an offer
o Person making invitation may then accept the offer
▪ Shelf displays, advertisements, catalogues
The Life of an Offer
o Offer turns into contract by acceptance
o Offer may be terminated before acceptance
o Ways to kill an offer:
▪ Lapse of time
• Offeror can set termination date
• If no date set, court will infer reasonable time
▪ Rejection
• No thanks
▪ Counter offer
• Offeree responds to an offer but modifies the terms
▪ Death or insanity
▪ Revocation
• Withdraw by offeror
• What if the offeror promised to hold the offer open?
o Outcome depends on whether the offeree received a
firm offer or purchased an option
o Firm offer = gratuitous promise to not revoke an
offer
▪ Generally unenforceable except if
• Put the promise under seal
• Options: a contract in which the
offeror receives something of value in
return for a binding promise
Acceptance
• Agreement to offeror’s terms
o Contract created immediately upon acceptance
o Acceptance must be in response to offer
• Forms of acceptance
find more resources at oneclass.com
find more resources at oneclass.com
