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Lecture 7

Law 122 Lecture 7.docx

Law and Business
Course Code
LAW 122
Jane Monro

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LAW 122: Lecture 7
The Nature and Creation of Contracts
Agreement that contains legally enforceable rights and obligations
 What does legally enforceable mean?
oTake action (sue) the other person for breach of contract
“Meeting of the Minds”
A shared decision to enter into a legal transaction on a particular basis
Exchange of Value
Occurs when the parties each give up something
oEx: One gives money for an object
*Know Section 3, Subsection 1 & Section 5, Subsection 1 of Occupiers Liability Act
Elements of a Contract
1. Parties must have an intention to create a legal relationship
2. They must reach a mutual agreement through the process of offer and acceptance
3. They must enter into a bargain by each giving
*Not all agreements are contracts!
Intention to Create Legal Relations
Arises if a reasonable person would believe that the parties intended to create a legally
enforceable agreement
To determine intention courts look at:
oWhether the agreement was unrealistic and/or exaggerated?
oDid the parties have a commercial relationship or family/friend
In a business context, the creation of a contract can vary:
oParties could have created a contract, however, they have yet to do so
The issue of intention can be difficult when both social relations and business
relations are combined
Offer –Terms
An offer is an indication of a willingness to enter into a contract on particular terms
An offeror is a party who offers to enter into a contract
Offeree is a party who receives an offer to enter into a contract
Contract comes into existence as soon as an offer is accepted and the acceptance
is communicated to the offeror
Once a contract comes into existence both parties must fulfill their obligations and
neither party can, acting alone, alter the agreement
Performance of contract: Exchange of the what each party is giving up
Invitation to Treat
An indication of a willingness to receive an offer
It is an invitation for others to make an offer to you
 Examples of invitation to treat:
oItem offered for sale in a store with a price attached to it
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