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LS101 Lecture Notes - Radical Change, Fine Print, Condition Precedent

Legal Studies
Course Code
Frances Chapman

of 6
Introduction to Contract Law
Choice if you want to enter into contract with obligations
Important function to govern commerce
Governs voluntarily relationship
Protect property, prevent fraud, and ensure people live up to deals that they make
2 ideals:
1. Individuals should be given the freedom of choice
2. Law acts to restrain our conduct to protect society
Power differential: help those with less power
Contracts can be oral and accepted as informal as a handshake
Basic Principles of Contract Law
Largely common law study
Sale of Goods Act: legislation that regulates how we contract with other
Law of contracts is universal
Contracts concerned with the exchange of goods and services
People voluntarily enter into contracts, not forced
Almost anyone can enter contracts
Court looks at actions of the parties
o An offer by one party that was definitely accepted by the other
o Not concerned about fairness of contract
o Not the courts role to determine fairness of bargains struck
o Enforce clear intention of the parties
o Courts only step in if one party is disabled to make reasonable decisions
o Courts will not undo a contract if done, but it not done yet they will not help to enforce
Definition of a Contract: an agreement between two or more parties that is binding in law which gives
rights and/or obligations which the courts may enforce
o Starts with a promise
o If something goes wrong, courts decide whether to infer
o Freedom to contract
Fundamental principle of law
o Fundamentally wrong
Unfair dealings
Vulnerable populations
o Terms of the contract
Expressed (stated) or Implied (unstated)
Language must be specific and certain
o Looks at damages
Bilateral Contract
Traditional contract
Contract where the offeror and offerer trade promises and bond to perform
2 specific people each promises to do something
Unilateral Contract
One party promises to do something in exchange for an act of the other party
Ex. Reward for lost dog
Offered to world at large
Can be accepted by more than one person
Subsidiary promise: implied promise that offeror cannot revoke offer once offerer starts
preforming contract
Written Contracts
Contracts do not need to be in writing but writing makes evidence of agreement
Statute of Frauds 1677- some contracts must be in writing
Several categories must be in writing:
o Guarantees and indemnities
o Not performed in 1 year
long term contract
people forget
o Contracts for property
o Promises in consideration of marriage
o Executor to a will
o Misc. other statutes
o Sales of Goods Act: goods over certain $ must be evidenced in writing
o Electronic documents
Clicking “I Agree
Written documents are taken seriously
Cannot change terms of agreement
No opportunity to negotiate
Even if a contract is in writing, there can still be disputes that the contract is not complete
Ingredients to a Contract
1. Consensus
o Both parties agree to terms of contract and are fully aware
o Consensus ad idem “meeting of the minds”
o Reasonable person test: what would person thought towards contract?
o Courts won’t allow a person to escape from a contract by claiming not read/understood
o Protect reasonable expectation of the parties
o 3 elements: offer, acceptance
OFFER: promises of willingness by one party to enter into a contract with
another party on certain terms and conditions, offeror makes the offer, offeree
accepts contract. May be expressed or implied. May be to one person, or group.
Termination of offer, 6 ways :
1. Refusal by saying no
2. Lapse of time: when offeror says offer will only be available for
certain time
3. Lapse of reasonable time, no specific time, look at subject
matter, mode of communication
4. Failure of a condition, death of offeror
5. Revocation, offeror can revoke offer until accepted but must be
communicated by offeror to offeree, use instantaneous method
of communication. If offeror revokes offer, offeree cannot
accept because there’s no longer an offer
6. Counter offer new terms. Original offer has been void.
ACCEPTANCE: expressed terms/conditions are acceptable and the individual is
willing to be bound by them. Acceptance indicates willingness to be bound.
Must be communicated by written/verbal. Offer may be accepted at time until
revoked, but offer can be revoked any time before accepted.
Reasonable person test
Place: communication is completed where it is received by the offeror.
To be valid offer must be communicated by other party
Only group/person whom offer is made to may accept
Cannot accept terms of contract by silence, but be by words or
“Post Box Rule”: exception to communication principle,
acceptance is deemed to be effective at the time and place it is
2. Consideration
o Tool that courts use to see if they should enforce a promise
o Requirement that both parties agree to agreement, pay a price, and both parties receive
a benefit
o Price is not only money, but anything of value being exchanged for the promise of the
other party
o Parties must show there was detriment/benefit to one party
o Whether consideration has been exchange is fundamental issue in contract
o Don’t need consideration when contract is under “seal”
Historic way to create an enforceable promise
Sign of legitimacy
o Consideration must be sufficient, not necessarily adequate, must be specific
Have some value, but not necessarily adequate so it doesn’t have to be equal in
o Gratuitous promise is not consideration
A gratuitous promise is a one-sided promise
It’s unenforceable
o Consideration is distinct from motive
Cannot be illegal
Cannot be agreement to do illegal act
Certain things are against public policy, although not illegal
Where both parties are equally in the wrong, position of defendant is stronger
Forget plaintiff’s action because they are wrong itself
Illegal and public policy contracts fall into categories like:
Contracts to commit crime
Contracts to obstruct justice/avoid jurisdiction
Aiding the enemy
Contracts must be possible/realistic
o Consideration may be present/future but not past
Both parties must be required to do something by agreement
Future: I will pay you $50 when you’re done
Present: I will pay for $50 now
Past: You painted the house and now I’ll give you $50
Past consideration is no consideration