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chapter 6

3 Pages
Winter 2014

Administration - UNBF
Course Code
Robert Derra

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Chapter 6: Forming contractual relationships
I. The contract
An agreement: takes the form of offer and acceptance
Offer: a promise to perform specified acts on certain terms
oOfferor: the person who makes an offer
oOfferee: the person to whom an offer is made
oExample: when Trackers sends out the concrete terms to Coasters,
Coasters is entitled to accept (acceptance) that offer. If so, Trackers is
obliged to follow the contract.
oCertainty: all essential terms must be set out or the contract will fail for
uncertainty. However, it does not necessarily have to meet perfection
(court will determine that)
oInvitation to treat: an expression of willingness to do business
It does not have complete content to be considered an offer (the
ITT party is assumed to be the one who is entitled to accept the
offer from the party which accepts the ITT  the ITT party has the
option of refusing doing the business  not enforceable in the court
oStandard form contract: a “take it or leave it” contract where the
customer agrees to a standard set of terms that favors the other side.
No negotiation
Helps reduce transaction costs  potentially lower price.
oWhen an offer is made, in law: when the purported offer is sufficiently
comprehensive that it can be accepted without further elaboration or
oTermination of offer
Revocation: the withdrawal of an offer
oRevocation in the context of a firm offer: the law permits
offerors to revoke their offers during the set period of time
they leave their offers open if the offerees have not
purchased or given the offerors something in return.
During this time, the offerors are able to revoke their offers
even though the offerees accept the offers.
Option agreement: an agreement where, in
exchange for payment, an offeror is obligated to
keep an offer open up for a specified time.
oRevocation in the context of a tendering contract: the
law sets out that the call of an owner to contractors is an
offer rather than an invitation to treat. This way, the
contractors who accepted are committed to a set of rules.
Only the chosen contractors can proceed further into the

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Chapter 6: Forming contractual relationships I. The contract   An agreement: takes the form of offer and acceptance  Offer: a promise to perform specified acts on certain terms o Offeror: the person who makes an offer o Offeree: the person to whom an offer is made o Example: when Trackers sends out the concrete terms to Coasters,  Coasters is entitled to accept (acceptance) that offer. If so, Trackers is  obliged to follow the contract. o Certainty: all essential terms must be set out or the contract will fail for  uncertainty. However, it does not necessarily have to meet perfection  (court will determine that) o Invitation to treat: an expression of willingness to do business  It does not have complete content to be considered an offer (the  ITT party is assumed to be the one who is entitled to accept the  offer from the party which accepts the ITT  ▯the ITT party has the  option of refusing doing the business  ▯ not enforceable in the court o Standard form contract: a “take it or leave it” contract where the  customer agrees to a standard set of terms that favors the other side.  No negotiation  Helps reduce transaction costs  ▯potentially lower price. o When an offer is made, in law: when the purported offer is sufficiently  comprehensive that it can be accepted without further elaboration or  clarification o Termination of offer  Revocation: the withdrawal of an offer o Revocation in the context of a firm offer: the law permits  offerors to revoke their offers during the set period of time  they leave their offers open if the offerees have not  purchased or given the offerors something in return.  During this time, the offerors are able to revoke their offers  even though the offerees accept the offers.  Option agreement: an agreement where, in  exchange for payment, an offeror is obligated to  keep an offer open up for a specified time. o Revocation in the context of a tendering contract: the  law sets out that the call of an owner to contractors is an  offer rather than an invitation to treat. This way, the  contractors who accepted are committed to a set of rules.  Only the chosen contractors can proceed further into the  deal. o Lapse: the expiration of an offer after a specified or  reasonable period  o Rejection: an offer is automatically terminated when it is  rejected by the offeree. It can only be effective again if the  offeror revives it and sends it to the offeree, or the offeree  takes it as his own offer to send to the offeror. o Counteroffer: the rejection of one offer and proposal of a  new one. o Death or insanity: an offer dies if the offeree or offeror  dies. In case they already have a contract regarding death  case, death will not affect the contract. Someone becomes  insane after a contract is not bound.  Acceptance: an unqualified (complete) willingness to enter into a contract on the  terms in the offer o Communication of acceptance  To make the acceptance legal, the offeree must communicate  through means such as in person, writing, telephone, email, etc. In  case there is a term that requires a specific way of communication,  the o
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