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Contract Handout #1(Offer and Acceptance).pdf

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University of Toronto Mississauga
Manfred Schneider

MGT 393 - BUSINESS LAW Contract Law – Handout #1 ROLE OF CONTRACT /INTRO CONCEPTS ▯ facilitates bargaining process ▯ typically attempts - "level playing field" nature of a contract ▯ contract is an agreement enforced by law ▯ elements of contract – intention, offer, acceptance and consideration ▯ begins with a promise that the law will enforce consensus ad idem (“a meeting of the minds”) ▯ dependent upon the existence of subjective assent to all terms of a proposed contract by both parties; ▯ court will look at the actions of the parties; SPECIFICS INTENTION ▯ contract requires intention to create legal relations ▯ objective test based on the “reasonable person” ▯ did the parties intend to be legally bound? ▯ presumption of intention in commercial matters ▯ presumption of no intention in social matters OFFER ▯ offer -- triggering device ▯ constitutes a tentative promise made by one part y (offeror), perhaps subject to some condition; ▯ when offeree accepts - you have a contract; ▯ mere request to know whether stated terms would be acceptable; statement of terms; price quotations; solicitations of offers [ invitations to treat] - do not have the force of a contractual offer capable of acceptance and contract ; ▯ distinguishing offers and invitations to treat – objective test “what wou ld a reasonable person think” example - send to you an unsigned contract; example2 - go shopping; example 3 - Carbolic Smoke Ball (a classic case) ▯ offer must be communciated (and communicated as an offer); ▯ communication can be written, oral – perhaps even conduct life of an offer: revocation of offer ▯ revocation – withdraw of offer by offeror ▯ an offer not under seal can be revoked before acceptance ▯ no longer open to acceptance when revoked ▯ once offeree knows that offeror has revoked (e.g. must be communicated) or done some act inconsistent with its continuance, the offeree's power of acceptance lapses; ▯ revocation not effective until known by offeree ▯ keep offer open: 1. option; 2. seal 1 of 3 time within which offer may be accepted - "lapse" ▯ offeror may set a time for acceptance ▯ absence of express time - "reasonable" time ▯ consider circumstances and nature of item; ▯ cannot unilaterally extend time ▯ offer generally lapses if death or insanity ( no meeting of minds with dead or insane person) CONDITIONS AND COUNT ER-OFFERS ▯ an offer is terminted by rejection; offeree cannot revive ▯ an attempt to qualify or condition an acceptance is a counter -offer ▯ a counter offer – is rejection of old offer and creation of new offer ACCEPTANCE ▯ general – acceptance is an agreement to the offeror’s terms ▯ must communicate acceptance; ▯ must be positive ▯ except in case of an offer contemplating acceptance by conduct - must communicate to offeror e.g. delivery; use of equipment work done in anticipation of acceptance will not be co nstrued as acceptance ▯ silence - special case (generally silence plus prior agreement) ▯ cannot accept after revocation or rejection ▯ recipient of unrequested goods or services who fails to object to receipt is not bound to pay unless it objectively appears fr om facts that recipient consented to supply ▯ [ASIDE → instantaneous communication → acceptance by the offeree is effective when and where received by the offeror (note – rule here initially developed when people dealt face to face → but today, many forms of communication are instantaneous [fax, telephone]
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