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Administrative Studies
ADMS 2610
Robert Levine

CONTRACT An agreement whereby one party agrees to do something in return for something else. FORMATION OF CONTRACTS 1. Invitation to treat 2. Offer 3. Events which bring offer to an end a. Rejection b. Counter-offer c. Revocation d. Lapse 4. Consideration 5. Acceptance In Contract, capacity is presumed. Legality is however dictated by statues and public policy. That is , in respect to war etc., public policy frown on them. Where criminal act is covered by criminal code and laws are codified. INVITATION TO TREAT Where a person wants to sell something, he would advertise , post “for sale” signs, tell people that they want to sell something, I’d like to sell something. These statements are basically an open invitation to offer something and come into an agreement with anyone. This follows with “ how much”? this is a statement of interest. So, we start off with the invitation to treat. There is a special category of Invitation to treat to goods that are on the shelve. A product with the price tag on it sitting on a shelf, is but an invitation to treat and not an offer. OFFER When a person states the price after the question “ how much”? that’s an offer . EVENTS WHICH BRING OFFER TO AN END- when an offer is brought to an end, there can never be a consideration or acceptance a. Rejection: A offers to sell his car to B for $500, If B says “no thanks” – that’s a rejection and the offer is brought to an end. b. Counter-offer: A offers to sell his car to B for $1000 . ( A is offerer, B offeree) B says “ I’ll give you $500” ( Counter offer – the initial offer ends, and the roles change, where B is the offeror, and A is the offeree) A replies “ I need atleast 850” ( implicit rejection of B’s offer, and offer comes to an end. Counter offer is shown, parties have changed again) B says “ 800 “ A says “OK” ( Acceptance- you have 3 elements, the subject matter, parties and Price all meets on a similar note) The person coming up with the offer is the offerer, whereas the other is the offerree. c. Revocation: Revoke is to “take back” If A offers B his car for $1000, and before B even accepts it or quotes a counter offer, A tells B “ Forget it” Two important points: It must be communicated by the offeror to the offeree, that he takes back the offer It must be made before acceptance. A offers B his car for $1000 and gives B until 6pm Wednesday to accept. This offer can be taken back anytime before 6pm or acceptance.Such communication must however be communicated to the offeree in the case the offer is revoked. A offers B his car for $1000 and gives B until 6pm Wednesday to accept irrevocable. Now, a new term “ irrevocable” can be included. And in such a case, the person cannot take back the offer before 6pm. A offers B his car for $1000 and gives B until 6pm Wednesday to accept. Direct communication- revocation over phone call saying “ I am revoking the offer” Indirect communication- On Wednesday afternoon , B hears from C , B’s friend that A has sold the car to D. This would be an indirect communication and thus revokes the offer. d. Lapse: Rejection is one form of Lapse The death of one of the parties before acceptance But mostly an offer lapses due to the expiry of a said period, a said date. Note that we need to consider non-perishable goods and perishable goods, where the reasonable time period for acceptance for a perishable good would be shorter than that of the non-perishable good. Now with perishable goods, marketability period could apply. CONSIDERATION An offer that does not have a price is not an offer. Note that the price does not have to be monetary but a reciprocal act. And a Common law takes the position that consideration can be minimal so long as it is a valid consideration and anything and everything is a valid consideration. Product on a shelf: A product placed on a shelf or rack with or without a price tag is an invitation to treat. The person takes it to the cashier and that’s an offer to purchase. When the cashier ask for money, then it is an acceptance. Consideration is the price stated. Eg. A says “ I think I wanna get the house painted , but I am going out of station”. B paints the house and ask for $300. There was no offer and therefore it was not a contract If A says” I think I wanna get the house painted, but I am going out of station”. B says I can paint the house. A says I’ll pay you $300 when I come back. That’s a contract A, a home-owner enters into a contract with B , a builder to build an addition to the A’s house by May 1 st th for $30000. B has not begun by April 10 . So A who is worried tells B . I’ll give you an extra $5000, if you finish on time. st The contract is to build the addition by May 1 . However the second part is not a contact because it’s only a promise where there is no fresh consideration made. Eg. An additional room painted, for a paper clip etc. ACCEPTANCE Acceptance must be in the form stated in the offer. If the offer says that the acceptance must be in the form o
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