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ADMS 2610 Chapter Summary.doc

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York University
Administrative Studies
ADMS 2610

Chapter 7 89 ContractsElements of a Valid Contract 1An intention to create legal relationship 2Offer3Acceptance 4Consideration5Capacity to contract 6Legality Intention to create legal relationship Consensus ad idemoPresumptions in contract lawStrangers intend to be bound by their promisesFamily members and close friends do not intend to be bound in contractsBoth are presumptions can be rebuttedoInvitation to do BusinessAdvertisements are not offersInvite offers that seller may accept or rejectOfferoOffer must be communicated by the offeror to the offeree before acceptance may take place oOffer is not valid until it is received by the offeree and the offeror is not bound by the offer until such time as it is accept oOnly the person to whom an offer is made may accept the offer oCannot accept an offer you do not know ofAcceptanceoThe acceptance of the offer takes place when the letter of acceptance properly addressed and he postage paid is placed in the postbox or post office oIf the acceptance lost while in the hands of the post office the contract would still be binding oThe acceptance would not be complete until the offeror was made aware of the acceptance oThe offeror should withdraw the offer before the offeree has fully performed the acceptance then no contract would exits oLapse of an Offerthe termination of an unaccepted offer by the passage of time a counteroffer or the death of a party Offer cannot be accepted later unless the original offer is revivedoRevocation of an Offerthe termination of an offer by notice communicated to the offeree before acceptance Unlike lapse it requires an act of offeror to be effective and notice of revocation is only effective when its finally received by the offeree Indirect notice of revocation possible eg rumour from third partyor a reliable source goods have been soldOffers can be revoked anytime before acceptance unless there is an option A separate promise to keep an offer open for a period of timeoUnilateral OffersAn offer made to the world at large The performance of the act is acceptance Offeror cannot revoke offer so long as offeree is in the course of performing their partConsiderationoSomething that has value in the eyes of the law and which a promisor receives in return for a promise Consideration must flow in both directionsoIf consideration is a service it must be performed with care and skill otherwise the promisor will be liable for any loss suffered due to careless performance or negligence not breach of contract but tort committed oTenders Unless provided to the contrary in the call for tenders an offer made in response to the call may be revoked at any time before acceptance oPast Consideration is no consideration at all and the promise is gratuitous oQuantum MeruitA reasonable price for the services rendered unless family or friendsas much as he has earned A quasicontractual remedy that permits a person to recover a reasonable price for services andor materials requested where no price is established when the request is made Court decides on price based on price of similar goods or services in areaQuantum meruit payments may be required where 1 There is an agreement to provide goods or services but the price is unspecified and 2 The context of the contract or the customs of a trade indicate an expectation that a market price will be paidoGratuitous Reduction of DebtOnce creditor accepts a lesser payment ie actual sum is paid cant sue for more laterCreditors agreeing to accept less than what is owed is a gratuitous promiseNew promise requires new considerationExceptions to this rule exists for business efficiencySign under sealAcceptance of something other than moneyPay before the due dateThird party makes the paymentoEstoppelA rule whereby a person may not deny the truth of a statement of fact made by him or her when another person has relied and acted upon the statement or such a gratuitous promise oGratuitous promises are generally not enforceable because they lack considerationA gratuitous promise of a large sum to a charity for a specific purpose may be enforceableA gratuitous promise made under seal is enforceableA statement on which another party relied to his or her detriment may be enforceable even without consideration The party making the statement may be estopped from denying the truth of the statement and may be bound by itoConsideration must be legal The promises cannot be illegal or a violation of public policyAsking for additional funds to complete a construction projectPromise to provide extra funds is gratuitous new promise requires new considerationoCannot violate Statutescontracts with clauses that buyer must resell at fixed or minimum price is unlawful under Competition ActCapacity to contractoInfant or Minora person who has not reached the age of majority common law less than 21 most provinces less than 18 or 19 oMinor contracts for necessariesfood clothing are enforceable against minoroMinors can repudiate other contractsothe sale of goods act in most provinces provides that a minor must pay a reasonable price for goods that are necessaries that are sold and delivered to the minoroWhere a contract is voidable it contains a potential unfairness or invalidity but it is enforceable until one party exercises an equitable right to repudiate the termsoWhere a contract is void its defects and unfairness are manifest and obvious and the contract is deemed to be unenforceable from the very beginningoIf the contract made by the minor has been fully performed executory contract for nonnecessary item then minor may be bound by agreement unless he can show that he had been taken advantage of by the merchant and can return all goods purchased Executed Contact fully executed by the minor enforceable against minor unless minor was taken advantage ofExecutory yet to be performed may not be enforceable against minoroA minor who has falsely presented himself as having attained the age of majority will not be permitted to hold the minor to the contract so the merchant may be entitled to recover the goods on the basis of the minors fraud oBankrupt Persons Until receives discharge can only enter into contracts for necessaries Contract unenforceable against bankrupt parties ie not yet discharged from bankruptcy if agreement is for nonnecessariesoRepudiationThe refusal to perform and agreement or promiseoRatificationThe adoption of a contract or act of another party who was not originally bound by the contract or actoWhen minor has entered into a contract of a continuing or permanent nature and receives benefits and incurs obligationsThe contract must be repudiated within a reasonable time after attainting the age of majority or the contract is bindingoContracts for nonnecessaries not of a continuing natureMinor must expressly ratify on attaining the age of majorityoIf a minor engaged in business continues to accept benefits under a contract after attaining age of majority will be boundLegalityoContracts must have a legal purpose ie not contrary toStatute contract to commit crime eg Criminal Code restraint of competition Competition Act party not licensed eg doctor dentist lawyer
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