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Chapter 7

Chapter 7.docx


Department
Law and Business
Course Code
LAW 122
Professor
Andre Serero
Chapter
7

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November 6, 2012
Jessica Medina Chapter 7 The Nature and Creation of Contracts
Chapter 7 The Nature and Creation of Contracts
Introduction
Contract An agreement that creates rights and obligations that can be enforced in law.
Meeting of minds A shared decision to enter into a legal transaction on a particular basis.
Exchange of value Occurs when the parties each give up something
Every contract requires three steps:
o The parties must have an intention to create legal relations
o They must reach a mutual agreement through the process of offer and acceptance.
o They must enter into a bargain by each giving consideration.
Comparing Torts and Contracts
Concept Summary 3.2 Pg. 63
Tort is imposed by law, contract voluntarily created by the parties
Intention to Create Legal Relations
Intention to create legal relations Arises if a reasonable person would believe that the parties
intended to create a legally enforceable agreement.
Court asks whether a reasonable person would have believed that the parties intended to enter
into a contract. Test is objective
Offer
The Nature of an Offer Must enter into a mutual agreement through the process of offer and
acceptance.
o Offer An indication of a willingness to enter into a contract on certain terms
o Offeror A party who offers to enter into a contract
o Offeree Party who receives an offer to enter into a contract
Invitation to Treat An indication of a willingness to receive an offer.
Communication of an Offer Can be stated verbally or written
The Life of an Offer If an offer is not accepted it may cease to exist in a variety of ways:
o Revocation- If the offeror withdraws an offer
Firm offer Occurs when the offeror promises to hold an offer open for
acceptance for a certain period (Can be revoked)
Offers can only be firm (not revoked) if the offeror’s promise was placed under
seal or offeree paid for the right to accept.
Option A contract in which the offeror is paid in exchange for a binding promise
to hold an offer for acceptance for a specific period.
Tender An offer to undertake a project on particular terms. (pg 161-162 or
Concept summary 7.1 for details)
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