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LAW 122 (625)
Chapter 7

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Law and Business
LAW 122
Andre Serero

November 6, 2012 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 s
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