LAW 122 Chapter Notes - Chapter 7: Contract
LAW – Chapter 7 – Contracts
Contract – an agreement that contains legally enforceable rights and obligations
Meeting of the minds – a shared decision to enter into a legal transaction on a particular basis
Exchange of value – when each of the parties give up something
1. The parties must have an intention to create legal relations
2. They must reach a mutual agreement through the process of offer and acceptance
3. They must enter into a bargain by each giving consideration (exchange of value)
Most contracts don't have to be written to be enforceable
A contract will not arise without an intention to create legal relations – arises if a reasonable
person would believe that the parties intended to create a legally enforceable agreement
A comfort letter creates a moral obligation but not a legal one
Offer – an indication of a willingness to enter into a contract on certain terms
Offeror – a party who offers to enter into a contract
Offeree – a party who receives an offer to enter into a contract
Some courts classify statements not as offers but as invitations to treat – an indication of a
willingness to receive an offer
Once the contract exists, neither party can change it unilaterally
The life of an offer:
Revocation – occurs if the offeror withdraws an offer
Firm offer – occurs when the offeror promises to hold an offer open for acceptance for
a certain period of time
oA firm offer cannot be revoked if the offeror’s promise was placed under seal or
if the offeree paid for the right to accept within a certain period
oOption – a contract in which the offeror is paid in exchange for a binding
promise to hold an offer open for acceptance for a specific period
oTender – an offer to undertake a project on particular terms
Constitutes an offer to enter into a special contract, called “contract A” to
hold a fair tendering process in exchange for the submission of an
irrevocable bid
Constitutes an invitation to treat to receive offers to enter into a
contract. Called “contract B” for the construction of the library
Lapse of Time – offer is entitled to limit of the lifespan of an offer ( acceptance must
occur by certain date) or open for reasonable period if no specific date
Death or insanity – automatically revoked if either the offeror or the offeree dies
Rejection – when the offeree refuses an offer
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Document Summary
Contract an agreement that contains legally enforceable rights and obligations. Meeting of the minds a shared decision to enter into a legal transaction on a particular basis. Most contracts don"t have to be written to be enforceable. A contract will not arise without an intention to create legal relations arises if a reasonable person would believe that the parties intended to create a legally enforceable agreement. A comfort letter creates a moral obligation but not a legal one. Offer an indication of a willingness to enter into a contract on certain terms. Offeror a party who offers to enter into a contract. Offeree a party who receives an offer to enter into a contract. Some courts classify statements not as offers but as invitations to treat an indication of a willingness to receive an offer. Once the contract exists, neither party can change it unilaterally. Revocation occurs if the offeror withdraws an offer.
