MGT 3010 Chapter Notes - Chapter 6: Standard Form Contract, The Lapse, Contract
Chapter 6: Formation of a contract
CONTRACTS
Contract: A set of promises that the law will enforce
-contracts are a good example of voluntary legal relationships.
-contract laws set the rules for how ordinary promises become legally binding promises
A prospective customer, acting in response to the invitation, may make an offer and the seller
may in turn accept or refuse.
Offer: a description of a promise one party is willing to make, subject to the agreement of the
other party.
Offeror: the person making the offer
Offeree: the person to whom the offer is made
Standard form contract: an offer prepared in advance by the offeror, including terms favourable
to the offeror that cannot be changed by the offeror, but must be accepted as is or rejected in
their entirety, also known as a contract of adhesion
THE LAPSE AND REVOCATION OF AN OFFER
Lapse: the termination of an offer when the offeree fails to accept it within a specified time, or
if no time is specified, then within a reasonable time.
An offer may lapse for the following reasons
1. When the offeree fails to accept within a time specified in the offer
2. When the offeree fails to accept within a reasonable time, if the offer has not specified
any time limit.
3. When either of the parties dies or becomes insane prior to acceptance.
Option: a contract to keep an offer open for a specified time in return for a sum of money.
Exercise an option: accept the offer contained in an option
ELEMENTS OF ACCEPTANCE
We need to identify
1. Who made the offer
2. When it was communicated
3. When and by whom the offer was accepted.
Negative option billing: a practice of adding services and sending bills without request and
relyig upo the custoer to cacel if they do’t ish the serice.
Inviting tenders: seeking offers from suppliers
Standing offer: an offer that may be accepted as needed from time to time.
Ways in which an offer comes to an end
1. The offer may lapse when the offeree fails to accept within the time stated in the offer,
or if no time limit is stated within a reasonable time.
2. The offeror revokes the offer before the offeree has accepted
3. The offeree rejects the offer or makes a counter offer
4. The offeree accepts before any of the three above has occurred (in which case, the offer
ends and is replaced by a contract between the parties.
Jurisdiction: the province, state or country whose laws apply to a particular situation
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Document Summary
Contract: a set of promises that the law will enforce. Contracts are a good example of voluntary legal relationships. Contract laws set the rules for how ordinary promises become legally binding promises. A prospective customer, acting in response to the invitation, may make an offer and the seller may in turn accept or refuse. Offer: a description of a promise one party is willing to make, subject to the agreement of the other party. Offeree: the person to whom the offer is made. Lapse: the termination of an offer when the offeree fails to accept it within a specified time, or if no time is specified, then within a reasonable time. Option: a contract to keep an offer open for a specified time in return for a sum of money. Exercise an option: accept the offer contained in an option. We need to identify: who made the offer, when it was communicated, when and by whom the offer was accepted.
