Chapter 6 Business & Consumer Law

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Marketing and Consumer Studies
MCS 3040
Joseph Radocchia

Chapter 6 Forming Contractual Relationships The contract An Agreement Before a contract can be in place, the parties must be in agreement as to their rights and obligations  An agreement takes the form of an offer & acceptance Offer Offer: A promise to perform specified acts on certain terms Certainty of offer  Only a complete offer can form the basis of a contract (a.k.a all essential terms have been set out)  An offer doesn’t have to meet the standard of perfect clarity in how its expressed  If the parties intended to have contract, parties will endeavor to interpret the alleged offer as in as reasonable a fashion as possible  An offer can achieve the standard of certainty even if it leaves some matters to decide in future Invitation to Treat Invitation to treat: An expression of willingness to do business  Is different from an offer in that it is of no legal relevance  To assist with clarifying if it is an offer or an invitation to treat, the common law has devised rules  Eg. Advertisements aren’t offers to do business but instead invitations to treat Standard form contract: A “take it or leave it” contract, where the customer agrees to a standard set of terms that favors the other side  E.g Rental equipment places usually have standard set of terms to be agreed to  A fundamental rule is that a contract is formed only when a complete offer is unconditionally accepted by the other side Offeror: The person who makes an offer Offeree: The person to whom an offer is made Termination of Offer  An offer can only be accepted if its “alive” – its available to be accepted  If the offer has been legally terminated, no contract can be made since the offer is now gone An offer can be terminated for a number of reasons… Revocation  The offeror can revoke his offer at any time before acceptance by notifying the offeree Option Agreement: An agreement where, in exchange for payment, an offeror is obligated to keep an offer open for specified time  Without this, offeror can revoke offer even though they have promised to leave offer open for set period of time (firm offer)  Purpose is to give offeree a guaranteed period of time within which to deliberate Revocation in the Context of a Tendering Contract  A specialized set of rules governs the tendering process  When an owner wishes to secure competitive bids to build a large project for example, it typically calls for tenders  In response, contractors (or tenderers) submit tenders that set out a price for work to be done  For this case, the supreme court of Canada devised a new legal structure for how tenders are understood  Says that call of tenders is not an invitation to treat but was an offer of a preliminary contract known as contract A  Contract A typically requires the tenderer and the owner to follow the rules governing the tender selection process including a promise by the tenderer not to revoke its tender for a specified time period  Everyone who submits a tender is accepting the offer of contract A to govern the relationships as well as offering to enter into contract B if chosen to do so  Contract B refers to the larger contract to perform the work in question  There would
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