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Chapter 5

BU231 Textbook Notes Chapter 5.docx

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Wilfrid Laurier University
Shelley Mc Gill

Chapter 5 Contracts = voluntary legal relationships  not legal obligations forced upon everyone like tort or criminal liability  A set of promises that the law will enforce  Begins with a promise, but not all promises become contracts  4 basic requirements that form a legally enforceable contract: offer, acceptance, consideration, and intention Contract law = empowers parties to create legal obligations that would not otherwise exist Offer  A description of a promise one party (offeror) is willing to make, subject to the agreement of the other party (offeree)  When the offeree accepts = contract  An invitation to do business = NOT a contract o The display of a coat in a store window does not amount to an offer to sell o These are just advertising devices to start negotiations for a contract of sale  The form of an offer is not important as long as its heard and understood  An offeree cannot accept an offer until they are aware of it  Businesses that sell to the general public usually present their terms of offers in written documents handed to their customers o Ie. movie tickets, credit card agreements, online purchases  An offeree cannot change any terms of a standard form of contract  so there is no real element of bargaining  must accept the offer as is or not at all o An offer presented in a printed document or notice, the terms of which cannot be changed by the offeree, but must be accepted as is or rejected o Protection from this inequality in bargaining  If the business falls within an area regulated by a govt board, the terms of contracts are subject to board approval  Some segments of the public (ie. consumers) are offered special protection  Public receives only as much protection as the courts can find in the general law of contracts Required notice of terms  Courts presume that an unqualified acceptance of an offer is an acceptance of every term of that offer o Ie. if the offeree did not know that the offer contains a certain term, and the court finds that the steps taken to bring the term to the attention to the offeree was insufficient, then they will have a remedy  as if the term has never been on their contract  However, if they can prove that they had done what was necessary in the circumstances to bring the term to the notice of the offeree, then they are bound by the contract Unusual or unexpected terms  Unexpected terms need to be brought directly to the attention of the offeree  their decision may change  If an offeree sign a document, a stronger presumption arises that they accept all the terms it contains harder to avoid the consequences The lapse and revocation of an offer Lapse  The termination of an offer when the offeree fails to accept it within a specified or reasonable time o Also, when either of the parties dies or becomes insane prior to acceptance o An offeree can no longer accept it even if they are unaware that it has lapsed Revocation  An offeror may revoke/ withdraw an offer at any time before acceptance, even when it has promised to hold open for a specified time  Offeror must provide notice of revocation to make it effective  The court will consider the offer revoked if it would be unreasonable for the offeree to suppose that the offeror still intended to stand by its offer Options  A contract to keep an offer open for a specified time in return for a sum of money o Offeror is not allowed to make contracts with other parties that would prevent the offeror from fulfilling its offer  Another option is to have the offer specify that it is irrevocable Rejection and counter-offer by the offeree  When an offeree receives an offer and chooses to change some of its terms, the contract has not been accepted  counter-offer o Rejection of the earlier offer and it does not revive o Only if the offeror agrees to re-offer it may the offeree accept the original offer o But when they inquire whether the terms offered are the best they can expect = not a rejection  Goes back and forth unti
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