CHAPTER 7 NATURE AND CREATION OF CONTRACTS
Contract can be -> verbal or written long or short, simple or complex, standard or negotiated, one sided
or balanced, fair or unfair, immediate or long term.
ELEMENTS -> mutual intention to create a contract, meeting of the minds as to the terms of the contract
through offer and acceptance, exchange of values from each party to others
TORT V CONTRACT -> tort is a private duty imposed by the common law, contract is an express duty
voluntarily entered into by 2+ parties.
Tortious duties apply generall and do not require a special or obvious relationship between parties
whereas contractual duties arise only from a special relationship bw the parties to a contract aka privity
Damages awarded in tort are meant to put party in pposition before tort was committed
Damages for a breach of contract are intended to place the breached parties in the position they would
have occupied if contract had been fulfilled
Mutual intention arises if a reasonable person would believe that the parties intended to
create a legally enforceable agreement – objective, parties ireal intentions irrelevant
OFFER -offfer and acceptance
Not an invitation to treat which is invitation to make an offer
Cirticial q: from the perspective of an objective, of r.p was the statement an offer or was it an invitation
for others to make an offer
rebuttable Presumptions:
Items in a store with a price are characterized as invitations to treat;
Advertisements in the media are characterized as invitations to treat
Offer not revocable if it included a promise to remain open for a prescribed period of time and either –
placed under seal – deemed consideration or the offerees paid for a commitment that it would remain
open
The City of Darlington, which wants to build a new
recreational centre, places an advertisement in a
local newspaper requesting that contractors submit
tenders. The newspaper advertisement states
that tenders must be received by 4:00 pm on June
1 5 and that tenders are irrevocable after they have
been received by the city. Ronalda is amongst the
contractors who submit tenders. At 4: 15 on June 1 5,
however, he realizes that he had miscalculated the
expenses that would be involved in the project and
that his bid consequently is grossly understated. He
telephones the city and asks it to remove his tender
from consideration. Even though the city has yet
to select the winning tender, it rejects Ronalda's
request and informs him that it will select his bid if
that bid offers to build the recreation centre for the
lowest price. Explain whether Ronaldo will be able
to revoke his bid.
Acceptance by promise – bilateral contract: promise exchanged for promise, silence cannot constitute acceptance
he defendant wrote to the plaintiff offering to sell him property for
$1,800. The plaintiff responded by wire as follows: “Send lowest cash
price. Will give $1,600 cash.” The defendant replied as follows:
“Cannot reduce price.” Immediately after receipt of this telegram, the
plaintiff wrote accepting the original offer. The general legal principle is
that when an offer has been rejected it cannot be later accepted
without the consent of the party who made the offer.
1.Is the defendant legally bound by the plaintiff’s ultimate acceptance
of his offer – yes bc he offered 1800 and plaintiff wrote aceptign it
ACCEPTANCE
“
So if A allows B to work for
him under such
circumstances that no
reasonable man would
suppose that B meant to do
the work for
nothing, A will be liable to
pay for it. The
doing of the work is the
offer; the permission
to do it, or the acquiescence
in its being done,
constitutes the acceptance.
Acceptanace by performance
Unilateral contract: act exchanged for a promise
Act must be in response to the offer
CHAPTER 8 CONSIDERATION AND PRIVITY OF CONTRACT
Requirement for consideration is the distinguishing feature of the common law
Consideration = the exchange of value by the parties to a contract – anecessary ingredient for contract
formation, consideration must be provided by all parties to the contract
Arises when a party gives or promises to give a benefirst to other party
Include incurring a loss or detriment or promising the other partys to incur a loss or detriment
Must be suffiecient any thing of value
Doesn’t have to be adequate
Past consideration not consideration
Pre existing public duty: the fulfilment of a public duty cannot be consideration for a new contract
ENFORCEABLE PRMISES WITHOUT CONSIDERATION – morally but some are legally enforescable
-promise by way of contract, seal, and estoppel
Seal = mark on a contract confirming the partys intention to be bound, notwithstanding that the other
aprty may not have provided consideration, seal must be applied at time the party signs doc
Estoppel – refers to rule preventing a party from retaracting or disputing a statement previously made
Promissory Estooppel – This legal rule prevents a party from retracting a promise that the other party
has relied upon;
An exception to the general rule that a promise is not enforceable if there has been no exchange of
consideration
Promissory estoppel = a promise by the promisor, reliance by the promise on the promise such that it
would be unfair if it were retracted
No evidence of inequitable behavior engaged In by the promise;
An existing legal relationship bw the parties within which the promise was made
If met promisor cannot retract its promise in regard to past events
Can retract promise in regard to future events provided it wouldn’t result in an unfair hardship to the
promisee
PRIVITY OF CONTRACT
Assignment – modification or exception to the privity of contract rule; a contractual party (assignor)
assigns its rights to another party (assignee);
The assignee steps into the shoes of the assignor and can enforce all contractual right against the other
party (debtor)
CLASS 7
A pre contractual representation is a statement by one party to the other intended to induce that party
to contract -NOT PART OF CONTRACTContractual term is a provision considered part of the contract representing a legally enforceable
obligation of one party to the other – part of the contract
Misrepresentaition is a false pre-contractual statement
It is an incorrect statement of fact when made;
Legal consequence –=a tort
A contractual statement or term is a promise of future performance
A breach of a contractual term can arise only if the promise of future performance is not fulfilled
Not all incorrect statement is a misrepresentation ex – an incorrect statement of belief or opinion,
incorrect statement made without any contractual intent (sales talk)
Misrep is an incorrect statement of an existing fact, it is false when made
Precontractual statement actionable if innocent party entered part of contract due to misrep
Silence as misrep – parties are not obliged to disclose material facts during negotiations is subject to
exceptions where failure to do so constitutes misrep
Inducement – the deceived party must demonstrate that the misrep induced the contract ie the
deceived party reilied on the truthfulness of misrep in agreeing to contract
- What if the deceived party had the opp to test the accuracy of the misrep but failed to do so
EXPRESS TERMS – a statement by one of the parties that a areasonable person would believe was
intended to create an enforceable obligation – cannot be added to or modified by any oral evidence
Interpretation of express terms – words are given their plain and orfinary meaning unless the result is
absurdity;
Contra Proferentem – ambiguity or uncertainty in wording is interpreted against the deafting party
Implied term – obvious consequence of the parties agreement; or it is required for business efficacy
Implied terms by statute – various states incorporate terms into contracts ex implied warranteies ,
minimum standards of employment
Standard form agreement – mass-produced standard form contracts -> ex insurance contacts mortgages
credit agreements software licenses etc
Chapter 10 contractual defect
- Mental incapacity  voidable if party took adv of mental incapacity and it can be proven person
did not have mental capacity, but if party didn’t know its not voidable
- Intoxication ->https://i.imgur.com/Bd6eXEq.png
CHAPTERS 11 AND 12 – DISCHARGE BY PERFORMANCE, AGREEMENT, OPERATION OF LAW, NREACH OF
CONDITION OR WARRANTY
Performance – parties have completed their contractual obligation
time of performace – if time is not of essence, may perform later than stipulated but it may be liable for
costs as a consequence of later perforamce by other oparty – rznable time – rznable notice required for
timely performance, debtor obligated to tender payment when due even if not requested by creditor,
interest doesn’t accrueonce tender is made
Substantial performance – party discharged from further contractual obligations due to defective or
incomplete
AGREEMENT – either party can discharge contract, condition precedent
Accord n satisfaction – contract executed on one side, rescission may not be possible due to lack of
consideration
Release – an agreement under stal to discharge a contract
Variation – new contract with varied terms (continuation) requires new consideration
Novation – discharge of contract and replaced with another, requires consent of all parties, reqs
discharge
Waiver – party abandons thr tight to insist on a contractual performance, no consideration, written oral
or implied, courts need evidence, may retract waiver given rznable notice and not unfair
Does the failure to perform the particular contractual obligation
deprive the other party substantially of the whole benefit it
intended to obtain from the contract?
CHAPTER 12 CONTRACTUAL REMEDIES