The document outlines the essential elements and requirements for the formation of a valid contract, including offer, acceptance, consideration, intention, capacity, legality, and writing. It discusses the nature of contracts, the process of making offers and counter-offers, and the implications of acceptance, particularly in various contexts such as internet contracts and standard form contracts. Additionally, it addresses the concepts of consideration, intent to create legal relations, and the legal consequences of agreements in commercial transactions.
The document outlines the essential elements and requirements for the formation of a valid contract, including offer, acceptance, consideration, intention, capacity, legality, and writing. It discusses the nature of contracts, the process of making offers and counter-offers, and the implications of acceptance, particularly in various contexts such as internet contracts and standard form contracts. Additionally, it addresses the concepts of consideration, intent to create legal relations, and the legal consequences of agreements in commercial transactions.
The document outlines the essential elements and requirements for the formation of a valid contract, including offer, acceptance, consideration, intention, capacity, legality, and writing. It discusses the nature of contracts, the process of making offers and counter-offers, and the implications of acceptance, particularly in various contexts such as internet contracts and standard form contracts. Additionally, it addresses the concepts of consideration, intent to create legal relations, and the legal consequences of agreements in commercial transactions.
The document outlines the essential elements and requirements for the formation of a valid contract, including offer, acceptance, consideration, intention, capacity, legality, and writing. It discusses the nature of contracts, the process of making offers and counter-offers, and the implications of acceptance, particularly in various contexts such as internet contracts and standard form contracts. Additionally, it addresses the concepts of consideration, intent to create legal relations, and the legal consequences of agreements in commercial transactions.
• The supplier shall disclose specific information about
the total price of the good or service, the terms of payment, and warranties = “terms”
• Internet consumer is offeree, and is bound by clicking “I
accept” icon on computer screen Standard Form Contracts
• “Take it or leave it” contracts
• Offeree has no bargaining power • Harsh or surprising terms must be drawn to the customer’s attention • Presumption to be bound by terms may not apply if exemption is unusual or unexpected Standard Form Contracts
• An ordinary written commercial contract between
businesses does not require notice of special terms; it is each parties’ responsibility to review the document
• Although signature is generally not required to
form contract, if offeree signs document, a strong presumption arises that signer accepts all terms in document The Termination of an Offer
An offer may end by
• Lapse • Revocation • Rejection • Counter-offer
If any of these occurs, the offer cannot be
accepted, even if the offeree is unaware of lapse The Nature of Revocation
• Offers may be revoked before acceptance
• Revocation must be communicated to the offeree and received by the offeree • An option contract may be used to prevent revocation • Option is a contract to keep an offer open for a specified time in return for a sum of money When Does an Offer Lapse?
An offer may lapse:
• At the end of the specified time period
• At the end of a reasonable time
• When either of the parties dies or becomes
insane prior to acceptance Counter Offer
• When an offeree receives an offer and, though
interested, chooses to change some of its terms, he has not accepted; rather, he has made a counter-offer of his own, amounting to rejection of the offer
• The making of a counter-offer is a rejection of the
earlier offer and brings it to an end
• Thus, an offer is no longer available for
acceptance after rejection Purcell was in failing health and advertised to sell his retail computing equipment business. Quentin was familiar with Purcell’s business operations; he sent Purcell a detailed offer to buy for $450 000, paying $75 000 as a cash down payment, with the balance payable in instalments over two years.
Purcell promptly sent an email to Quentin stating: “The price and all the other terms seem fair, except that I need substantially more cash by way of down payment—say, $125 000. Tell me how high you are willing to go.” Quentin replied by email, “There is no way I can increase the cash payment.”
Purcell replied the next day, “Okay. I’ve thought about it, and given the state of my health, I have decided to accept your offer.” By then, Quentin had heard that the business had suffered because of Purcell’s declining health, and he refused to go through with the purchase. He asserted that since Purcell had refused his offer, there was no deal. Acceptance of an Offer (1 of 2)
• Must be unconditional
• Must generally be communicated to offeror
⚬By words or actions (usually positive words or conduct) ⚬Silence is not consent without a pre-existing agreement ⚬Some offers may be accepted by offeree’s conduct if that was intended by offer and not communicated to offeror Acceptance of an Offer (2 of 2)
The Moment of Formation - Analyze business
negotiations to identify:
• who made the offer,
• when it was communicated, • when and by whom the offer was accepted, and • when acceptance was communicated A grain buyer with sent a mass text message to clients in March 2021, advertising that the company was looking to buy 86 tonnes of flax at a price of C$17 ($12.73) per bushel.
The buyer, Kent Mickleborough, spoke with farmer Chris Achter on
the phone and texted a picture of a contract to deliver the flax in November, asking the farmer to “please confirm flax contract” in the message.
Achter, who lives in the community of Swift Current, responded
with a thumbs-up emoji. But Achter did not deliver the flax in November – and by that time, prices for the crop had increased.
https://www.canlii.org/en/sk/skkb/doc/2023/2023skkb116/2023skkb116.html Transactions at a Distance (1 of 2) • The contract is made when and where the acceptance is received • If acceptance is properly made by snail mail, the contract is made when and where the acceptance was mailed(“postal rule”) • When offeror states preference for a mode speedier than mail, the acceptance is not valid when dropped in the mailbox, but only when received Transactions at a Distance (2 of 2)
• Email, social media, etc. – acceptance is not
effective until received • acceptance may be completed by digital means is deemed to be received when it is capable of being retrieved by the recipient Formation of Internet Contracts
• The supplier shall disclose specific information about
the total price of the good or service, the terms of payment, and warranties = “terms”
• Internet consumer is offeree, and is bound by clicking “I
accept” icon on computer screen Unilateral Contracts
• Acceptance is made by performance of a
specified act ⚬Reward situations ⚬Offer cannot be revoked after good faith performance has begun Requirements of a Valid Contract
Before an agreement is binding in law, it must have
two primary elements
• Consideration
• Mutual intention to create legal relations
The Meaning of Consideration • Consideration is the price that one party pays for the promise of another (something for something - or a bargain) • A gratuitous promise is one without consideration • For example, a charitable pledge • Gratuitous promises are not legally binding under contract law • A promise of forbearance may be sufficient consideration Adequacy of Consideration
• Valid consideration must be
⚬Specific but not necessarily adequate ⚬With reference to present/future promises ⚬Not “past consideration” • A promise to pay additional money for a pre- existing obligation is not enforceable Motive Contrasted with Consideration: Past Consideration • Motive cannot change a gratuitous promise into a binding contract, nor can it reduce a binding promise into a merely voluntary obligation.
• If one person promises to reward another who
has previously done an act gratuitously or given something of value, the promise is not binding. ⚬That promise is gratuitous—for “past consideration” is no consideration at all. Relation Between Existing Legal Duty and Consideration • Where A has an existing contractual duty to B, a later promise by B to pay A something extra to perform that obligation is not binding.
• Performance by A is not good consideration for the later
promise because A was already contractually bound to perform Equitable or Promissory Estoppel There is a clear and unambiguous promise Loss suffered by reasonable reliance on a gratuitous promise Plaintiff acted in reliance on the promise Promissory estoppel prevents a promisor from Rule denying his promise Reliance was reasonably foreseeable, and
Plaintiff suffered injury
Request for Goods or Services
• A request for goods or services creates an
obligation to pay a reasonable price
⚬Quantum meruit Intent to Create Legal Relations (1 of 2) • Intention is presumed in commercial situations • The presumption may be rebutted ⚬Reasonable bystander test • Parties may agree to not have their agreement enforced by the courts Intent to Create Legal Relations (2 of 2) • Contract formation requires a “meeting of the minds” on all the essential terms which means the parties words and conduct show an intention to contract from the view of an objective reasonable bystander • In the commercial context, disputes over intention often arise when negotiations are concluded orally with a written contract to be produced after the fact. Is there an intention to contract at the conclusion of the oral negotiations or not until the written document is signed? James, a local real estate developer, is negotiating the sale of a commercial property with Sarah, a business owner. They meet to discuss the terms of the sale, and after some negotiation, they both verbally agree that the property will be sold to Sarah for $1 million, with a $100,000 deposit due in two weeks.
However, James isn’t entirely sure if he wants to sell the property yet. Despite agreeing to the price and terms in their discussion, he doesn't intend to follow through with the sale and uses the negotiation merely as a way to gauge Sarah's interest in the market value of the property. He never provides Sarah with a formal written contract, despite their discussions. Sarah, believing they have a deal based on their verbal agreement, prepares the deposit money and arranges financing.
A few weeks later, James informs Sarah that he has decided not to sell the property. Sarah is frustrated and argues that they had a binding agreement. James, on the other hand, argues that there was no formal contract because he never intended to finalize the sale.
