Business law week 4

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Text of Business law week 4

  • 1. Formation of a Valid Contract
  • 2. What type of agreements are valid contracts?
    • Handshake?
    • Sign on the dotted line? X ..
    • Is it an agreement the Courts will enforce?
  • 3. Elements of a Valid Contract
    • Offer
    • Acceptance
    • Consideration
    • Capacity to contract
    • Legality
  • 4. 1. Intention to create a legal relationship
    • The meeting of the minds
    • The promisor must intend to be bound by the promise made.
    • Advertisements:
      • Is an ad to sell for a specific price binding? Is this a kind of contract?
      • Textbook P 65
      • Puffs the promises which are not recorded
  • 5. Advertising:
    • Advertisements are treated as an invitation to do business
    • The company is not entering into a contract with everybody in the world who reads the ad
  • 6. Offer and Acceptance of the Contract
    • Every promise is subject to a condition:
      • I will pay you $, and you will do X.
    • Rule #1
    • The offer must be communicated to the other party in order to be accepted
  • 7. Textbook p66 - Banner Example
    • A company had a large corporate banner that was flown from a flag mast outside its downtown corporate office. During a wind storm, the banner disappeared, and the com- pany decided to place an advertisement in the local newspaper offering a reward of $200 for its return. Before the advertisement appeared in the newspaper, an employee of another company located nearby found the banner and returned it to the receptionist at the corporate office. Later that day, the employee noticed the reward advertisement in the news and made a claim for the reward. In this case, the offer of reward was not communicated to the employee until after he had performed what was required under the terms of the offer of reward. The employee, therefore, cannot accept the offer because he had returned the banner without the intention of creating a contract. This concept will be examined more closely with respect to another element of a contract, but for the present, it may be taken as an example of the communication rule.
  • 8. Acceptance of the Offer
    • P 67 The acceptance of the offer must be communicated to the offeror in the manner requested or implied by the offeror in the offer
    • Words or acts that indicates the offer is accepted
  • 9. Textbook p67
  • 10. Acceptance methods:
    • Fax
    • Mail: Postal Acceptance Rule :
    • Offers that invite acceptance by mail, the relevant date is the day the mail goes in the post box
  • 11. Electronic Contracts
    • Clicking the box is the same as a signature
    • Textbook p69
  • 12. The Counter Offer
    • The only acceptance is one that clearly and unconditionally accepts the offer
    • Anything else is a counter-offer
    • Examples: Offer to service car for $, reply with an offer to let them do the job for $X, there has been no acceptance.
    • Offer,
    • Reply with a new offer (Counter-offer)
    • Example: Textbook p70
  • 13. Silence in the Process of Offer and Acceptance
    • Silence cannot be considered acceptance of an offer
      • Unless a prior agreement has been established between the parties
    • Can you stand by and let someone do work, and later say that you never accepted the offer of the work to be done?
      • No. Textbook p71
  • 14. Example: Unsolicited Goods
    • Members of the public shall not be required to pay for unsolicited goods
  • 15. Forms of Acceptance
    • Written: I accept your offer
    • Others may be acceptable by convention
  • 16. Lapse of an Offer
    • Until an offer is accepted, no legal rights or obligations arise
    • Death will cause an offer to lapse
    • If the conditions are not accepted unconditionally the offer will lapse
    • Any change in terms by the acceptance will cause the offer to lapse
  • 17. Revocation of an Offer
    • Offeror (the one selling) can revoke an offer (cancel it)
    • Must be communicated before the offer is accepted
    • Anytime before the offer is accepted
  • 18. Revocation
    • Are there situations where the offer should not be revocable?
        • Offer to sell land, oil and gas, that requires investment before purchase
        • CAUTION: Real estate, you make an offer to sell the property, and the purchaser wants assurance you will go through with the sale and not stop halfway through the process
    • If you want an irrevocable offer, ask for one!
      • This is a separate contract so get some consideration
  • 19. Revocation
    • Example:
    • Offer to sell property for $1Million
      • Buyer begins to sell their house
      • Dont want to get stuck without a place to live when present house sells, if offer is revoked
      • Buyer insists on an irrevocable offer from the seller
  • 20. Revocation
    • Can be communicated in any particular way
    • The revocation must come to the attention of the offeree before the offer is accepted.
  • 21. Consideration
    • Bargain theory of contract everybody should get something in return for a promise
    • This Something is called consideration
    • IE: payment of money, performance of a service, promise not to do something (sue)
    • Steel consideration example, p 76