Formation of Contracts

Are the parties to the contract serious?

"Intend" to create a legal relationship if

their agreement is to be binding

made in the course of a business

Intent Commercial Agreement
intend to make a legally binding contract

between friends and agreements between

close relatives = not legally binding
contracts
Social Agreement
presumption will not apply if it can be
shown from the circumstances that they did
not intend to be legally bound by their
agreement

one party needs to make an offer (an

offeror) and the other party needs to accept
that offer (offeree)

manifestation by an offer that he is willing

to neter a bargain, justifying acceptance by
the offeree

identify the parties

offer has been made and understand that
Reasonably Certain Offer communication of acceptance is all that is describe the subject of the agreement
necessary to form a binding contract
Contract some sort of price term

measure by the offeree's reasonable

Joke (Not serious)
perceptions, not offerors's subjective intent

Preliminary Negotiation (eg. no manifestation of the offeror's willingness

Invalid Offer
quotation/proposal) to conclude a final bargain

Advertisment (unless the lanugage makes

invitations to negotiate / solicitations of
an express promise to adhere to specifc
offers
terms)

reject + propose/offer different term

Offer
Rejection / Counter-offer takes the first offer off the table (no orginial
offer)
"counteroffer"
offeror withdraws the original offer and
free to sell it to someone else

Lapse of Time unspecified laspe after a reasonable period of time

can withdraw at any time prior to

acceptance

communicated to all the person to whom

the offer was made

keeps an offer open for a limited amount of

Irrevocable Offers = Option Contract time, in exchange for the offeree's
consideration or value

Elements of contract Direct: offeror notifies the offeree that the

an offer has been made and offer has been revoked
Revocation offeror may change his mind Direct or Indirect Revocation
before acceptance Indirect: offeree learns from a different
source that the offer has been revoked

Termination of an Offer once the offeree has begun performance

Unilateral Contract invites acceptance only by performance
offeror may not revoke the offer unless the
offeree fails to complete the performance

offeror should reasonably expect that the offeree may

change position or do something in preparation for
performance in a way that would hurt the offeree if
the offeror were to terminate the offer unexpectedly
Detrimental Reliance
offeror may not revoke the offer until a
reasonable period of time has passed to
allow the offeree to accept the offer

offeree learns the offeror's death or

incapcitation before attempting to accept
terminates immediately if the offeror dies
Death or Incapacity of either party offer does not terminate with the offeror's
or becomes legally incapcitated
death
option contract
special case: if offeror die and left some
money >> pay the debt first (contract
counted as debt)

eg: offer to sell a house will automactically

Destruction of the Subject Matter
terminate if the house burns down

brings an agreement into existence and

fixes the terms of the contract

cannot be deemed or assumed

agree to ALL terms of the offer (= cannot

Mirror-Image Rule add certain condition or make a
counteroffer)

consistent with the offer's term

acceptance by post may be effective at the
time of posting circumstances indicate to a reasonable
person in the offeree's position that
acceptance through the mail is not a
legitimate means of acceptance

placed with the postal service

prescribe a time of acceptance that is not

postage is paid
the moment of dispatch

acceptance is made out to the correct

address

Acceptance Mailbox Rule / Postal Rule Lost : properly / improperly addressed

revocation: if offeree were to send an

acceptance by mail while offeror sent a effective only upon receipt
revocation at same time >> contract formed

acceptance received late >> treated as an

whichever is received first by the offeror
offeree's change of heart offer to enter a contract on the terms of the
will be effective
acceptance

option contracts

unlaterial contracts (accepted by

exception
performance)

inconsistent with the offer's terms

sent when it is accpeted by the information

system outside the control of the sender

time of receipt is determined by the nature

Electronic Transactions
of the addressee

only effective when it is received