BUSN 1320

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  1. What makes a contract enforcable?
    What are the 3 criteria that must be satisfied?
    • 1. Intention to create legal relations
    • 2. Meeting of the minds (offer & acceptance)
    • 3. Consideration (exchange of value)
  2. Meeting of the minds
    • Presumptions are either social/family (no intention satisfied) OR commercial (intention satisfied)
    • The above criteria can be justified under the reasonable person
  3. Meeting of the minds
    Consists of an offer and acceptance

    An offer consists of offer, invitation to treat, mere puff

    Can be justified under the reasonable person test
  4. What can an offerer do?
    take back, revoke, create terms, restrictions
  5. Offer is? and can be 1 of which 2 types?
    Directed at a specific person w/ specific terms

    • Bilateral-2 promises back and forth
    • Unilateral-made to the world at large
  6. Invatation to treat
    An invitation is anything displayed to a large number of people, i.e. OBO on Craigslist

    It is displayed w/o specifying to who or how to accept
  7. Mere Puff
    • No legal effect; just sales language
    • Exaggerated or unstable claim
    • Purely rhetoric & NOT meant to be taken seriously
  8. How can an offer be communicated?
    • HAS to be communicated properly
    • Can't accept w/o knowing the offer
  9. Life of an offer can be killed in which 5 ways?
    • 1. Revocation
    • 2. Lapse of time
    • 3. Death/insanity
    • 4. Rejection (offer refused by offeree)
    • 5. Counter-offer (Yes, but X... it kills every offer before it)
  10. Acceptance
    • Instantanious
    • Non-instantanious
  11. Instantanious Acceptance
    • Phone, face-to-face etc.
    • When A hears YES or recieves the YES
  12. Non-Instantanious way to communicate acceptance/offer
    • Mail...
    • There is a substantial delay b/w the parties
    • RULE: If dealing with n-i communication, acceptance happens when the offeree sends it
  13. What is a statement?
    • Offer
    • Invitation to treat
    • Mere puff
  14. Acceptance  by performance
    • When the promise is complete
    • When in process of performing the act; cannot revoke
  15. objective intention of offeror
  16. “The question is one of intention; and whether a proposal is to be
    • construed as an invitation to deal or as an offer which can be turned into
    • a binding agreement by acceptance” (Canadian Dyers Association v
    • Burton (1920), 47 O.L.R. 259 (H.C.))
  17. Key questions for acceptance
  18. 1) Is there acceptance?
    • 2) When did it occur?
    • 3) Was it communicated? Was it necessary that it was communicated?
    • Acceptance can be accomplished by promise or by performance
  19. Key Questions for acceptance
    • 1) Is there acceptance?
    • 2) When did it occur?
    • 3) Was it communicated? Was it necessary that it was communicated?

    Acceptance can be accomplished by promise or by performance
  20. Consideration
    • Dontaion=No consideration element. i.e. may give a shirt to make valid
    • Can be unequal value
  21. Past consideration
    • Past consideration is no consideration at all!
    • Valid if:
    • Reward-may be forcable
    • Request-Request for help (not past consideration; valid)
  22. Sufficient Consideration
  23. Mutuality of consideration
    • requires that each party provide
    • consideration in return for the other party’s consideration.
  24. Promise not to sue is only valid if
    there is a valid claim

    • A promise not to bring a legal action against someone is consideration,
    • but if you make such a promise and you reasonably know that such a legal action
    • wouldn’t be successful then that consideration is not acceptable.
  25. Pre-existing obligation
    •  Pre-Existing Obligation: is an obligation that existed, but was
    • not actually performed, before the contract was contemplated.
    •  Three Pre-Existing Legal Duties:
    •  1) Pre-Existing Legal Duty to the Public/State
    •  2) Promises to perform pre-existing duty to a third party
    •  3) Promise to perform an pre-existing duty to the same party
  26. Promise to forgive existing debt
    Allowable in BC; but not outside unless another benefit (i.e. sour keys)
  27. Privity of a contract
    Who is allowed to sue under a contract

    • refers to the relationship that exists between the
    • individuals who create the contract
    • ONLY parties to a contract to sue; you cannot sue if you are only¬†the beneficiary
    • Can deal with this problem if you use an agent
  28. Exceptions to privity doctrine
    •  Some jurisdictions have abolished the rule
    •  Assignment
    •  Trusts
    •  Statute
    •  Employment
    •  Himalaya Clause
  29. Assignment
    • a process in which a contractual party transfers their rights to a third
    • party
  30. Rationale
    • a person who has acquired a right or benefit under a contract has the
    • right to assign the benefit to another
  31. Parties to an Assignment
    • Assignor: the contractual party who assigns their contractual rights
    •  Assignee: the stranger to whom the contractual rights are assigned
    •  Debtor: the original contracting party against whom the assigned right can be
    • enforced.
  32. Forms of Assignment:
    • Equitable assignment
    • Statutory assignment
    • Assignment by operation of law
  33. Equitable Assignment
    • assignment that was traditionally enforced by the
    • courts of equity
    • Written or oral
  34. Statutory Assignment:
    • an assignment that conforms to the requirements of
    • a statute

    • General requirements for statutory assignment:
    •  1) Must be written and signed by the assignor
    •  2) Written notice must be provided to the debtor
    •  Why? What would happen if there was a rogue assignor?
    •  3) Must be absolute:
    •  Unconditional: assignment is not dependent upon future event.
    •  Complete: assignment is for all of the existing debt.
  35. Vicarious performance
    • Vicarious performance occurs when a contractual party arranges
    • to have a stranger perform their obligations

    • Vicarious performance is allowed to the extent that the
    • obligation does not require contracting party’s specific skill for
    • performance.
  36. Trust
    • occurs when one person holds property on behalf of another
    •  Settlor: party placing property in trust
    •  Trustee: the person who holds the property on behalf of the other
    •  Beneficiary: the person on whose behalf the property is held
    •  Trust’s application to privity:
    •  If a promise is received on trust for a “stranger” that
    • stranger/beneficiary will have the ability to enforce the contract
  37. Himalaya clause
    • a special term of contract that protects a third party
    • beneficiary from liability
  38. Contractual Defects
    • (1) Incapacity
    • (2) Absence of Writing
    • (3) Mistake
    • (4) Unfairness in Bargaining
    • (5) Illegality
  39. Valid, Void, Voidable contracts
    • Valid contract: one that is legally binding on both parties.
    •  Void contract: does not qualify as a legally binding contract because an essential element is missing.
    •  Voidable contract: exists and has legal effect, but one of the parties has the option to end the contract
  40. Capacity
    the legal power to give consent

    • Capacity an issue where:
    •  (1) minors
    •  (2) mental incapacitation
    •  (3) intoxication
    •  (4) corporations
    •  (5) associations
    •  (6) Indian bands and Aboriginal persons
    •  (7) public authorities
  41. Mistake
    meaning etc

    • 1) Mistaken Identity:
    •  Test for if mistaken identity renders contract
    • defective:
    •  1) Mistake was known to the other party
    •  2) Mistake was material: matters to the mistaken
    • party in an important way.

    • "It has been said of the law of mistake that no two authors agree in its
    • analysis and that the same confusion exists in the case law.”
  42. Three forms of unfairness which may render the contract
    •  (1) Duress
    •  (2) Undue influence-
    • the abuse of a relationship in order to
    • influence someone and induce an agreement
    •  (3) Unconscionable transactions-
    • an agreement that no right-minded person
    • would ever make and no fair-minded person would ever accept
  43. Contract may be void for illegality
    Dimmick and kidnapped family; fell asleep and family called police
  44. Covenant in Restraint of Trade
    • contractual term that unreasonably restricts one
    • party’s liberty to carry on a trade, business, or profession in a particular way
Card Set:
BUSN 1320
2014-05-28 17:53:57
Exam Number

Chapters 1,2,7,8 & 10
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