Question 1

Discuss the requirement of consensus in the formation of contract.In your answer, consider the role of offer and acceptance, and also look at the degree of understanding required between the parties.

Accepted Answer

Consensus is the first element discussed that must be present for a contract to exist.Usually most attention is focused on offer and acceptance, and to answer this question, students should show a good understanding of these requirements.This discussion should include the difference between an offer and an invitation to treat, as well as an understanding that it is the offer that contains the terms of the contract and that all major terms must be clear in that offer, although some minor ones can be implied.As far as acceptance is concerned, it should be clear that students know that consensus is not effective until communicated, thus completing the connection between the minds of the parties.They should also show an understanding of the operation of the post-box rule.But a vital component of the answer should relate to the concept of the meeting of the minds between the parties.It is not necessary that all parties understand the agreement or even that they have read the agreement, only that the terms are clear and that, had they read it, they could have understood it.This is an objective rather than a subjective test.They then will discuss how the court deals with a mistake over the terms where both parties have a different understanding.Here, the court will apply the principle that the reasonable expectations of the parties are to be enforced.

Question 2

"For a contract to be binding, both parties must have a clear understanding of all terms of that agreement." Discuss the accuracy of this statement.

Accepted Answer

It's only necessary that the terms of the agreement are clear and unambiguous.One party's failure to read or understand the clear provisions of a contract will not affect the validity of that agreement.

Question 3

All of the essential terms of a contract except for consideration must be clearly specified.

Accepted Answer

All essential terms of a contract, including consideration, must be clearly specified. Consideration is a necessary element in the formation of a contract, along with offer, acceptance, and mutual agreement.

Question 4

Which of the following would best satisfy the requirements for a good legal offer?
A)"I'll drive you to Seattle on Saturday."
B)On a flyer (placed on your windshield):"We have the best offer in town! A mint 1956 Chevrolet for $20 000."
C)"I'll give you $1 for your new green bike."
D)"I'll pay you at least $300 for your horse, Blackie, and even more if the horse is lucky."
E)"The purchaser will pay $10 for one of the seller's laser printers, the exact model to be determined at a later date."

Accepted Answer

The answer of Which of the following would best satisfy...

Question 5

Which of the following is an offer as opposed to an "invitation to treat"?
A)A notice in the catalogue from the gift shop of the Edmonton Aquarium: "15% off the price of all jewellery until January."
B)A notice in the Toronto Star: "I will pay $100 to whomever finds and returns my lost female calico cat who answers to the name Marx."
C)The display of goods on the shelves of Safeway.
D)A sweater displayed in the window of a shop with the price tag attached and showing.
E)An ad in a real estate paper: "Best offer in Vancouver! 3-bedroom home in Kitsilano for only $350 000!"

Accepted Answer

B) is an offer because it specifies the terms and shows a clear intention to be bound by those terms upon acceptance (finding and returning the cat). The others are invitations to treat, which invite offers but do not themselves constitute offers.

Question 6

All contracts must be written to be binding.

Accepted Answer

Contracts can also be oral and still be legally binding, depending on the specific circumstances and type of contract. However, it is always recommended to have a written contract to avoid any ambiguity or misunderstandings.

Question 7

A contract is a single promise, made by one person to another, enforceable in court.

Accepted Answer

A contract typically involves a mutual exchange of promises between two or more parties, each of whom has an obligation to fulfill their part of the agreement for it to be enforceable in court.

Question 8

What must be present in an offer before it qualifies as such?

Accepted Answer

The answer of What must be present in an offer...

Question 9

Distinguish between an offer and an invitation.

Accepted Answer

The answer of Distinguish between an offer and an invitation....

Question 10

All commercial contracts must be evidenced by writing to be enforceable.

Accepted Answer

While it is preferable to have commercial contracts in writing, not all contracts need to be in writing to be enforceable. Some contracts can be verbal and still be enforceable, although this can make it more difficult to prove the existence and terms of the contract. However, certain types of contracts (such as those for the sale of goods valued over a certain amount) may require a written document to be enforceable under the law.

Question 11

All contracts must be in writing to be enforceable.

Accepted Answer

While written contracts are helpful to have, they are not always required for a contract to be enforceable. Some contracts can be oral or implied and still be legally binding. However, having a written contract can provide a clearer understanding of the terms agreed upon and can be useful in case of a dispute.

Question 12

In the Pharmaceutical Society case, it was decided that goods displayed on the shelf in a self-service merchandising situation were an invitation to treat, rather than an offer.Discuss.

Accepted Answer

The answer of In the Pharmaceutical Society case, it was...

Question 13

Which of the following is an ingredient necessary to form a contract?
A)Exemption clauses
B)Fairness
C)Privity
D)Capacity
E)Assignment

Accepted Answer

Capacity refers to the legal ability of individuals to enter into a contract. It means that they should be of legal age, have sound mind, and not under any duress while entering into the contract. The absence of capacity can result in the contract being voidable or unenforceable. The other options listed are not necessary ingredients for forming a contract.

Question 14

An ad in the morning paper reads: "Brand new 2012 Ford Escorts $16 499.No payment until January 2012.We make your first payment." This is an example of which of the following?
A)Invitation to treat
B)Gratuitous promise
C)Offer
D)Unilateral contract
E)Bilateral contract

Accepted Answer

An advertisement is generally considered an invitation to treat, not an offer, as it invites potential buyers to make an offer to purchase.

Question 15

An invitation to treat is an offer published in the newspaper.

Accepted Answer

An invitation to treat is not an offer but an invitation for others to make offers. Publishing something in the newspaper, like an advertisement, is typically considered an invitation to treat, not a binding offer.

Question 16

Four days ago, Pete was reading the newspaper and saw the following: "Best offer in town! Zenith XX Laser Printer - $1000!" When he went to the store this afternoon and said he wanted one, the employees replied that they didn't have any left, nor could they get any.On these facts, which of the following is true?
A)Pete could sue for breach of an option contract.
B)The offer by the store had lapsed before Pete tried to accept it.
C)The wording in the newspaper was merely an invitation to the public to do business, and no contract was formed.
D)The store had revoked the offer before Pete tried to accept it.
E)Pete could sue the store for breach of contract because he was accepting the offer in the newspaper.

Accepted Answer

The answer of Four days ago, Pete was reading the...

Question 17

Contracts may be in writing, under seal, verbal, or even implied.

Accepted Answer

Contracts can take various forms and do not necessarily have to be in writing or under seal. They can also be formed through verbal agreement or even by conduct, known as an implied contract.

Question 18

Why is an understanding of contract law important for a business person?

Accepted Answer

The answer of Why is an understanding of contract law...

Question 19

List the five ingredients necessary to form a contract.

Accepted Answer

The answer of List the five ingredients necessary to form...

Question 20

Only the essential terms of a contract must be set out in the offer.

Accepted Answer

It is a general rule of contract law that only the essential terms need to be included in an offer for it to be valid, although the specific essential terms may vary depending on the particular contract and the subject matter involved.

Quiz 3: Formation of Contracts