Chapter 6

Question 1

What is the primary objective of Chapter 6?

Answer 1

To understand how negotiations lead to a contractual relationship and the legal ingredients of a contract

Question 2

What are the basic elements required for an enforceable contract?

Answer 2

• An agreement (offer and acceptance)
• Complete (certain)
• Deliberate (intention to create legal relations)
• Supported by mutual consideration

Question 3

Define ‘offer’ in the context of contract law.

Answer 3

A promise to enter a contract on specified terms as soon as it is accepted

Question 4

What is the difference between an offer and an invitation to treat?

Answer 4

An invitation to treat is an expression of willingness to do business without legal consequences, while an offer can be legally accepted

Question 5

True or False: A standard form contract allows for negotiation between parties.

Answer 5

False

Question 6

What constitutes a revocation of an offer?

Answer 6

The withdrawal of an offer before acceptance by notifying the offeree

Question 7

What is an option agreement?

Answer 7

An agreement where, in exchange for payment, an offeror is obligated to keep an offer open for a specified time

Question 8

What happens to an offer if it is rejected?

Answer 8

The offer automatically terminates and can only be accepted if revived by the offeror with a new or revised offer

Question 9

What is a counteroffer?

Answer 9

A rejection of one offer and a proposal of a new one, which automatically terminates the original offer

Question 10

Fill in the blank: Acceptance occurs when there is an _______ willingness to enter into a contract on the terms in the offer.

Answer 10

[unqualified]

Question 11

What is the postbox rule in contract law?

Answer 11

Acceptance is effective at the time of mailing rather than the time of delivery, if the offeror intends it to apply

Question 12

In which case was it determined that advertisements can constitute offers if clear and definite?

Answer 12

Carlill v Carbolic Smoke Ball Co

Question 13

What is the significance of the ‘lapse’ of an offer?

Answer 13

An offer expires after a specified or reasonable period, rendering it no longer ‘alive’ for acceptance

Question 14

What must be communicated for an acceptance to be legally effective?

Answer 14

An unconditional assent to the offer in its entirety

Question 15

What does the term ‘termination of offer’ refer to?

Answer 15

The end of an offer’s validity, which can occur through revocation, lapse, rejection, counteroffer, or death/insanity

Question 16

How can acceptance be communicated?

Answer 16

• In person
• In writing
• By mail
• By fax
• By email
• By telephone
• By other actions

Question 17

What is an essential requirement for electronic contracts under the Uniform Electronic Commerce Act (UECA)?

Answer 17

There must be an offer, acceptance, and communication of acceptance

Question 18

True or False: A firm offer is enforceable even if it lacks consideration.

Answer 18

False

Question 19

What does ‘mutual consideration’ refer to in contract law?

Answer 19

The requirement that both parties provide something of value in a contract

Question 20

What happens if the offeree does not communicate acceptance of an offer?

Answer 20

No contract is formed

Question 21

What is the legal outcome if an offer is revoked before the acceptance period?

Answer 21

The revocation is legally valid and the contract cannot be formed

Question 22

What is the role of the offeror in a contract?

Answer 22

The person who makes an offer

Question 23

What is the effect of a death or insanity of the offeror or offeree on the offer?

Answer 23

Offers generally die if the offeror or offeree dies, but may be accepted by courts under certain conditions

Question 24

What does UECA specify regarding electronic messages?

Answer 24

It specifies when a message is sent and when it is received, but not where and when acceptance becomes effective.

Question 25

How is the formation of electronic contracts determined?

Answer 25

It will be decided on a case-by-case basis unless specified by electronic traders.

Question 26

True or False: Communication on the World Wide Web is similar to instantaneous communication.

Answer 26

True

Question 27

What affects the practical application of rules governing offer and acceptance?

Answer 27

The requirement of proof that the necessary events occurred.

Question 28

What must someone seeking to enforce a contract be able to prove?

Answer 28

That offer and acceptance occurred.

Question 29

What is the ideal form of proof for a contract?

Answer 29

Documentary evidence.

Question 30

What challenges arise when documents are not available to prove a contract?

Answer 30

The individual must convince the court of the contract's existence without extraneous proof.

Question 31

What is a common difficulty in proving oral agreements?

Answer 31

They require independent verification or corroboration.

Question 32

What is required for some contracts to be enforceable?

Answer 32

They must be evidenced in writing.

Question 33

What do parties often seek before being bound by a contract?

Answer 33

Agreement on the contract's formal language and signature.

Question 34

What happens if parties intend further documentation as a precondition of a contract?

Answer 34

The court may view there’s no concluded contract until the formal contract exists.

Question 35

Define consideration in contract law.

Answer 35

The price paid for a promise, requiring each party to give up something of value.

Question 36

What distinguishes a legally enforceable promise from a non-enforceable one?

Answer 36

The presence of consideration.

Question 37

What is a gratuitous promise?

Answer 37

A promise for which no consideration is given, and thus not enforceable.

Question 38

What can constitute consideration other than money?

Answer 38

Goods or services, as long as they are of value.

Question 39

True or False: Consideration must always be present on both sides of a transaction.

Answer 39

True

Question 40

What happens if one party pays above market value?

Answer 40

The contract remains binding.

Question 41

What is a pre-existing legal duty?

Answer 41

A legal obligation that a person already owes.

Question 42

What is the significance of fresh consideration in contract alterations?

Answer 42

Alterations benefiting only one party are unenforceable without fresh consideration.

Question 43

What case involved Gilbert Steel and University Construction?

Answer 43

Gilbert Steel Ltd v University Construction Ltd, 1976 CanLII 672 (ONCA).

Question 44

What did the court conclude in Gilbert Steel regarding consideration?

Answer 44

There was no consideration for the promise, making it unenforceable.

Question 45

What is required for variations of contracts according to traditional rules?

Answer 45

They must be supported by fresh consideration.

Question 46

What recent court decisions have changed the approach to contract variations?

Answer 46

Several court decisions in New Brunswick and BC have ruled that variations can be enforceable without fresh consideration.

Question 47

What is the significance of the Rosas v Toca case?

Answer 47

It established that fresh consideration is not required for a binding contractual variation.

Question 48

What must be proven for promissory estoppel to apply?

Answer 48

Reliance on another’s promise intended to affect the legal relationship.

Question 49

What does a promise under a seal indicate?

Answer 49

Serious intent and acknowledgment that the contract is enforceable without consideration.

Question 50

What is the doctrine of promissory estoppel?

Answer 50

A doctrine allowing reliance on a gratuitous promise to enforce it defensively.

Question 51

What is the effect of legislation on partial payments of debt in some jurisdictions?

Answer 51

Once a lesser amount is agreed upon and paid, the creditor cannot claim the full amount later.

Question 52

What is the common law rule regarding gratuitous promises to accept lesser amounts?

Answer 52

The creditor is free to sue for the balance.

Question 53

What is necessary for a promise to be enforceable under the modern approach?

Answer 53

The variation must be voluntary and fair, regardless of consideration.

Question 54

What must be proven to establish intention to contract?

Answer 54

The promise must have been intended to be contractual.

Question 55

How are family agreements treated under common law?

Answer 55

They are presumed non-contractual unless intention to contract is proven.

Question 56

What presumption exists in business agreements regarding intention to contract?

Answer 56

There is a presumption of intention to create legal relations.