Chapter 6 - Consensus and Consideration

Question 1

contract

Answer 1

voluntary exchange of promises creating obligations which, if defaulted on can be enforced and remedied by the courts

Question 2

elements of a contract

Answer 2

1. consensus
2. consideration
3. capacity
4. legality
5. intention

Question 3

consensus

Answer 3

mutal agreement

be willing to commit themselves to terms

terms must be ambiguous

Question 4

consideration

Answer 4

the price each party is willing to pay to participate in the contract

Question 5

capacity

Answer 5

legally capable of understanding

Question 6

legality

Answer 6

object and consideration involved in the agreement must be legal

Question 7

intention

Answer 7

must intend that legally enforceable obligations will result from contract

Question 8

offer must contain

Answer 8

• all of the terms of the contract
• a communication of willingness to be bound
• all significant terms of the proposed contract

Question 9

Invitation to treat

Answer 9

invitation to potential customers to engage in the process of negotiation

• ads or sales promos are not binding

Question 10

offer by cinduct

Answer 10

offer may be implied by conduct

Question 11

typical process to create a contract

Answer 11

slide 10

Question 12

communication of an offer

Answer 12

• offer must be communicated
• only person/group to whom an offer is made can accept it
• all important terms must have been disclosed
• exemption clauses must be brought to the attention

Question 13

end of an offer

Answer 13

1. offer ends at a specified time
2. after a reasonable time (if time not specified)
3. at the death or insanity of the offeror
4. revocation of offer (withdrawn) before acceptance and revocation is communicated to the offeree
5. when the offer is rejected
6. a counter offer is put forward

if illegal/destroyed

Question 14

standard form contract

Answer 14

an offer with fixed terms that the customer is invited to accept

Question 15

duty of good faith

Answer 15

directors and officers of a corporation who are making decisions in their capacities as corporate fiduciaries, must act with a conscious regard for their responsibilities in that role.

Question 16

acceptance

Answer 16

• offerees intention to commit
• unconditional
• inclusion of new terms in an acceptance is a counteroffer

Question 17

communication of acceptance

Answer 17

• acceptance of an agreement is usually accomplished by communicating it to the offeror
• unilateral contract accepted by completion of performance
• silence is not acceptance

Question 18

bargaining process

Answer 18

trading promises and all parties derive some benefit

Question 20

gratuitous promise

Answer 20

one sided agreement in which only one of the parties is getting something from the deal

not enforceable

Question 21

adequacy of consideration

Answer 21

need not be fair but unfair consideration may indicate undue influence, insanity or fraud

Question 22

existing duty

Answer 22

a change in the contract requires new consideration

no additional consideration is permitted for public duty

Question 23

past consideration

Answer 23

considered no consideration

Question 24

valid consideration

Answer 24

settlement out of court - each party gives up court determination of the matter

Question 25

promissory estoppel

Answer 25

deals with a person making a promise or a commitment to do something in the future can only be used as a shield not as a sword

Question 26

draw promissory estoppel

Answer 26

slide 26