DAY 85 - Contracts

Elements of a Contract
We enter into agreements all the time, but only agreements that have certain legally binding elements are considered contracts.

1. OFFER & ACCEPTANCE
One party makes a "serious" offer, often referred to as a "valid" offer to enter into a contract.  To be valid the offer must be clear and precise.  Then, the offeree (the party accepting the contract offer) must accept the offer.  If a "meeting of the minds" takes place, then the offer has been legally offered and accepted...

The offer must be "serious" - offers made in anger or as a joke are not serious and therefore not valid.

Terms of the offer must be clear.   If goods are being sold then specifics must be detailed, e.g. size, weight, colour, delivery date, terms of the sale (date paid).  And some terms can be assumed.

Invitations to Buy - generally we call these advertisements, store displays, signage, etc.  - these are called, "Invitation to Treat".  In most of these cases, courts have determined that a legal contract has not been formed because these invitations are merely that, invitations to enter a contract by buying.

Communicating an Offer - mail, email, fax, verbal, implied - and many other forms of communication can be used in a contract offer.

Terminating an Offer - until an offer has been accepted there is no contract, so if someone never accepts the offer it is terminated.

Acceptance - words, conduct or in writing, the acceptance must follow some legal rules.  Counteroffers can take effect too - e.g. selling real-estate there is often a series of offers and counteroffers that occur before final agreement.

The acceptance must be communicated to indicate acceptance.  If the acceptance is by mail, the envelope's date stamp indicates acceptance on that date.

2.  CONSIDERATION - the exchange of something of value.  Note - the actual value of the things being exchanged are not relevant.

Present consideration happens when the contract is formed.

Future consideration occurs when a promise within the contract is made for something that happens in the future, e.g. the seller didn't get payment until a future date.


3.  CAPACITY - ability to enter into a contract.

Minors - anyone under age 18 is considered a minor in Canada.

Many apprenticeship and employee contracts are valid with minors as well, e.g. McDonald's.

Impairment by drugs, alcohol, other meds or another physical or mental ailment.


4.  CONSENT - there must be free agreement on both parties to enter the contract.

What is non-consent?
1. misrepresentation of the facts/terms (lying)
2. mistake - someone can honestly make an error in understanding.
3. undue influence
4. duress

5.  LAWFUL PURPOSE - any contract that is a crime in Canada is illegal and void.