Exam 7: The Nature and Creation of Contracts

The Town of Oxbridge wants to build a new arts centre, but it is not sure which construction company it should hire for the job. Which type of statement is the town most likely to make?

Simon believed that he might want to buy certain shares from Melinda in the near future. On June 1st, he therefore paid her $1000 in exchange for an option to purchase 5000 shares in Acme Inc at $10 each on or before October 1st. Which of the following statements is TRUE?

The case of Carlill v Carbolic Smoke Ball Co is best known for dealing with the issue of

An option is valid only if it is placed under seal.

On June 1st, Sasha agreed to sell a car to Elaine for $10 000. Under the terms of that agreement, she was required to pay the price to him on June 10th and he was required to transfer ownership in the car to her on the same day. Once Sasha and Elaine do so, their contractual relationship will be terminated for all purposes.

Which of the following statements is TRUE?

Layton Fine Fashions had a shipment of orange ties that it wished to sell. It therefore placed an advertisement, on Monday, in the town newspaper that said, "Fine silk orange ties. The season's hottest fashion trend. This week only - Come to Layton Fine Fashions and we guarantee that you'll pay no more than $35." The advertisement was such a success that the ties were almost entirely sold out within two days. Which of the following statements is TRUE?

Rosie placed an advertisement in a newspaper that said: "Five purebred Siamese kittens for sale. $200 each. First come/first served. Respond in person or by email to ? HYPERLINK "mailto:Rosie@netmail.com" ?Rosie@netmail.com." ?Gig saw the advertisement and immediately sent an email message that said: "I will pay $1000 for the five kittens." However, when Gig arrived at Rosie's door with the cash in hand, she refused to hand over the kittens. She explained that while Gig's message was the only reply that she had received in response to her advertisement, she had changed her mind and had decided to keep the kittens for herself. Provide an argument on behalf of Gig that would support the creation of a contract with Rosie.

How is the concept of a meeting of the minds related to the concepts of offer and acceptance? Illustrate your answer by reference to the phenomenon of a cross- offer.

Hiram Brody worked as a research assistant for Rheem Shareef, who was one of his professors. Rheem regularly asked Hiram to proofread documents that she had written. Hiram therefore was not especially excited when he was asked to proofread a research proposal that Rheem had drafted in connection with a major project for which she had recently received generous funding from the government . He did, however, become very excited when he read paragraph 14 of the document: "I will offer Hiram Brody the position of joint- investigator. That position will require him to both resign from his present post as my research assistant and take a leave of absence from his current studies. Given the nature of the project and given his outstanding qualifications, Hiram will be paid $8000 per month for a period of eighteen months." After Hiram hurriedly finished proofreading the document, he unsuccessfully tried to contact Rheem to talk about his new position. He learned, however, that she had left town, on very short notice, to be with a sick relative who lived outside of Canada. He then wrote a letter to the Chair of his University Department in which he both resigned as Rheem's research assistant and took a two- year leave of absence from school. He also left a message on Rheem's telephone answering machine in which he said, "I accept. I can't wait to begin working as your joint- investigator." Hiram consequently was very angry when Rheem said, after she had returned from abroad, that she had changed her mind and had hired another person to serve as her joint- investigator. Hiram insists that she cannot do so because he had already accepted her offer. A court, however, would say that Hiram could not create a contract by leaving a telephone message for Rheem because

In order to decide whether the parties intended to create a legally enforceable agreement, the courts apply a subjective "reasonable person" test.

Agreements created between family members or friends are never legally enforceable.

Wessam offers to sell Ivan a bicycle for $100. Ivan asks to think about it for a couple days. The next day, Wessam tells him that she has increased the price to $150. Wessam has

The phrase consensus ad idem means

In a normal tendering process, is Contract A a unilateral contract or a bilateral contract? Is Contract B a unilateral contract or a bilateral contract? Give reasons for your answer.

An advertisement in a newspaper is usually considered an offer if it contains a clear description of the product and a specific price.

Joan wants to buy a prime piece of real estate from Guiaumme, but she is waiting to find out whether the bank will give her a loan. In order to make sure that Guiaumme does not sell the land to anyone else, Joan gives him $5000 in exchange for his promise not to sell the land. This type of agreement is called

A bilateral contract

"Contract law represents the pathology of commerce." Which of the following statements fully explains that quotation?

Eric bought a house for $150 000. He paid $25 000 immediately and promised the seller that he would pay the remainder in monthly instalments over the next ten years. Eric then told his daughter, Naomi, that he would give the house to her if and when she paid all of the monthly payments. Naomi was reluctant to commit herself to that arrangement because she was not sure if she would always have enough money to make the payments. Eric said to her, "Well, let's see how it goes." Naomi made the monthly payments for six years. Unfortunately, she and her father then began to fight. At that point, he told her that the deal was off. Eric has offered to repay Naomi for all of the payments that she had made, but he insists that the house will always belong to him. The market value of the house has recently and unexpectedly increased from $150 000 to $400 000. Which of the following statements is most likely TRUE?