Exam 7: The Nature and Creation of Contracts

As a matter of risk management, how can a business avoid becoming involved in a battle of the forms?

On June 1st, Maureen sent a letter to Joel that offered to sell 10 000 shares in Tadpole Inc (a computer software company) for $5 each. Her letter did not require Joel to respond by any particular date. On June 3rd, Tadpole Inc publicly announced that its engineers had perfected a new technology that would revolutionize the electronic commerce industry. By June 4th, the price of a single share in the company had increased to $100. On June 6th, Joel returned from his cottage and learned of both Maureen's offer and the price of Tadpole Inc shares. He promptly sent a letter to Maureen that said, "I accept your offer. I will pay a total of $50 000 for 10 000 shares in Tadpole Inc." Maureen obviously no longer wants to sell her shares under the price that she quoted in her offer. Discuss the factors that a court would consider in deciding whether or not she and Joel had created a contract.

Morris posted a notice promising to pay a $50 reward to anyone who found his lost cat. Morris saw Edna, his neighbour, and drew her attention to the notice. She expressed sympathy, but said that she did not have time to help because she was rushing off to work. When she returned home early that afternoon, however, she went to Morris's house to tell him that she would look for the cat. Although he was not at home, she searched the area, found the animal and returned it to his house. Morris now refuses to pay Edna the $50. A court would most likely say that Edna can

Rabby Inc is an oil exploration company that wants a sophisticated piece of equipment to be designed for its operations in northern Alberta. It therefore wants to receive bids from various engineering companies. In the context of a normal tendering process, which of the following statements is TRUE?

An offer is always automatically revoked if either the offeror or the offeree dies before acceptance.

From a risk management perspective, explain why it may be better for a business to use an invitation to treat, rather than an offer, when seeking someone to buy its product.

An invitation to treat

Cindy calls Davin to accept his offer to trim her hedges in exchange for a haircut. Cindy is described as the

Acme Corp is a widget manufacturer that carries on business in Edmonton. Until recently, it sold its products only within the province of Alberta. However, it now wants to sell to customers in Manitoba as well. It is concerned, however, about the effect of the Alberta Contracts Enforcement Act. That statute says that only specially licenced companies are entitled to sell widgets under "contracts that are made within the province of Alberta." Acme Corp is not specially licenced. The statute does not, however, affect contracts that are created outside of Alberta. Bearing in mind the general rules regarding offers and acceptances, suggest ways in which Acme Corp can go ahead with its proposal without violating the Contracts Enforcement Act.

On March 1st, Janet, who lives in Edmonton, sent a letter to Tad, who lives in Toronto. The letter said: "I want to buy your car. I'll pay $10 000 for it. If I don't hear anything more from you, I'll assume that I can drive the car away when I'm in Toronto at the beginning of April." When he received that letter on March 5th, Tad phoned Janet. She was not home, but he left a message on her answering machine that said: "I'm willing to sell my car to you, but only if you promise to pay $15 000. I need your answer within one week." Janet listened to that message on March 6th. That same day, she sent a second letter to Tad that said, "I received your message. I'll pay $15 000, but not one cent more." On March 10th, Tad decided that he did not want to sell the car after all. He immediately left a message on Janet's answering machine that said: "The deal is off. I'm keeping my car." An hour later, he received Janet's second letter. Which of the following statements is most likely TRUE?

Which of the following statements is TRUE?

List five ways in which an offer can be terminated.

A person may be held liable under a contract even if they did not personally want to enter into an enforceable agreement.

Gordon sends a letter to Thomas that says "I will buy your diesel engine for $7000." At exactly the same time, Thomas sends a letter to Gordon that says "I will sell my diesel engine to you for $7000." Which of the following statements is TRUE?

Under the normal tendering process, a party that submits a bid may have obligations under both Contract A and Contract B.

As a general rule, the courts will not enforce an agreement that is not in writing.

Henrique posts a notice at the racetrack that says he is willing to sell his old horse for $5000. When he returns to the track the next day two people arrive at the same time to buy the horse. A court would most likely say that Henrique

ABC Inc and XYZ Ltd entered into a written agreement for the purchase and sale of paper products. That agreement contained a clause that said: "This arrangement is not entered into, nor is this memorandum written, as a formal or legal agreement, and shall not be subject to legal jurisdiction in the Law Courts." ABC Inc wants the paper products, but XYZ Ltd refuses to deliver them. Which of the following statements is most likely TRUE?

"If a contractual offer is accepted by conduct, rather than words, the parties must have a unilateral contract, rather than a bilateral contract." Discuss that statement. Use examples to prove your answer.

Marissa had 500 shares in XYZ Corp that she was willing to sell at a price of $10 each. She wrote a letter to Mark that said, "I will sell 500 shares in XYZ Corp to you at a price of $10 each. You can accept any time within the next month. This is a firm offer." Marissa signed and sealed that document. When he received that letter two days later, Mark decided to accept Marissa's offer. He wrote a letter to that effect, but then forgot to mail it. Two weeks later, the value of the shares increased to $20 each. Marissa therefore no longer wanted to sell them at the original price. She telephoned Mark and told him that her offer was revoked. She was entitled to do so.