Exam 7: An Introduction to Contracts

When an offeree dies before accepting an offer, the offer does not lapse because the deceased's personal representative can accept an offer on behalf of a deceased person.

The world of commerce requires that the intention to create a legal relationship be proven before any contract can be found to exist between the parties.

It was almost time for the Heeleys to renew the mortgage on their home and they were considering their options. The mortgage was currently held by the Big Bank and the Heeleys were not satisfied with the service they had received from the Big Bank's mortgage staff. Recently, the local radio station had been airing commercials for the Little Bank, which suggested that people switch their mortgages to Little Bank to take advantage of better rates and more personal service. As a special incentive, the commercials stated that, for a limited time, for every mortgage over $50,000 which was brought to Little Bank from another financial institution, Little Bank would give the customer an all-expense-paid trip to Mexico. Feeling in need of a vacation, the Heeleys decided to take advantage of this incentive and made an appointment to see the manager of Little Bank. During their meeting the manager explained that the Mexico trip would be given on mortgages brought within the next month. The Heeleys mortgage did not expire at Big Bank for another six weeks, however the manager said it should not be a problem awarding them the trip for having made the commitment within the advertised period to transfer their mortgage. At the end of the six weeks, the Heeleys transferred their mortgage to Little Bank and delivered the paperwork needed by the bank to set up their trip. Several days later the Heeleys received a telephone call from the head office of the Little Bank informing them that they were not eligible to receive the trip as their mortgage had not been transferred within the offer period. Discuss the legal issues that arise as a result of this case. What legal principles might the Heeleys and the bank apply to support their respective positions, and what would be the likely result should legal action ensue?

Ian offered to sell his horse to Wanda for $3,500. Wanda wanted to think about it and let Ian know by email. Ian agreed. Wanda emailed Ian at 11:45 that night. At 6 a.m. Ian accepted an offer to sell the horse to William for $3,700. He read his email at 8 a.m. Can Wanda sue Ian for breach of contract?

Microsoft uses a click wrap agreement with a clause requiring all disputes to be heard in the state of Washington, U.S.A. Microsoft has its head office in Redmond, Washington. A consumer resides in Ontario. Is this click wrap agreement binding?

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul and Jones established a binding contract when Jones telephoned Rahul and accepted Rahul's offer to buy his canoe for $200.

There are requirements predetermined by law to make a contract binding and, therefore, legally enforceable. With your knowledge of the process of arriving at a contract, explain how that process relates to the legal solidification of a contract.

Rosa offers Valerie the chance to buy her cottage for $25,000. Two days later, while Valerie is still considering the offer, Rosa's sister mentions to Valerie that Rosa has sold the cottage to Ben for $30,000. If Valerie now accepts, Rosa will be liable for breach of contract.

Mr. Gatlin went into a supermarket where he saw a new kind of toothpaste on a shelf, priced at $2.69. He decided to try it, so he took it to the checkout and placed it on the moving counter. The staff member at the checkout ran up the sale, took Mr. Gatlin's money and put the toothpaste in a bag, handing it with the receipt and the change to Mr. Gatlin. A contract was formed when:

Salem said to Crystal over his cell phone, "Do you want to buy my car for $2,000?" Before she heard him, her cell phone dropped the call. Can she accept the offer?

Becky is colouring her hair one day and her friend Kamilah asks if Becky will colour hers as well. Becky agrees and does a good job. Two months later, Becky goes to a professional hairdresser to have her hair coloured and pays her $100. Becky should also be entitled to payment for her colouring job.

Tom offers to buy Jenny's fishing tackle for $500, but she says she wants $600. Tom then proposes a price of $550, but Jenny says she is not interested. Tom is afraid she will walk away from a deal, so he says "OK. I'll accept your offer to sell for $600." There is now a contract between them.

Mike responds to Flavio's statement that he would like to buy Mike's motorbike for $3,000 by saying that he would want $4,000, given the work he has put into it. Flavio says OK. I'll give you that. Here's $2,000, and I'll give a promissory note for the balance payable at $500 a month for the next 4 months." 1. There is a contract. 2) There is no contract. 3) Flavio's first statement to Mike was an invitation to do business. 4) Flavio's response was a counter offer. 5) Flavio's final statement to Mike was an acceptance.

Discuss the significance of Carlill v. Carbolic Smoke Ball Co. [1893], 1 Q.B. 256 for modern day marketing practice. Give some examples to illustrate your points.

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul's offer lapsed when Jones did not immediately accept the offer before the two parties departed on their separate business.

Which of the following elements does not constitute a legal relationship in contract?

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul is not bound in contract with Brown because the prior contract he made with Jones became enforceable when Jones accepted his offer.

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. The acceptance by Jones was ineffective because Jones did not reply to Rahul by way of a written acceptance.

Which of the following are NOT presumed to be binding?

Andy offers to sell his car to Bob, but Bob needs to arrange financing, so Andy says he will give Bob three days to do so. Andy can revoke the offer before the three days are up.