Professional Documents
Culture Documents
WEEK 2
WEEK 2 MULTIPLE CHOICE QUIZ
A. Statutes
B. Common Law
C. Law of Equity
D. Paramountcy
WEEK 2 MULTIPLE CHOICE QUIZ
A. Federal; Education
B. Provincial; Healthcare
C. Federal; Banking and Money issues
D. Provincial; Matters of local commerce
WEEK 2 MULTIPLE CHOICE QUIZ
A. Binding
B. Persuasive
3-4
WEEK 2 MULTIPLE CHOICE QUIZ
A. Injunction
B. Specific Performance
C. Accounting
D. Damages
WEEK 2 MULTIPLE CHOICE QUIZ
5. A Plaintiff in a civil action must prove his case based on which legal standard?
Chapter 3
Formation of
Contracts
CHAPTER 3 Learning Objectives
• Contract Formation
• Understand the elements of a Contract
• Be able to describe the process by which consensus is
reached
• Be able to identify a valid offer and acceptance
• Explain “consideration”
• Understand what the concepts of gratuitous promises and
promissory estoppel are
• requirements of capacity, legality, and infancy
• Understand that contracts require “intent”
• Is a written document is required
WHAT IS A CONTRACT?
What is a Contract?
• Post-box rule
– Exception to rule that acceptance must be
communicated
– Where use of mail is a reasonable form of acceptance,
acceptance is effective when and where posted
– Also applies to telegrams and possibly couriers
– Does not apply to facsimile or email
Consideration
• Facts: Linda Mackenzie (Plaintiff) and her husband build a house on land
given to her husband by her mother. Her father in law (Defendant) assisted in
the construction. The Defendant loaned his son considerable money before
completion of the house. Plaintiff and Defendant signed a mortgage in favor of
Defendant for $25,000 at 10% interest. No money changed hands and the
Defendant claimed he had already advanced the $25,000 to his son. The
mortgage was not registered until three months after the son died which was
14 years later. Defendant now wishes to claim on the mortgage which he
claims is worth $112,000.
• Issue: whether there was any consideration to support the mortgage?
• Rule: Past consideration is no consideration.
• Analysis: judge found that any money that had been given to the son prior to
the building of the house was a gift given out of love and affection and any
monies had ben given to the son prior to when the mortgage was signed.
• Conclusion: finding in favor of Plaintiff
Consideration
• Parties can change contract obligations, but all parties must receive
“new” consideration - Past Consideration is not new consideration
• Gratuitous promises not binding on promisor with some exceptions:
– Taking less in full satisfaction of debt is binding by statute
– Promissory Estoppel – reliance on gratuitous promise may be used
as a defence only
– With a seal, no need to establish consideration
Promise to Pay Higher Price Not Supported by Consideration
Gilbert Steel Ltd. v. University Construction Ltd.
• Void
– There never was a contract
– Both parties are free from obligations
• Voidable
– One party has the right to escape the contract (called
rescission); contract valid until this is done
Intent
• The Parties to a K must intend legal consequences
to flow from contract for any breach
• Would the reasonable person thought he/she was
entering into a legally enforceable contract? This
is an objective standard.
• One must have the capacity to for the intent to K
see Infants, Intoxication, and Insanity.
• Presumption that that business and commercial
contracts are legally binding, and to get out of one
you would have to produce evidence that indicated
an opposite intention.
Capacity
Infants