2. The Formation of Contracts (Chap 2).docx

2. The Formation of Contracts (Chap 2).docx - 2 THE...

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2. THE FORMATION OF CONTRACTS Readings : Chapter 2 pg. 45 - 73 1. General: offer and acceptance; tacit agreements A contract is formed when the parties reach agreement on all the material terms of the contract. The primary basis of a contract is consensus, not offer and acceptance. The rules of offer and acceptance constitute a useful, but not essential, analytical tool in understanding the formation of contracts. As a general rule, the parties may express their intentions in any form whatsoever: in writing, orally, or by conduct. Even silence can signify agreement, but only in highly exceptional circumstances. Thus, a contract may be formed tacitly , without any words being used by either party, or, more commonly, the offer may be in writing and the acceptance tacit. An offer can be made to an individual or to a group of people. 2. The offer An offer is simply a proposal to contract. More formally, it is a declaration of intention by one party (the offeror) to another (the offeree), indicating the performance that he or she is prepared to make, and the terms on which he or she will make it. Being a unilateral declaration, an offer does not in itself give rise to a binding obligation. Until such acceptance, the offeror may withdraw the offer, unless he or she is bound by a separate agreement not to do so. An agreement not to withdraw an offer is known as an option. The offer must be: 1. Firm, made animo contrahendi: That is to say, with the intention that its acceptance will call into being a binding contract. It is a question of fact. 2. Complete: The offer must contain all the material terms of the proposed agreement – there cannot be further matters that still have to be negotiated before the overall agreement can take effect.
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3. Clear and certain: The offer must be sufficiently certain; it should be enough for the addressee merely to answer ‘yes’, for a contract to come into being. The Consumer Protection Act introduces further requirements concerning offers. The offer must be in plan and understandable language The offer must disclose whether goods are reconditioned or grey-market goods – a person who offers to supply goods what have been reconditioned, rebuilt or remade and bear the trademark of the original producer or supplier must indicate that said goods have been reconditioned, rebuilt or remade. Negative option marketing in prohibited – a supplier may not promote any goods or services on the basis that the goods or services are to be supplied unless the consumer declines the offer Consumers have the right to a cooling-off period if goods were marketed to them directly – a person who markets good or services to a consumer at a place other than their usual place of business must inform the consumer that they can rescind any contract concluded within five days Catalogue marketing is regulated.
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