4. CLaw - Essentials of a Contract.docx - Contract Law Essentials of a Contract Definition of a Contract A contract is an agreement which(1 binds the

4. CLaw - Essentials of a Contract.docx - Contract Law...

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Contract Law: Essentials of a Contract Definition of a Contract: A contract is an agreement which (1) binds the parties and (2) is enforceable in law If any one of the above-mentioned elements is missing, there will not be a valid contract. An offer may be made to: 1. A single person 2. A group of persons 3. To the whole world Invitation to Treat (ITT) An offer to negotiate or an offer to receive offers. Unlike an offer, it is not an indication by the person making it that he is willing to be bound should the other party be interested in proceeding further. Common instances of invitations to treat: 1. Display of goods a. If display of goods is considered an offer, a seller may not be able to state that he has reserved the goods for someone else or already sold to someone else. Further, when a customer tries it on or brings it to the cashier, it might amount to acceptance and he may not be able to change his mind afterwards 2. Advertisements a. As it is unreasonable to expect the advertiser to always have sufficient stocks of the items he advertises unless stated so b. Practical effect of the rule is that if the goods stated are not available, the advertiser will not be liable for breach of contract c. Exception : advertisements may amount to offers especially true of unilateral contracts – one party makes a promise, the other party does not promise anything. In such situations, advertisements would usually be considered as offers and once the act has been completed, there would be contract i. Prudent for the company to state that the offer lasts for only as long as the stocks of free gifts last 3. Company Prospectus a. ITT: company not promising that all applications will be approved or granted OFFER Three Elements of a Contract 1. Offer and Acceptance 2. Intention to create legal relations 3. Consideration (sufferance)
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b. Offer: when potential investors apply for shares c. Acceptance: when company allots the shares to the investors 4. Auctions a. ITT: auctions that call for bids b. Offer: when the bidder places the bid c. Acceptance: when auctioneer selects the highest bid and knocks with his hammer 5. Tenders a. ITT: call for tender b. Offer: when tender is placed c. Acceptance: tender that the company accepts 6. Quotations a. Offer or ITT depends on factors eg what the quotation actually states and whether essential matters have been addressed
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