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1 Contract
A contract is a promise or a set of promises for the breach of
which the law gives a remedy, or the performance of which
the law in some way recognizes as a duty.
TERM 2
2 Promise; Promisor; Promisee;
Beneficiary
DEFINITION 2 (1) A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made. (2) The person manifesting the intention is the promisor. (3) The person to whom the manifestation is addressed is the promisee. (4) Where performance will benefit a person other than the promisee, that person is a beneficiary. TERM 3
3 Agreement ; Bargain
DEFINITION 3
An agreement is a manifestation of mutual assent on the part
of two or more persons. A bargain is an agreement to
exchange promises or to exchange a promise for a
performance or to exchange performances.
TERM 4
4 How a Promise May Be Made
DEFINITION 4
A promise may be stated in words either oral or written, or
may be inferred wholly or partly from conduct.
TERM 5
9 Parties Required
DEFINITION 5
There must be at least two parties to a contract, a promisor
and a promisee, but there may be any greater number.
14 Infants
Unless a statute provides otherwise, a natural person has the
capacity to incur only voidable contractual duties until the
beginning of the day before the person's eighteenth birthday.
TERM 7
15 Mental Illness or Defect
DEFINITION 7 (1) A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect (a) he is unable to understand in a reasonable manner the nature and consequences of the transaction, or (b) he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition. (2) Where the contract is made on fair terms and the other party is without knowledge of the mental illness or defect, the power of avoidance under Subsection (1) terminates to the extent that the contract has been so performed in whole or in part or the circumstances have so changed that avoidance would be unjust. In such a case a court may grant relief as justice requires. TERM 8
16 Intoxicated Persons
DEFINITION 8
A person incurs only voidable contractual duties by entering
into a transaction if the other party has reason to know that
by reason of intoxication (a) he is unable to understand in a
reasonable manner the nature and consequences of the
transaction, or (b) he is unable to act in a reasonable manner
in relation to the transaction.
TERM 9
17 Requirement of a Bargain
DEFINITION 9
(1) Except as stated in Subsection (2), the formation of a
contract requires a bargain in which there is a manifestation
of mutual assent to the exchange and a consideration. (2)
Whether or not there is a bargain a contract may be formed
under special rules applicable to formal contracts or under
the rules stated in 82-94.
TERM 10
18 Manifestation of Mutual Assent
DEFINITION 10
Manifestation of mutual assent to an exchange requires that
each party either make a promise or begin or render a
performance.
25 Option Contracts
An option contract is a promise which meets the
requirements for the formation of a contract and limits the
promisor's power to revoke an offer.
TERM 17
26 Preliminary Negotiations
DEFINITION 17
A manifestation of willingness to enter into a bargain is not
an offer if the person to whom it is addressed knows or has
reason to know that the person making it does not intend to
conclude a bargain until he has made a further manifestation
of assent.
TERM 18
27 Existence of Contract Where Written
Memorial Is Contemplated
DEFINITION 18
Manifestations of assent that are in themselves sufficient to
conclude a contract will not be prevented from so operating
by the fact that the parties also manifest an intention to
prepare and adopt a written memorial thereof; but the
circumstances may show that the agreements are
preliminary negotiations.
TERM 19
29 To Whom an Offer Is Addressed
DEFINITION 19 (1) The manifested intention of the offeror determines the person or persons in whom is created a power of acceptance. (2) An offer may create a power of acceptance in a specified person or in one or more of a specified group or class of persons, acting separately or together, or in anyone or everyone who makes a specified promise or renders a specified performance. TERM 20
30 Form of Acceptance Invited
DEFINITION 20 (1) An offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing a specified act, or may empower the offeree to make a selection of terms in his acceptance. (2) Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.
32 Invitation of Promise or
Performance
In case of doubt an offer is interpreted as inviting the offeree
to accept either by promising to perform what the offer
requests or by rendering the performance, as the offeree
chooses.
TERM 22
33 Certainty
DEFINITION 22 (1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain. (2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy. (3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance. TERM 23
35 The Offeree's Power of Acceptance
DEFINITION 23
(1) An offer gives to the offeree a continuing power to
complete the manifestation of mutual assent by acceptance
of the offer. (2) A contract cannot be created by acceptance
of an offer after the power of acceptance has been
terminated in one of the ways listed in 36.
TERM 24
36 Methods of Termination of the Power of
Acceptance
DEFINITION 24 (1) An offeree's power of acceptance may be terminated by (a) rejection or counter-offer by the offeree, or (b) lapse of time, or (c) revocation by the offeror, or (d) death or incapacity of the offeror or offeree. (2) In addition, an offeree's power of acceptance is terminated by the non-occurrence of any condition of acceptance under the terms of the offer. TERM 25
37 Termination of Power of Acceptance Under
Option Contract
DEFINITION 25
Notwithstanding 38-49, the power of acceptance under an
option contract is not terminated by rejection or counter-
offer, by revocation, or by death or incapacity of the offeror,
unless the requirements are met for the discharge of a
contractual duty.
43 Indirect Communication of
Revocation
An offeree's power of acceptance is terminated when the
offeror takes definite action inconsistent with an intention to
enter into the proposed contract and the offeree acquires
reliable information to that effect.
TERM 32
45 Option Contract Created by Part
Performance or Tender
DEFINITION 32 (1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. (2) The offeror's duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer. TERM 33
46 Revocation of General Offertion Created
by Part Performance or Tender
DEFINITION 33 Where an offer is made by advertisement in a newspaper or other general notification to the public or to a number of persons whose identity is unknown to the offeror, the offeree's power of acceptance is terminated when a notice of termination is given publicity by advertisement or other general notification equal to that given to the offer and no better means of notification is reasonably available. TERM 34
48 Death or Incapacity of Offeror or Offeree
DEFINITION 34
An offeree's power of acceptance is terminated when the
offeree or offeror dies or is deprived of legal capacity to enter
into the proposed contract.
TERM 35
50 Acceptance of Offer Defined; Acceptance
by Performance; & by Promise
DEFINITION 35 (1) Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer. (2) Acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise. (3) Acceptance by a promise requires that the offeree complete every act essential to the making of the promise.
51 Effect of Part Performance Without
Knowledge of Offer
Unless the offeror manifests a contrary intention, an offeree
who learns of an offer after he has rendered part of the
performance requested by the offer may accept by
completing the requested performance.
TERM 37
52 Who May Accept an OfferAccept
DEFINITION 37
An offer can be accepted only by a person whom it invites to
furnish the consideration.
TERM 38
53 Acceptance by Performance; Manifestation
of Intention Not to Accept cont'd
DEFINITION 38
(1) An offer can be accepted by the rendering of a
performance only if the offer invites such an acceptance. (2)
Except as stated in 69, the rendering of a performance does
not constitute an acceptance if within a reasonable time the
offeree exercises reasonable diligence to notify the offeror of
non-acceptance.
TERM 39
53 Acceptance by Performance; Manifestation
of Intention Not to Accept
DEFINITION 39
(3) Where an offer of a promise invites acceptance by
performance and does not invite a promissory acceptance,
the rendering of the invited performance does not constitute
an acceptance if before the offeror performs his promise the
offeree manifests an intention not to accept.
TERM 40
54 Acceptance by Performance; Necessity of
Notification to Offeror cont'd
DEFINITION 40 (1) Where an offer invites an offeree to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offer requests such a notification. (2) If an offeree who accepts by rendering a performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless
60 Acceptance of Offer Which States Place,
Time or Manner of Acceptance
If an offer prescribes the place, time or manner of
acceptance its terms in this respect must be complied with
in order to create a contract. If an offer merely suggests a
permitted place, time or manner of acceptance, another
method of acceptance is not precluded.
TERM 47
62 Effect of Performance by Offeree Where
Offer Invites Either Performance or Promise
DEFINITION 47
(1) Where an offer invites an offeree to choose between
acceptance by promise and acceptance by performance, the
tender or beginning of the invited performance or a tender of
a beginning of it is an acceptance by performance. (2) Such
an acceptance operates as a promise to render complete
performance.
TERM 48
63 Time When Acceptance Takes Effect
DEFINITION 48 Unless the offer provides otherwise, (a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but (b) an acceptance under an option contract is not operative until received by the offeror. TERM 49
65 Reasonableness of Medium of Acceptance
DEFINITION 49
Unless circumstances known to the offeree indicate
otherwise, a medium of acceptance is reasonable if it is the
one used by the offeror or one customary in similar
transactions at the time and place the offer is received.
TERM 50
66 Acceptance Must Be Properly
Dispatched
DEFINITION 50
An acceptance sent by mail or otherwise from a distance is
not operative when dispatched, unless it is properly
addressed and such other precautions taken as are ordinarily
observed to insure safe transmission of similar messages.
69 Acceptance Acceptance by Silence or
Exercise of Dominion cont'd
(1) Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only: (a) Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation. (b) Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer. TERM 52
69 Acceptance Acceptance by Silence or
Exercise of Dominion
DEFINITION 52 (c) Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept. (2) An offeree who does any act inconsistent with the offeror's ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him. TERM 53
71 Requirement of Exchange; Types of
Exchange cont'd
DEFINITION 53
(1) To constitute consideration, a performance or a return
promise must be bargained for. (2) A performance or return
promise is bargained for if it is sought by the promisor in
exchange for his promise and is given by the promisee in
exchange for that promise.
TERM 54
71 Requirement of Exchange; Types of
Exchange
DEFINITION 54
(3) The performance may consist of (a) an act other than a
promise, or (b) a forbearance, or (c) the creation,
modification, or destruction of a legal relation. (4) The
performance or return promise may be given to the promisor
or to some other person. It may be given by the promisee or
by some other person.
TERM 55
90 Promise Reasonably Inducing Action or
Forbearance
DEFINITION 55 (1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. (2) A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance.
161 When Non-Disclosure Is Equivalent to an
Assertion cont'd
A person's non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only: (a) where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material. (b) where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if non-disclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. TERM 62
161 When Non-Disclosure Is Equivalent to an
Assertion
DEFINITION 62
(c) where he knows that disclosure of the fact would correct a
mistake of the other party as to the contents or effect of a
writing, evidencing or embodying an agreement in whole or
in part. (d) where the other person is entitled to know the
fact because of a relation of trust and confidence between
them.
TERM 63
162 When a Misrepresentation Is Fraudulent
or Material cont'd
DEFINITION 63 (1) A misrepresentation is fraudulent if the maker intends his assertion to induce a party to manifest his assent and the maker (a) knows or believes that the assertion is not in accord with the facts, or (b) does not have the confidence that he states or implies in the truth of the assertion, or (c) knows that he does not have the basis that he states or implies for the assertion. TERM 64
162 When a Misrepresentation Is Fraudulent
or Material
DEFINITION 64
(2) A misrepresentation is material if it would be likely to
induce a reasonable person to manifest his assent, or if the
maker knows that it would be likely to induce the recipient to
do so.
TERM 65
163 When a Misrepresentation Prevents
Formation of a Contract
DEFINITION 65
If a misrepresentation as to the character or essential terms
of a proposed contract induces conduct that appears to be a
manifestation of assent by one who neither knows nor has
reasonable opportunity to know of the character or essential
terms of the proposed contract, his conduct is not effective
as a manifestation of assent.
174 When Duress by Physical Compulsion
Prevents Formation of a Contract
If conduct that appears to be a manifestation of assent by a
party who does not intend to engage in that conduct is
physically compelled by duress, the conduct is not effective
as a manifestation of assent.
TERM 67
175 When Duress by Threat Makes a Contract
Voidable
DEFINITION 67 (1) If a party's manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim. (2) If a party's manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction. TERM 68
176 When a Threat Is Improper Cont'd
DEFINITION 68 (1) A threat is improper if (a) what is threatened is a crime or a tort, or the threat itself would be a crime or a tort if it resulted in obtaining property, (b) what is threatened is a criminal prosecution, (c) what is threatened is the use of civil process and the threat is made in bad faith, or (d) the threat is a breach of the duty of good faith and fair dealing under a contract with the recipient. TERM 69
176 When a Threat Is Improper
DEFINITION 69 (2) A threat is improper if the resulting exchange is not on fair terms, and (a) the threatened act would harm the recipient and would not significantly benefit the party making the threat, (b) the effectiveness of the threat in inducing the manifestation of assent is significantly increased by prior unfair dealing by the party making the threat, or (c) what is threatened is otherwise a use of power for illegitimate ends. TERM 70
177 When Undue Influence Makes a Contract
Voidable Cont'd
DEFINITION 70 (1) Undue influence is unfair persuasion of a party who is under the domination of the person exercising the persuasion or who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare. (2) If a party's manifestation of assent is induced by undue influence by the other party, the contract is voidable by the victim.
179 Bases of Public Policies Against
Enforcement
(i) restraint of trade ( 186-188), (ii) impairment of family
relations ( 189-191), and (iii) interference with other
protected interests ( 192-196, 356).
TERM 77
186 Promise in Restraint of Trade
DEFINITION 77
(1) A promise is unenforceable on grounds of public policy if
it is unreasonably in restraint of trade. (2) A promise is in
restraint of trade if its performance would limit competition in
any business or restrict the promisor in the exercise of a
gainful occupation.
TERM 78
205 Duty of Good Faith and Fair Dealing
DEFINITION 78
Every contract imposes upon each party a duty of good faith
and fair dealing in its performance and its enforcement.
