Contract Law: Acceptance and Consideration

Study Notes

Acceptance by post is effective when the letter is stamped and posted
Acceptance by telephone, fax, or modern means of communication is effective only when received by the offeror, not when sent

A fundamental element of a contract
A promise or action made by one party in exchange for the promise or action made by another party
Must be real (has value and can be converted into cash)
Must be lawful
Can be executed (when both parties have completed their part as required by the contract) or executory (a promise to be completed in the future)
Must be possible
Need not be adequate but sufficient
Must not be past (an act performed before a promise of payment or consideration is made)

Simple contracts: require no special form, may be oral, in writing, or implied by conduct
- Examples: traveling, purchase of personal needs, assignments of copyright, insurance contracts, hire purchase or credit sales, lease of land or property for three years
Specialty contracts: contracts dealing with mortgages and the sale of land, also known as contracts by deed

Agreement: offer and acceptance
Offer: a proposal or bid by a party or their agent to another party
Counteroffer: rejecting the original offer and replacing it with a new offer
Invitation to treat: an advertisement to make an offer
Acceptance: exists when the offeree agrees to all the terms and conduct of the offer

By performance: both parties do their part
By agreement: both parties agree to cancel
By breach: one party decides to complete their obligation, but the other does not
By renunciation: one party carries out a portion and fails to go any further
By lapse of time: one party fails to carry out their obligation within a reasonable time
By frustration: a change in circumstances after the contract was made, which is not the fault of either party, rendering the contract impossible to perform or depriving it of its commercial purpose
By death
By bankruptcy