Teacher Notes A B C D

Reflection

What is a contract?

Contracts are a form of everyday life. Every time you purchase a cd, ride a bus, or go to a movie you
enter into a contract.

Elements of a Contract

A contract is a legally binding agreement between two or more parties. Contracts may or written or oral
in order to be legally binding.

To be a legal contract it must have three elements:

offer

acceptance

consideration

One party promises to do something and the other party promises to do something in return - the offer
and acceptance. The consideration is the exchange of something of value - everyone receives a benefit.

Activity

How does this example fit the definition of a contract?

Ben promises to cut Nettie's lawn once a week. Nettie agrees to pay Ben $5 per week for the service.
offer

acceptance

consideration

The courts may not always recognize an agreement as legally binding and enforcable.

Mike and Terri agreed to go out for lunch. At the last minute MIke backs out. He made a promise, but
this was a social agreement, not a moral obligation. Neither of them intended to create a legally
enforcable agreement.

Activity

Explain whether this is a contract? Record an answer in your notebook.

Setting : Garage Sale

Susie: I'll give you $100 for that computer desk.

Tyler: Well... I really want $150 for it.

Susie: I will go look somewhere else.

Tyler: No, don't, I'll take the $100.

Once the parties have entered into a contract, they cannot cancel or change it simply because they have
changed their mind, unless the other party agrees to cancel or change too. One party can can sue the
other by ordering the contract performed, or damages paid for the breach of contract.

Teacher Notes A B

Afterthe offer, acceptance, and consideration have been establised to firm up a contract, the next
element of a contract is the capacity to contract.

All sane and sober adults can form contracts, but there are laws to protect people from being exploited
in contract situations. Contracts are not legally binding for:

minors

people with mental disability

people with impaired judgment

illness

disability

hypnosis

alcohol/drugs
The intent is to protect individuals who may not have the ability to make decisions in their own best
interest.

Across Canada the age of majority varies. In Saskatchewan it is 18. In the other Canadian provinces and
territories it varies between 18 and 19 years of age.

Reflection

Why do the provinces have a difference age of majority? How is this beneficial? How is this
problematic?

The age of majority is not the same as the age at which a person can legally marry, drink, or drive a car.
Why is this the case?

Contracts for Necessities

An exception to this rule is for the necessities of life (food, clothing, shelter). In such cases a contract
with a minor can be enforced or businesses would not want to deal with minors.There are times when a
good or service is necessary for a minor to have.A teenager may need to rent or purchase a tuxedo to
attend his graduation or to be a groomsman at a family wedding. Normally teens do not have need for a
tuxedo. The business should enter into contract with the teenager because of the social need.

Just like for a adult, wIth contracts for necessities, a minor may not be forced to pay the contract price if
it is not in their best interest. A "reasonable" exchange must occur.

For example if Shereen purchases athletic shoes for $120 at one store, then sees them selling for $90 at
another store, the store of purchase should match the better price.
Legally in this case Shereen has the same right to "reasonable" price as an adult.

People With Disability or Impaired Judgment are treated much the same as minors, through protection.
As with minors, people with impaired judgement are obligated to pay only a "reasonable" price for
necessaries.

Teacher Notes A B C D

In order to be a legally enforceable contract, it must meet the following requirements:

offer of contract must be presented

acceptance of the contract must take agreed upon

consideration of the benefits for the parties involved

genuine consent to enter into contract from both parties involved

People often do not realize that there are certain types of contracts which are void and unenforceable
even when the four requirements have been satisfied?

These contracts are considered illegal contracts, and include:

contracts violating statute law

contracts against public policy

This makes sense. Why would anyone get involved with a contract that knowingly breaks the law?

Teacher Notes A B C

Did you know that every time you make a purchase you are entering into a consumer contract? It does
not matter if the purchase is for a new sweater or if it is a pack of gum. The purchase is still considered a
contract. The majority of Canadians take for granted the benefits of consumer protection, but
when an issue arises and protection is needed the importance of the law becomes very apparent.

Where is contract law derived from?

While the law of contract is founded within the common law, statute law has been developed in order
to clarify and to protect the interests of consumers against potentially more powerful commercial
interests.

Statutes associated with consumer protection are designed to provide a remedy to the consumer, that is
not provided via the common law.

Consumer protection is covered at the provincial level in terms of issues related to the actual goods
exchanged.

At the federal level, legislation addresses issues of pricing and advertising of goods and services.One
feature of statute law in consumer protection legislation is the absence of privity, allowing a consumer
to hold a retailer accountable for a product, even if a third party supplier manufactured the product.

Where did contract law originate?

Contract law developed to fulfill the need to resolve disputes in business transactions.

Until the 17th century, the only legal remedy for individual commercial disputes was through the law of
torts, whereby an individual could undertake tort action for harm caused by failure to repay debt.
As commercial transactions increased in volume and complexity, the need to recognize a legal
relationship in the exchange of goods and services became more apparent. In the latter 17th century,
judges began to hear increasing numbers of cases regarding commercial transactions, resulting in the
genesis of contract law.

People needed protection to ensure that what they were buying is exactly what they got. Are the
guarantees, really guarantees?

The purpose of contracts is:

to protect the reasonable expectations of the parties involved in an agreement

to provide an avenue for dispute settlement according to the rule of law.

Most often Individuals form contracts when they undertake common consumer transactions, whether
as buyers or sellers, lessors or renters. Under common law, only parties to a contract are entitled to
contractual rights.

If my brother purchased a car from one of the local dealerships, the contract is between my brother and
the dealership. I have no part of that aggrement.