FORMATION OF A CONTRACT
Contract: a promise or set of promises which the law will enforce
6 elements of a valid contract:
1) intention to create legal relations
2) agreement
3) consideration
4) legal capacity
5) genuine consent
6) legality of objects
bilateral contract: a promise for a promise
unilateral contract: a promise to be accepted by the performing of an act
Must a contract be in writing? Generally no (with the exception of specific classes which must be in writing or they will be void, and other specific classes which should be evidenced in writing under the Statute of Frauds or else they will not be enforceable)
A “free” promise is unenforceable (no consideration) unless it is contained in a deed – a “formal” contract which is “signed, sealed and delivered.” All the contracts we are studying, however, are “simple” contracts (no formal requirements, such as signed, sealed & delivered)
INTENTION TO CREATE LEGAL RELATIONS
Agreement (mutual promises) doesn’t in itself create a contract. The law requires evidence of some intention of the parties (express or implied) to become bound in a contract.
2 presumptions (may be rebutted):
1) parties to an agreement concerning commerce or business intend to be legally bound
2) parties to an agreement of a family, domestic, social or voluntary nature do not intend to be bound
the test is objective (what conclusions can be drawn by a reasonable person from the parties’ words or conduct), not subjective (what the parties actually had in mind)
examples of commercial agreements where presumption was rebutted (was no intent to be bound): those binding “in honour only,” “comfort letters,” statements of intention, general policy of governments carrying out a statutory function
examples of domestic agreements where presumption was rebutted (was intent to be bound): husband & wife had separated & wife paid husband’s mortgage payments for a...