Unit Three: Reaching Agreement, Offer, and Acceptance (Vocabulary Flashcards)

Vocabulary flashcards covering key terms and definitions related to consensus, offers, acceptance, and basic contract-law concepts from the lecture notes.

Consensus

True agreement forming the basis of a contract; parties must reach consensus on rights and duties; creates obligations and requires serious intention.

Animus Contrahendi

Latin for intention to be bound; parties must have serious intention to create legally binding rights and duties.

Common Intention and Declaration

Parties must intend to create the same legal relationship; both aware of the other’s intentions; can be shown in writing, orally, or by conduct; indicator is offer/acceptance.

Offer

Declaration by the offeror of an intention to be bound on specified terms; must be complete, clear, communicated, and current.

Offeree

The person to whom an offer is made; may accept, reject, or make a counter-offer.

Offeror

The party who makes the offer; the recipient of acceptance forms the contract.

Acceptance

An offeree’s declaration to accept the offer; must be in terms identical to the offer (unqualified) and communicated to the offeror.

Unqualified Acceptance

Acceptance that agrees to all terms without changes; essential for binding contract.

Concluding a Contract

Moment and place where consensus is reached; theories include information theory (acceptance known to offeror), dispatch/expedition theory (posted acceptance), and reception theory (electronic acceptance when received).

Valid Offer

An offer that is complete, clear, intended to create a contract, communicated to the offeree, and current.

Complete Offer

All terms of the contract are contained in the offer.

Clear Offer

Offer is not ambiguous; rights and duties are determinable.

Intention to Create a Contract

Serious intention to create legal rights and duties; not a joke; advertisements/auctions may be invitations rather than offers.

Invitation to Treat

Non-binding invitation for others to make offers; applies to ads, displays, and auctions.

Communicated Offer

The offer must be communicated to the offeree; without awareness, no binding acceptance can occur; can be verbal, written, or electronic.

Lapsed Offer

An offer that has expired or been rendered invalid by lapse of time, revocation, death, capacity issues, or impossibility.

Revoked Offer

Offer withdrawn by the offeror before acceptance; must be clearly communicated to the offeree.

Rejected Offer

Offeree refuses the offer; ends the original offer and may lead to a counter-offer.

Counter Offer

A rejection of the original offer and creation of a new offer; roles swap.

Acceptance Within Time

Acceptance must occur within the prescribed time or within a reasonable time if none is set.

Prescribed Manner and Place

Acceptance must be made in the manner and at the place prescribed by the offeror; non-compliance can cause lapse.

Awareness of Offer

The offeree must know about the offer in order to accept; otherwise no contract (illustrated by Bloom case).

Clarity of Acceptance

Acceptance must be an unequivocal expression; may be written, oral, or non-verbal and must clearly indicate acceptance.

Requirements for Valid Acceptance

Acceptance must be by the offeree, with knowledge of the offer, be clear, correspond to all terms, occur within time, follow prescribed manner/place, and be communicated to the offeror.

Options

An agreement to keep the offer open for a period; creates two contracts (the initial offer contract and the option contract) and cannot be revoked during the option period.

Right of First Refusal

Right to be offered a future contract first; not an offer itself; if terms change, the offer must be made to the holder first.

Advertisements

Generally invitations to treat; not offers unless clearly intended to be offers given the surrounding circumstances.

Offers for Reward

Advertisements offering reward to the public that are actual offers if the advertiser intends to pay upon conditions being met.

Carlill v Carbolic Smoke Ball Co.

A landmark case holding that certain advertisements can constitute an offer; holder of the reward can sue to obtain it.

Bloom v American Swiss Watch Co.

Case establishing that the offeree must know of the offer to accept; otherwise no contract.

Consumer Protection Act (CPA)

Applies to contracts where suppliers sell goods/services in ordinary course of business; governs price displays and related remedies; includes exceptions for obvious errors.

Void Contract

A contract missing one or more essential requirements; treated as never having occurred; cannot be enforced.

Voidable Contract

A contract that is valid until rescinded by an innocent party due to defects like misrepresentation, duress, or undue influence.

Restitutio in integrum

Restoration of both parties to their positions before the contract; if not possible, monetary restitution may be awarded.

Mistake (General)

Error affecting the contract; may be unilateral or common; can render contract void if material.

Common Mistake

Both parties share the same mistaken assumption; if material, the contract may be void.

Factual Mistake

Mistake about a fact in the contract (price, object, performance); often void for lack of consensus.

Material Mistake

Mistake that influences decision to contract; assessed by wills theory; types include negotio, corpore, and persona.

Reasonable Mistake

Objective standard using a reasonable person; negligent mistakes may not be reasonable; caveat subscriptor concerns.

Misrepresentation

False statement of fact made during negotiations; can be innocent, negligent, or intentional; typically voidable; remedies include rescission and damages in delict.

Innocent Misrepresentation

False statement of fact made without intention to mislead; allows rescission; damages usually not recoverable under contract but may be pursued in delict.

Negligent Misrepresentation

False statement made carelessly; may rescind and claim damages in delict.

Intentional Misrepresentation

False statement made knowingly or recklessly to induce contract; may rescind and claim damages in delict.

Duress

Unlawful threat causing contract formation; typically voidable; remedy includes rescission and damages; threat must be unlawful and imminent.

Undue Influence

One party influences the other to an extent that free consent is compromised; requires a special relationship; contract may be voidable.

Rectification

Court-ordered correction of a written contract to reflect true intentions; often used when written terms do not mirror the agreement; relates to parol evidence.

Ratification

Approval or confirmation of a contract after formation, making it legally binding where it might not have been.

Parol Evidence Rule

Rule restricting evidence of prior or contemporaneous agreements that would modify a written contract; used with rectification.