Certainty of Terms

Introduction

The basis of contract law is an agreement made between the parties that can be enforced by law. What does this mean?

What would be an example of a legally binding agreement? Why?

What would be an example of an agreement that is not legally enforceable? Why?

Offer and Invitation to Treat

- I own a pharmacy and place a bottle of medicine on a shelf containing various medicines. Some of these require a prescription and others do not. All bear a price tag. You wish to buy a prescription medicine but you do not have a prescription for it. Am I obligated Certainty of Terms to sell it to you?

- A neighbour who doesn’t like me is selling his car. He puts it outside with a card that reads “For Sale: $500 or best offer”. I know he won’t want to sell his car to me. If I take the money to him is he obligated to do so?

Acceptance

- I send you a faxed offer to sell you my car for $1000. You fax back asking for my best price, indicating that you will pay $700 in cash. I fax reply to say I cannot reduce the price. You fax back saying you Certainty of Terms will pay $1000. In the interim a third party has accepted my offer. Do I have to sell you the car?

- I make machines and offer to sell you a machine for $1000. My offer is written on a form that sets forth a number of terms, including that the actual price you must pay will be the market price at the time the machine is delivered. You place an order for the machine using your form of purchase order, which sets forth different terms and, in particular, does not provide for any modification to the price. The form contains a tear-off Certainty of Terms slip that says the order is made in accordance with the terms set forth thereon. I tear off the slip and return it to you with a letter saying that I will sell you the machine in accordance with the terms on my offer. When I deliver the machine and ask for more money than the original offer, you do not want to pay the extra. Who is right?

- I attend an auction with a friend who tells me to sit very still and not make any gestures while the auctioneer is auctioning the goods. While the Certainty of Terms auctioneer is auctioning off a very expensive piece of art, I see a friend on the other side of the room. I wave to get her attention and immediately hear “Sold! To the lady in the 5th row for $1 million!”. Have I just bought a painting?

Certainty of Terms

- You and I enter into an agreement where I sell you a vending machine. You have to share the profits of the machine with me 50/50. If you choose, you can buy the machine from me after 6 months, but if you choose not to do so then you must continue to share the profits Certainty of Terms with me for the life of the contract. We have neglected to date the agreement. Is the agreement valid? Is it valid if we have neglected to include the price to be paid after 6 months? What if the price is to be calculated as ten times the average monthly revenues of the machine?


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