Law Formation of Contract
WEEK 3 – THE FORMATION OF CONTRACTS
Apply Your Knowledge
(EXERCISE 4 – CONTRACT OR NOT?)
Review the essential elements of a valid and enforceable contract and decide whether a valid, void or voidable contract has been formed in each of the following situations. Provide a legal explanation for your decision.
1. Last year, Smith, the owner of a retail business, in an attempt to reduce employee absenteeism due to illness, offered to give any employee who quit smoking for a year a $500 salary bonus. A number of employees agreed to quit smoking for the year and succeeded but Smith has now refused to pay the bonus claiming he cannot afford it since business was poor this year. The employees maintain that they had a valid and enforceable contract with Smith and he must pay.
2. Al suffers from manic-depression, a mental illness characterized by periods of extreme emotional highs and deep depressions. During a manic episode, Al decided he was going to renovate his home and entered into an agreement with his local Rona store to purchase several thousand dollars worth of building supplies. The suspicions of the salesman who negotiated the agreement were not aroused as Al acted like any other customer. The building supplies were delivered several weeks ago but Al has refused to complete payment. He is now in a deep depression and realizes that he cannot carry out his grandiose plans. Rona is threatening legal action if they are not paid. Al maintains no valid enforceable exists and he does not have to pay.
3. Ann offered to sell an old painting she found in her attic to an art dealer for $2,000. After examining the painting, the dealer realized it was a genuine Group of Seven painting worth several hundred thousand dollars and immediately accepted the offer. Ann has now discovered her error and wants the painting back. The dealer maintains he has a valid and enforceable contract and can keep the painting.
4. John worked for a
Apply Your Knowledge
(EXERCISE 4 – CONTRACT OR NOT?)
Review the essential elements of a valid and enforceable contract and decide whether a valid, void or voidable contract has been formed in each of the following situations. Provide a legal explanation for your decision.
1. Last year, Smith, the owner of a retail business, in an attempt to reduce employee absenteeism due to illness, offered to give any employee who quit smoking for a year a $500 salary bonus. A number of employees agreed to quit smoking for the year and succeeded but Smith has now refused to pay the bonus claiming he cannot afford it since business was poor this year. The employees maintain that they had a valid and enforceable contract with Smith and he must pay.
2. Al suffers from manic-depression, a mental illness characterized by periods of extreme emotional highs and deep depressions. During a manic episode, Al decided he was going to renovate his home and entered into an agreement with his local Rona store to purchase several thousand dollars worth of building supplies. The suspicions of the salesman who negotiated the agreement were not aroused as Al acted like any other customer. The building supplies were delivered several weeks ago but Al has refused to complete payment. He is now in a deep depression and realizes that he cannot carry out his grandiose plans. Rona is threatening legal action if they are not paid. Al maintains no valid enforceable exists and he does not have to pay.
3. Ann offered to sell an old painting she found in her attic to an art dealer for $2,000. After examining the painting, the dealer realized it was a genuine Group of Seven painting worth several hundred thousand dollars and immediately accepted the offer. Ann has now discovered her error and wants the painting back. The dealer maintains he has a valid and enforceable contract and can keep the painting.
4. John worked for a