CHAPTER 5
CANADIAN BUSINESS LAW
INTENTION TO CREATE A LEGAL RELATIONSHIP
PRESUMPTION - Legal assumption that is made, subject to a party proving otherwise
● Businesses understand that the promises they make to each other carry legal
consequences and that they may be sued if promises are broken
○ Presumption exists only between marketplace and business relations
● Intention to form contract may be rebuttable - capable of being refuted
○ Court does not need proof of entering contract, just presumes that both
parties had business intentions
OFFER & ACCEPTANCE
● Both parties must agree to the service and the contract terms
○ Process begins by 1 party setting up an offer and an unconditional
acceptance of that offer, by the other party - either verbal agreement or
signed document
● Disputes arise when the finality or conditions are desired to be negotiated by 1 party
● Disputes also arise if one party claims that it accepted the offer and enforces the
contract, while other party claims offer was no longer open for acceptance
● Must ask:
○ Was the offer open when it was accepted?
○ Was acceptance of the offer properly communicated?
LAPSE
● The specified expiry date and time of the offer
REVOCATION
● Party who extends the offer is entitled to revoke it at any time before it's accepted
● Revocation is the taking back an offer
● This makes sense in the voluntary sense of contracts - a business may reconsider
the wisdom of their offers at anytime until its accepted and keeps them flexible to
changing markets
● Exception: option agreement - agreement where a business/party gives something
of value to keep an offer open for a specific period of time
○ This in itself is a contract where there is an exchange of valuable mutual
promise
○ Best used when party needs time to conduct market research on the
economic advantages of the offer
○ Also used when party can't immediately line up their other related contracts
before accepting
COUNTEROFFER
● Proposal that accepts an offer on terms differing from those in the offer
, TERMS OF COUNTER OFFER FORMATION
WAS ACCEPTANCE OF THE OFFER PROPERLY COMMUNICATED?
1. A contract is formed when the party that accepts the offer communicates acceptance
to the party that makes the offer in the manner requested by the offering party
2. If the offer states that acceptance must be communicated in a specified form, only
that form of communication can create a contract.
3. Acceptance can be communicated by action alone, without requiring verbal or written
confirmation.
4. Acceptance by mail occurs when the party that accepts an offer puts the acceptance
in the mail.
5. Electronic acceptance occurs when it enters the information system used or
designated by the offering party and becomes capable of being retrieved and
processed by that party.
CONSIDERATION
● It's the “price” that each party is willing to pay for the contractual benefits they expect
to gain.
● A 1-sided promise does not meet conditions for a contract, and is not enforceable
EXCEPTIONS TO CONSIDERATION
● If your business agrees to allow the other business to pay you less to satisfy a debt,
then no consideration is required
○ You receive benefit of quicker debt repayment
CANADIAN BUSINESS LAW
INTENTION TO CREATE A LEGAL RELATIONSHIP
PRESUMPTION - Legal assumption that is made, subject to a party proving otherwise
● Businesses understand that the promises they make to each other carry legal
consequences and that they may be sued if promises are broken
○ Presumption exists only between marketplace and business relations
● Intention to form contract may be rebuttable - capable of being refuted
○ Court does not need proof of entering contract, just presumes that both
parties had business intentions
OFFER & ACCEPTANCE
● Both parties must agree to the service and the contract terms
○ Process begins by 1 party setting up an offer and an unconditional
acceptance of that offer, by the other party - either verbal agreement or
signed document
● Disputes arise when the finality or conditions are desired to be negotiated by 1 party
● Disputes also arise if one party claims that it accepted the offer and enforces the
contract, while other party claims offer was no longer open for acceptance
● Must ask:
○ Was the offer open when it was accepted?
○ Was acceptance of the offer properly communicated?
LAPSE
● The specified expiry date and time of the offer
REVOCATION
● Party who extends the offer is entitled to revoke it at any time before it's accepted
● Revocation is the taking back an offer
● This makes sense in the voluntary sense of contracts - a business may reconsider
the wisdom of their offers at anytime until its accepted and keeps them flexible to
changing markets
● Exception: option agreement - agreement where a business/party gives something
of value to keep an offer open for a specific period of time
○ This in itself is a contract where there is an exchange of valuable mutual
promise
○ Best used when party needs time to conduct market research on the
economic advantages of the offer
○ Also used when party can't immediately line up their other related contracts
before accepting
COUNTEROFFER
● Proposal that accepts an offer on terms differing from those in the offer
, TERMS OF COUNTER OFFER FORMATION
WAS ACCEPTANCE OF THE OFFER PROPERLY COMMUNICATED?
1. A contract is formed when the party that accepts the offer communicates acceptance
to the party that makes the offer in the manner requested by the offering party
2. If the offer states that acceptance must be communicated in a specified form, only
that form of communication can create a contract.
3. Acceptance can be communicated by action alone, without requiring verbal or written
confirmation.
4. Acceptance by mail occurs when the party that accepts an offer puts the acceptance
in the mail.
5. Electronic acceptance occurs when it enters the information system used or
designated by the offering party and becomes capable of being retrieved and
processed by that party.
CONSIDERATION
● It's the “price” that each party is willing to pay for the contractual benefits they expect
to gain.
● A 1-sided promise does not meet conditions for a contract, and is not enforceable
EXCEPTIONS TO CONSIDERATION
● If your business agrees to allow the other business to pay you less to satisfy a debt,
then no consideration is required
○ You receive benefit of quicker debt repayment
