Under Canadian contract law, what is required to form a valid contract, such as an Agreement of Purchase and Sale?
Correct Answer
A) There must be offer, acceptance, consideration, and intention to create legal relations
A valid contract needs an offer, an acceptance of that offer, consideration (something of value exchanged) and an intention to create legal relations. An Agreement of Purchase and Sale is formed when the buyer's offer is accepted on its terms. In Ontario, contracts for the sale of land must also be evidenced in writing signed by the party to be charged to be enforceable (Statute of Frauds, s. 4), but no witness, lawyer or registration with a regulator is required.
Why This Is the Correct Answer
This is correct because offer, acceptance, consideration and intention to create legal relations are the core elements of every valid contract in Canadian common law. An Agreement of Purchase and Sale meets them when the seller accepts the buyer's offer for a stated price with both sides intending to be bound.
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