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CMA Foundation · Fundamentals of Business Laws and Business Communication · Essential Elements of a Contract, Offer and Acceptance

Nair Traders orders goods from Iyer Mills, and Iyer's staff accept the order and begin dispatch. The contract is created by the exchange of letters, with no word of mouth, and every term is stated in them. Which classification applies by mode of formation?

It is an express contract, because its terms were stated in written words in the letters exchanged. Express contracts may be oral or written. An implied contract arises only from conduct or circumstances, and a quasi-contract is imposed by law, so neither fits.

  1. AImplied contract, since conduct shows acceptance
  2. BExpress contract, since terms were stated in written wordsCorrect
  3. CQuasi-contract, since no oral words were used
  4. DContingent contract, since dispatch is pending

Explanation

An express contract is one whose terms are stated in words, spoken or written. The letters set out every term, so the contract is express. An implied contract arises from conduct or circumstances, which is not the case when terms are fully written. A quasi-contract is imposed by law.

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