Business and Consumer Law Final Exam Notes
Chapter 5: An Introduction to Contracts
Contract Law: A deliberate and complete agreement between two or more competent persons in writing supported by mutual consideration, to perform an act. It is enforceable in court. Agreement: composed of an offer to enter into a contract and acceptance of the contract. Complete: the agreement must be certain.
Deliberate: both parties must want to enter into a contractual relationship. Voluntary: The agreement must be freely chosen, and not manipulated. Between Two or more Competent persons: Parties that enter into the contract must have legal capacity – that is they can sue and be sued. Suppoted by mutual consideration: Each party must give something of value in exchange for the goods/ services it receives. Doesn’t have to be in writing: Contracts can also come in a verbal form – but tend to be more difficult to prove in court Legal factors in their Business Context: Creating the Contract: Communication can come in the form of finding a partner to do business with as well as negotiations as to what terms will comprise the contract. Objective standard test: the test based on how a reasonable person would view the matter. Equal Bargaining Power: The Capacity for businesses to look out for themselves with regards to their interests. Business relationships: Contract law is narrow in scope in the sense that it is usually regarding one time business dealings, and does not focus on long term relationships. One has to know when to pursue a lawsuit and when to let it go based on how valuable the relationship is with another is. Economic reality: There may be better offers on the table that a party must consider; and therefore pay the penalties to a current business partner to pursue more lucrative options. Reputation management: A company must be careful not to breach to many contracts in its industry lest it be seen as unreliable, and undependable decreasing the amount of potential partners to do business with in the future. Contract: agreement between two parties that is enforceable in a court of law A contract must be:
-Deliberate (both parties want to enter a contractual relationship) -Voluntary (agreement must be freely chosen)
-Between two or more competent persons
-Supported by mutual consideration (involves a bargain or exchange between parties) -Not necessarily in writing
Contract law ensures that each party gets what they bargained for - namely performances of the promises made or compensation in its place Rules governing contracts based on common law (judge-made laws) Contract law is facilitative: it allows participants to create their own rights and duties that a judge can later enforce if called upon to do so Legal Factors in Their Business Context: Creating the Contract Most contracts begin with communication, usually informal contact between individuals in different businesses who recognise mutual needs or general inquiry made to a supplier concerning price and availability of materials Objective standard test: test based on how a reasonable person would view the matter Equal bargaining power: legal assumption that parties to a contract are able to look out for their own interests. -courts are usually not entitled to assess the fairness or reasonableness of the contractual terms Very occasionally, circumstances favour one party to such an extent that they will come to the assistance of the weaker party and set the contract aside Legal Factors in Their Business Context: Performing or Enforcing the Contract Contract law is narrow in scope: its emphasis is often on a specific transaction, such as a single sale, and is not traditionally concerned with longer-term business relationships An economic breach happens when one party calculates that it is more financially rewarding to breach the contract in question than to perform it违反更划算 -if done frequently, this can create an unreliable and...
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