Chapter10Notes - Chapter 10 The Formation of Traditional...

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Chapter 10 The Formation of Traditional and E-Contracts Contract law must provide rules to determine which contract terms will be enforced and which promises must be kept. Promise - a declaration by a person (the promisor) to do or not do a certain act. The person to which the promise was made has a right to expect or demand that something either will or will not happen in the future. An Overview of Contract Law Sources of Contract Law The common law governs all contracts except when it has been modified or replaced by statutory law (such as Uniform Commercial Code) or by administrative agency regulations. The Definition of a Contract Contract - a set of promises constituting an agreement between parties, giving each a legal duty to the other and also the right to seek a remedy for the breach of the promises or duties. (an agreement that can be enforced in court) Generally, contract disputes arise when there is a promise of future performance. If the contractual promise is not fulfilled, the party who made it is subject to the sanctions of a court. That party may be required to pay damages for failing to perform the contractual promise and sometimes be required to perform the promised act. The Objective Theory of Contracts Objective theory of contracts - the view that contracting parties shall only be bound by terms that can objectively be inferred from promises made. The objective facts are as interpreted by a reasonable person, rather than by the party’s own secret, subjective, intentions. Objective facts may include: What the party said when entering into the contract. How the party acted or appeared. The circumstances surrounding the transaction. A party may have many unexpressed reasons for entering into an agreement and profiting from the deal. Elements of a Valid Contract The four requirements that must be met before a valid contract exists: Agreement - an agreement to form a contract includes an offer and an acceptance. Consideration - any promises made by the parties of the contract must be supported by legally sufficient and bargained-for consideration. Contractual capacity - both parties entering into the contract must have the contractual capacity to do so. Legality - the contract’s purpose must be to accomplish some goal that is legal and not against public policy. Defenses to the Enforceability of a Contract A contract may be unenforceable if the following requirements are not met:
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Voluntary consent - the consent of both parties must be voluntary. Form - the contract must be in whatever form the law requires. Types of Contracts Contract Formation Contracts can be classified according to how and when they are formed.
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