BusinessLaw2-Me[1] - Business Law 2 Chapter 8...

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Business Law 2 Chapter 8: Contracts-Nature and Classification Introduction Contract law deals with the formation and keeping of promises Promise : An assertion that something either will or will not happen in the future. Contract law reflects our social values, interests, and expectations at any given point in time. Although aspects of contract law vary from state to state, much of it is based on the common law. The Function of Contracts Contract law is designed to provide stability and predictability for both buyers and sellers in the marketplace. Definition of a Contract Contract : An agreement that can be enforced in court. It is formed by two or more parties who agree to perform or to refrain from performing some act now or in the future. Objective Theory of Contracts : A theory under which the intent to form a contract will be judged by outward, objective facts (what the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transaction) as interpreted by a reasonable person, rather than by the party’s own secret, subjective intentions. *There must be intent for the contract to be formed.* Terminology Parties to a Contract Promisor o A person who makes a promise Promisee o A person to whom a promise is made Offeror o The person who makes the offer to the offeree Offeree o Offeree has the power to accept the offer and create a contract o The offeree has the power to create a contract by accepting the offeror’s offer. o A contract is made if the offer is accepted no contract is ever made if the offer is not accepted Requirements of a contract If any one of these four elements is lacking, no contract will be formed & the contract may be unenforceable: Agreement : offer and acceptance , there must be mutual assent by the parties Consideration : Promises must be supported by legally sufficient and bargained-for consideration (something of value received or promised to convince a person to make a deal). Gift promises and moral obligations are not considered supported by valid consideration. Contract capacity : The parties entering into the contract must be competent (have contractual capacity). Certain parties, such as persons adjudged insane, who have been drinking or children do not have contractual capacity. This is the validity of the contract. EXAMPLE : children making contracts, going into a contract while intoxicated, being mentally insane Lawful object : A contract must be legal . The object of the contract must be lawful. Contracts that deal with drugs or prostitution are against public policy and are void. EXAMPLE : illegal contracts, to kill someone, to do an exchange with drugs Defenses to the Enforcement of a Contract
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1) Genuineness of Assent : the apparent consent of both parties to create a contract must be genuine. If the consent is obtained by duress, undue influence, or fraud, there is no real consent. o
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BusinessLaw2-Me[1] - Business Law 2 Chapter 8...

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