Business Law Final 2 notes.docx - Chapter 13 Introduction...

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Chapter 13: Introduction to Contract LawOverview of Contract LawContract law reflects what promises/ commitments our society believes should belegally binding.oA promise to take your friend out to lunch does not constitute a contract asgratuitous in nature (i.e. No Quid Pro Quo)oA commitment to a car loan constitutes a contract (i.e. Quid Pro Quo was the exchange of lump sum for periodic payments at specified interest rates.)Contract vs PromisePromiseoA person’s declaration that he will perform or refrain from performing somepresent or future act.PromisoroPerson making the promisePromiseeoThe person to whom the promisor makes the promise to.ContractoAn agreement between two or more parties for valuable consideration. To perform or refrain from performing some present or future act.Contract law reflects what justifications our society will accept for the breaking of a contractual commitmentoBeing an “impulse buyer” is not justification for not paying a contractually due payment on a credit card.oBeing a minor (i.e. under 18 years of age) constitutes justification for not seeing a contractual obligation through.Contract law reflects what kinds of promises are considered to be legally void as against public policy.Function of Contract LawoProvides stability and predictability for commerce and businessoNeeded to Ensure compliance with contractual complianceProvide the non-breaching party relief when a contract is breached.Business relationships are often created through contractsoEmployment contract and covenant not to competeCovenant not to compete restricts what an employee may do after leaving company; where, when and with whom they may thereafter work.oBusiness contracts need to protect trade secrets.
ContractoMost legally enforceable contracts can be made orally or in writing.oSome contracts must be in writing per the Statute of Frauds.Breach of ContractContract disputes arise when there is a contractual promise of future performance and the promise is broken.The party who has breached /broken the promise is sued by the non-breaching party.If the non-breaching party prevails the breaching party is eitheroOrdered to pay non-breaching party damages by courtoSubject to injunctive relief by court.Elements of a ContractFour elements of a contractIf any are missing there is no contractoAgreementOffer and AcceptanceoConsiderationBargained-for-exchangeoContractual CapacityoLegal ObjectPerformance must be legalAgreementoMust have an offer and an acceptanceoOffer by one party, the offeror, to enter into contract and acceptance by other party, the offeree, accepting the terms of the offer.ConsiderationoThe bargained -for-exchange, or what each party gets in exchange for his or her promise under the contract.

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