518Chap10Ks-Meiners13thedition.doc - CHAPTER TEN CONTRACTS Contract Law Primarily state common law Judge-made law English courts Lex mercatoria

518Chap10Ks-Meiners13thedition.doc - CHAPTER TEN CONTRACTS...

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CHAPTER TENCONTRACTSContract LawPrimarily state common lawJudge-made lawEnglish courtsLex mercatoria Commercial rules developed by merchants over centuries of doing business across national boundaries. An important source was:The Roman law of contractsReflected commercial relationships in an empire that covered much of Europe, North Africa and the MiddleEastThe Restatement (Second) of Contractsis an authoritative summary of the common law of contractsModified by statutesArticle 2 of the Uniform Commercial CodePromotes uniformity of laws relating to the sales of goodsDefinition of a Contract1.An agreement;2.Upon sufficient consideration; 3.To do or not to do a particular thingA legally-enforceable promiseOr,
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The legal relationship that consists of:1.The rights and duties; of2.The agreeing parties;3.Arising out of promisesNot all promises are legally enforceableA promise may or may not be bindingTo be binding it must meet the requirements of a contractExpress and Implied ContractsExpress: A contract created by a direct statement by the parties of a promise or promises to each other; May be written or oralImplied: The parties do not directly state the promises to one another; the promises are inferred from:1.The behavior of the parties; or 2.The circumstancesThe law may also imply certain termsImplied warrantiesElements of a ContractOffer and AcceptanceOfferor and offereeThe AgreementThe OfferA promise to do something or refrain from doing some specific thingTo be an effective offer, three requirements must be met:1.Manifestation of Intent
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The offeror must have a clear intent to be bound by the contract as measured by an objective standard Would an objective, reasonable person, familiar with the business transaction believe that an offer had been made? Preliminary negotiations not an offer(?)AuctionUnless otherwise stated, an invitation to submit an offerIf the auction rules state the highest bid will be accepted, it is an offerAdvertisements are generally not an offer, but an invitation to negotiate2. Definite Terms and Conditions; If major terms are uncertain or missing, it may tend to indicate that the parties did not intend to enter into a contractA court may supply minor missing terms if it otherwise appears the parties intended to enter into a contractDoes a court have sufficient information to determine a remedy in the event of a breach? 3.Communication of the OfferKnowledge of the offer is required in order for there to be an acceptanceRewardWas the offer communicated?Terminating an OfferThere are two ways to terminate an offer:1.Action of the parties:
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2.Operation of lawException: An option contractRequires all the elements of a valid contractA binding promise (a valid contract) to keep an offer open for a specified amount of timeTermination (of the offer) by Action of the Parties1.RevocationMust be communicated to the offeree prior to acceptanceOffer may require acceptance within a certain time period
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