518-9KFormationoutline

518-9KFormationoutline - CHAPTER NINE CONTRACT FORMATION...

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CHAPTER NINE CONTRACT FORMATION Introduction A contract is an agreement between two or more parties that can be enforced in court The legal framework provides the stability and structure for business to plan and carry out their contracts When there are adverse business conditions a party cannot rely on good faith that the other party to a contract will perform out of a sense of duty Comparing Torts with Contracts Torts such as fraud and misrepresentation can originate within a contract’s context Intentional interference with a contract is also a tort Contract law exists to protect promises that have been made Tort law exists to protect people from certain kinds of harm Sources of Commercial Law Commercial or business law governs commercial transactions Covers topics such as contracts, partnerships, corporations and agencies Many principles of commercial law developed centuries ago from the law merchant The Law Merchant Mercantile courts predated common law courts and administered the law merchant that set out the rules that governed the contract process The rules evolved from merchants’ customs Merchants administered the mercantile courts
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During the Middle Ages, the law merchant was important for the fair or market, as the primary commercial event As the merchants traveled from place to place, the law was the same or similar As with common law, it made its way to the U.S. Codification of Commercial Law The U.S. adopted English Common Law which covered commercial transactions There were gaps in the law and different states handled issues differently To address this, uniform laws were developed to assist merchants Example: the UCC Contract Terms A contract is an agreement between two or more parties to perform – or refrain from performing – some act now or in the future If it is a valid contract it is enforceable A contract is based on a promise but not all promises are enforceable in court A contract is created when there is an offer and acceptance, as long as certain other conditions are met Offer Offeror Acceptance Offeree Electronic Contracts Terms Used with Contracts
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Formation Bilateral and Unilateral Contracts A bilateral contract is a promise for a promise The return promise is the acceptance Most contracts are bilateral A unilateral contract is a promise for an act The offeror’s promise requires the offeree to complete the performance with a return act (not a promise) Statute of Frauds Certain contracts must be in writing Whether a contract is unilateral or bilateral depends on the offeror’s requirements of the offeree in accepting the offer A reward for a lost dog is an example of a unilateral contract Express and Implied Contracts In an express contract, the terms of the offer and acceptance are specifically stated, either orally or in writing If the terms are not exactly set out, but are implied, a valid contract exists that is called an implied-in-fact contract Created by the parties’ conduct A visit to a doctor’s office
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518-9KFormationoutline - CHAPTER NINE CONTRACT FORMATION...

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