5 - Contracts 1 -Student Version

5 - Contracts 1 -Student Version - Business Law Contracts...

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Business Law – Contracts
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Contracts A contract is a voluntary exchange of promises , creating obligations which, if defaulted on, can be enforced and remedied by the courts . Primary concern of the courts is to enforce the reasonable expectations of the parties. ..But , Is every agreement a contract?
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If you are forced to make an offer ("your money or life") it is not a valid offer. Similarly if you are tricked into accepting, it will not be deemed acceptance of the terms offered. Why? - Remember a contract is a voluntary exchange of promises
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Oral Contracts Chances are that you formed a contract today. Most likely it was formed verbally (i.e. orally) If you went to the supermarket and bought something, you formed a contract. Every time we buy a cup of coffee, buy a pen or have a plumber make repairs we’ve entered into a contract.
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Importance of Written Contracts For businesses, written contracts are usually preferable to verbal (oral) contracts for two reasons: Written contracts provide parties with a record of their rights and obligations ; Written contracts provide proof of the parties’ agreement in the event of a dispute . Verbal contracts are risky because the parties’ memories or understanding of the deal may differ.
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Contracts - A Checklist To be enforceable in court, a contract must have : C - Capacity L - Lega lity I - Intention C - Consensus (i.e. Offer and Acceptance match) C - Consideration (price paid for a promise)
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Capacity to contract Not everyone is permitted to enter into contracts that would bind them at law. Certain classes of promisors must be protected as a matter of public policy , either for reasons of their inexperience and immaturity , or because of their inability to appreciate the nature of their acts in making enforceable promises.
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Capacity to contract contd. . Capacity= the ability to incur legal obligations and acquire legal rights . If a party to a contract lacks capacity, an essential element for a valid contract is missing . Those without capacity to contract include : Minors Persons intoxicated, or mentally incompetent (Adults of Diminished Capacity)
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Capacity to contract contd. . A minor or minor child in Canada is a person who is not an adult and is under the age of majority. The age of majority in Canada is determined by each province and territory in Canada. The age of majority in Ontario is18.
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Capacity to contract contd. . Minors : Contracts are voidable at the option of the minor ( i.e. minors have the option of canceling contracts for non-necessities/non-necessaries ), except for: (A voidable contract is a valid contract, but one of the parties has the right to cancel it.) Necessaries ( usually include things such as food, shelter, education and medical services ), Beneficial contracts of service (minor has derived a real advantage from it) May become liable for other contracts upon reaching age of majority
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Capacity to contract contd. . Q)
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5 - Contracts 1 -Student Version - Business Law Contracts...

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