Business Law Chapter 9-1

Business Law Chapter 9-1 - Business Law Chapter 9 The...

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The Nature of Contracts The law of contracts deals with the enforcement of promises –not every promise is legally enforceable The essence of a contract is that it is a legally enforceable promise or set of promises The Functions of Contracts Contracting lets us create a type of private law-the terms of the agreements we make that governs our relations with others Contracts facilitate the planning that is necessary in a modern, industrialized society The Methods of Contracting Unless the law specifically requires a certain kind of contract to be in writing, an oral contract that can be proven is as legally enforceable as a written one The common contracts today are standardized form contracts: o Contracts that are preprinted by one party and presented to the other party for signing o In most cases, the party who drafts and presents the standardized contract is the party who has the most bargaining power and/or sophistication in the transaction o Frequently the terms are negotiable o They can present the dangers that the party who signs the contract will not know what he is agreeing to and that the party who drafts and presents the contract will take advantage of his bargaining power to include terms that are oppressive or abnormal in that kind of transaction Basic Elements of a Contract To qualify as a contract, a set of promises must be based on voluntary agreement, which is made up of an offer and acceptance of that offer. Must be consideration to support each party’s promise Must be between parties who have capacity to contract, and the objective and performance of the contract must be legal Basic Contract Concepts and Types Bilateral and Unilateral Contracts In unilateral contracts, only one party makes a promise In a bilateral contract, by contrast, both parties exchange promises and the contract is formed as soon as the promises are exchanged Valid, Unenforceable, Voidable, and Void Contracts A valid contract is one that meets all the legal requirements for a binding contract o Valid contracts are enforceable in court An unenforceable contract is one that meets the basic legal requirements for a contract but may not be enforceable because of some other legal rule o If a contract is one of those for which the statute of frauds requires a writing, but no writing is made, the contract is said to be unenforceable
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Business Law Chapter 9-1 - Business Law Chapter 9 The...

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