Ch08-SG - ContractFormation WHATTHIS CHAPTERISA BOUT...

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Contract Formation W HAT   THIS  C HAPTER  I S  A BOUT Contract  law  concerns  the formation  and  keeping  of promises, the excuses our  society accepts  for breaking   such promises, and  what  promises are considered  contrary  to public policy and  therefore legally void. This chapter   introduces the basic terms and  concepts of contract law. C HAPTER  O UTLINE I. THE FUNCTION AND  DEFINITION OF CONTRACTS A. S OURCES   OF  C ONTRACT  L AW Contract  law  is common  law, which  governs  all contracts except  when  statutes  or administrative  regu - lations have  modified or replaced  it. Statutory  law—particularly  the Uniform  Commercial Code  (UCC) —governs all contracts for sales of goods. B. T HE  F UNCTION   OF  C ONTRACT  L AW Contract  law  is designed  to  provide  stability  and  predictability  for  buyers  and  sellers.  Contract  law  ensures  compliance  with  a  promise  and  entitles  a  nonbreach ing  party  to  relief  when  a  contract  is  breached.  In determining  the  existence  of a contract, the  element  of intent  is of prime  importance  (see  below). C. D EFINITION   OF   A  C ONTRACT contract  is a promise for the breach of which the law gives a remedy  or the performance of which the  law recognizes as a duty  (that is, an agreement  that can be enforced  in court). A contract may be formed   when  two  or more parties promise  to perform  or to refrain  from  performing  some act now  or in the fu - ture. A party  who  does not fulfill his or her promise  may  be subject to sanctions, including  damages  or,  in some circumstances, being required  to perform  the promise. D. T HE  O BJECTIVE  T HEORY   OF  C ONTRACTS Intent  to enter  into a contract is judged  by objective (outward)  facts as interpreted  by a reasonable  per- son,  rather  than  by  a  party’s  subjective  intent.  Objective  facts  include  (1) what  a  party  says  when   entering into a contract, (2) how  a party acts or appears, and  (3) circumstances surrounding  a deal. II. ELEMENTS OF A CONTRACT A. R EQUIREMENTS   OF   A  V ALID  C ONTRACT 1. Agreement This requirement  includes  an  offer  and  an  acceptance.  One  party  must  offer to enter  into  a legal  agreement, and  another party must accept the offer. 2. Consideration Promises must  be supported  by legally sufficient and  bargained-for consideration. 3.
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This note was uploaded on 12/20/2010 for the course BUS 100 taught by Professor Staff during the Fall '09 term at CSU Dominguez Hills.

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Ch08-SG - ContractFormation WHATTHIS CHAPTERISA BOUT...

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