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Unformatted text preview: Business Law Notes Chapter 12 Almost every business transaction affecting people involves a contract. Quasi contracts are not true contracts but obligations imposed by law. Contract – Legally binding agreement based on genuine assent of the parties, made for a lawful object, between competent parties, in a form, supported by consideration.- Arise out of agreements.- Create an obligation.- Each party legally bound to do or refrain from doing certain acts.- Elements: o Agreement o Competent parties o Genuine assent o Consideration o Lawful objective o Form Promisor – Person who makes promise. Promisee – Person to whom promise is made. Obligor – Promisor when promise is binding. Obligee – Promisee who can claim a benefit. Privity – Relationship between parties of a contract. Privity of contract – Same as privity. In written contracts, parties can be referred to by name or by special names. Party may be an individual, a partnership, a limited liability company, a corporation, or a government. One or more people may be on each side. Some contracts are 3 sided (credit card). Contract binds only the parties to the contract. Cannot impose a duty to a person not in contract. In some cases 3 rd persons have rights as 3 rd party beneficiaries or assignees. Contract based on agreement. Agreement arises when offeror – Person who makes offer – and offeree – Person to whom offer is made – accepts. Parties must have intent to enter into agreement. Sometimes parties are in agreement but their agreement does not produce a contract. Law does not require parties to be fair, kind, or reasonable, or to share gains or losses. Contracts classified according to their form, way they were created, binding character, and the extent to which performed. Contracts classified as formal or informal. Formal – Written contracts or agreements where the formality signifies the parties intent to be bound by the terms.- Contracts under seal – Signature or corps name followed by a scroll, the word seal, or the letters L.S.- Contracts of record – Obligations entered into under a court of record , called a recognizance or a contract of record .- Negotiable instruments . Informal (Simple) – Oral or written. Enforceable because they represent agreement of the parties. Simple contracts classified as express or implied contracts according to the way they are created.- Express contract – Terms manifested by words whether written or spoken.- Implied contract (Contract implied in fact) – Manifested not by words, but by acts and conduct of the parties. Arises when: o A person renders services indicating payment for them is expected. o The other person accepts the benefit of those services....
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This note was uploaded on 06/21/2011 for the course ACCOUNTING 0116001 taught by Professor Bloom during the Spring '07 term at Santa Fe College.
- Spring '07