lecture notes ch. 10

lecture notes ch. 10 - Chapter 10 Title:BusLawSeal.eps...

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Chapter 10 Nature and Terminology Chapter Outline I. An Overview of Contract Law A. S OURCES OF C ONTRACT L AW Contract law is common law.   The common law governs all contracts except when  statutory law or administrative agency regulations have been modified or replaced it.  Statutory   law—particularly   the   Uniform   Commercial   Code   (UCC)—governs   all  contracts for the sale of goods. It should be stressed that it is essential to know when the  UCC applies. B. T HE F UNCTION OF C ONTRACT L AW
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Contract law is needed to ensure compliance with a promise or to entitle a nonbreaching  party   to   relief   when   a   contract   is   breached.   All   contractual   relationships   involve  promises, but all promises do not establish contractual relationships.  Most contractual  promises are kept; keeping a promise is generally in the mutual self-interest of the  promisor and the promisee. C. D EFINITION OF A C ONTRACT A   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 (in other words, an agreement that  can be enforced in court). A contract may be formed when two or more parties each  promise to perform or to refrain from performing some act now or in the future. A party  who does not fulfill his or her promise may be subject to sanctions, including damages  or, under some circumstances, being required to perform the promise. D. T HE O BJECTIVE T HEORY OF C ONTRACTS The  intent  to  enter  into  a  contract   is  important  in  the   formation   of  a  contract.    The  objective theory of contracts determines intent. Under this theory, a party’s  intention to enter into a contract is judged by outward, objective facts as a reasonable  person   would   interpret   them,   rather   than   by   the   party’s   own   secret,   subjective  intentions. Objective facts include: (1) what the party said; (2) how the party acted or  appeared; and (3) the circumstances surrounding the transaction. II. Elements of a Contract The four essential elements of a contract are (1) agreement, (2) consideration, (3) contractual  capacity, and (4) legality. Defenses to the formation or enforcement of a contract include (1)  genuineness of assent and (2) form. III. Types of Contracts Each   of   these   categories   signifies   a   legal   distinction   regarding   a   contract’s  formation, performance, or enforceability.
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S PECIAL E XHIBIT Types of Contracts The following illustration summarizes the  types of contracts  discussed in the text.
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lecture notes ch. 10 - Chapter 10 Title:BusLawSeal.eps...

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