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5 - Contracts 1 -Student Version

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

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Business Law – Contracts -voluntary exchange of promises -(Presumption) parties are legally involved
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Business relationships depend on contracts. Contracts are the foundation on which business is conducted.
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What is a contract? Can a contract be formed orally? How many of you have entered into a contract in the last few days?
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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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The law of contract , unlike many other laws, does not set out the rights and duties of the parties . Instead, it permits the parties to establish their own rights and duties by following a series of principles and rules for the formation of a contract .
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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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Written Contracts Written contracts are almost always preferable to verbal contracts because a written document eliminates disputes about the terms and conditions of the contract or agreement. Also, some contracts are required to be in writing. 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 - Legality 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.
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