8 - The Legal and Regulatory Environment of Business (15th...

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The Legal and Regulatory Environment of Business ( 15 th ed.) Chapter 8 Introduction to Contracts: Classifications, Terminology & Formation I. Basic Concepts A. Contract Law in Private Enterprise 1. Basic Definition of a Contract: a legally enforceable promise 2. Contracts involve either an exchange of promises (“promise for a promise”) or a promise conditioned on performance of an act (“promise for performance”). B. Sources of Contract Law 1. Common law 2. Legislation, such as the Uniform Commercial Code (UCC) which applies to the sale of goods C. Breach of Contract occurs when one party does not live up the terms of the contract 1. Remedies - see Figure 8.1 p. 238 a) Negotiated Settlement b) Arbitration c) Compensatory Damages d) Specific Performance e) Consequential Damages f) Rescission g) Nominal Damages h) Liquidated Damages 2. Mitigation of Damages - the victim of a breach of contract must mitigate damages; i.e. take reasonable steps to reduce damages II. Classifications of Contracts A. Kinds of Contracts 1. Bilateral and Unilateral Contracts Bilateral Contracts involve each party making mutual promises (promise for a promise) Note: if it is not clear, most courts tend to assume that it is a bilateral contract Unilateral Contracts involves a present act in return for a promise of future performance; unilateral contracts are accepted by performing the requested act 2. Express and Implied-in-Fact Contracts Express Contracts are contracts that arise from discussions in which the parties actually discuss the terms of their agreement; and Implied-in-Fact Contracts are contracts that arise from the conduct of the parties rather than from words. 3. Implied in Law or Quasi Contracts Quasi-Contract - happens when a contract is implied in law. 1
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- This occurs when one party is unjustly enriched at the expense of another; the law may imply a duty on the first party to pay the second even though they do not have a contract - Does not happen very often B. Contractual Enforcement Terminology: Enforceable vs. Unenforceable Contracts 1. Valid Contract – an enforceable agreement because all of the essential requirements of
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This note was uploaded on 01/31/2012 for the course LEGL 2700H taught by Professor Pagnattaro during the Fall '11 term at University of Georgia Athens.

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8 - The Legal and Regulatory Environment of Business (15th...

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