B LAW301 Chapter 1: Chapter 1
28 Sep 2017
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Document Summary
Contract: a legal concept that allows people to create enforceable promises. Process of identifying, evaluating, and responding to the possibility of harmful events. There are 3 steps: identification : recognition of legal risks, evaluation : assessment of legal risks, response : reaction to legal risks. Risks that can be reduced to an acceptable level through caution. If a company loans money, and the bank recognizes the risk of not being paid back, the bank may seize property of the company. Even if the risk may not be avoided or reduced, it can be shifted onto another party. A company is vicariously liable for the actions of its employees. Examples of risk management techniques: insurance : a type of contact with 2 parties involved; the insured, and the insurer. The insured pays a price called the premium while the insurer promises to pay a price in case there is a loss.
