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MCS 3040 Study Guide - Final Guide: Novation, Subrogation, Cybersquatting


Department
Marketing and Consumer Studies
Course Code
MCS 3040
Professor
Joseph Radocchia
Study Guide
Final

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MCS 3040 Business and Consumer Law - Professor Joseph Radocchia
Final Exam Review – Chapters: 5, 6, 7, 8, 9, 16, 17, 18, 19, 20, 21, 22, 23, 24, and 28
Chapter 5: An Introduction to Contracts
Contract: a deliberate and complete agreement between two or more competent
persons, not necessarily in writing, supported by mutual consideration to do some act
voluntarily, and which agreement is enforceable by court of law
Equal bargaining power: legal assumption that parties to a contract are able to look
after their own interests
Objective standard test: the test based on how a “reasonable person” would view the
matter
Elements of a Contract:
- Agreement between parties
- Completed negotiations
- Deliberately made
- Voluntarily made
- Between 2+ competent persons
- Supported by mutual consideration
- Not necessarily in writing
Advantages of Contracts:
- Permit both parties to rely on terms they have negotiated, plan their business affairs
accordingly
- Create binding promises, enforceable by court
- Dispute arises, various options for dispute resolution
Key factors in contractual relationships:
- Communication
- Start of contractual relationship
- Courts not normally entitled to assess fairness/reasonableness
- Courts will come to assistance of weaker party & set contract aside
- Fine line b/w actionable misrepresentation (can sue); sales talk (cannot sue)
Contract Law & Breaching:
- Tends to focus on only individual transactions, rather than larger commercial
environment
- Focusing too much on legal rights and obligations may harm reputation of business
- Many factors relevant to decision to breach or observe contract (new opportunities,
market conditions, ability to produce/sell)
- Should be cautious since it can be hard to predict real cost of breach/what the new
contract must be worth to offset that loss

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Necessary elements present for court to recognize a contract as a legally binding
agreement:
- Agreement composed of an offer and an acceptance of that offer
- Element of completeness
- Element of deliberateness (intention)
- Fairness and voluntary willingness of parties to enter into the agreement
- 2 parties having legal capacity to contract
- Mutual consideration
- Preferably in written document
Objectives to keep in mind when dealing with customer trying to expand/restrict an
existing contract:
- Maintain project’s profitability
- Treat customer with respect while seeking a standard of reasonableness
- Ensure work is completed on a safe and timely basis without incident
- Refrain from approaching the issue legalistically
- Understand business relationships are long-term, and so is reputation
Chapter 6: Forming Contractual Relationships
Offeror: the person who makes an offer
Offeree: the person to whom an offer is made
Revocation: withdrawal of an offer
Lapse: expiration of an offer after a specified or reasonable period
Rejection: the refusal to accept an offer
Counteroffer: turning down an offer and proposing a new one in its place
Option agreements: an agreement where, in exchange for payment, an offeror is
obligated to keep an offer open for a specified time; separate contract that may or may
not lead to acceptance to the offer
Sale by tender: sale where offers are put forward by a specific time and date by a
deposit paid
Rejection: offer is automatically terminated if rejected by offeree
Counteroffer: a form of rejection that automatically terminates the original offer
Uniform Electronic Commerce Act (UECA): removes barreires to electronic
commerce; basis for provincial & federal gov’t commerce legislation and specifies
when a message is sent and when it is received, but does not specify where an
acceptance becomes effective
Promise under seal: once seal is affixed, evident of serious intent and
acknowledgement that contract is enforceable
Promissory estoppel: someone who relies on a gratuitous promise may be able to
enforce it; usable only as a defence to legal claims made to the promise breaker (need
reliance on another’s promise to change your position)
Partial payment of a debt: of common law, a gratuitous promise to accept a lesser
amount left the creditor free to sue for the balance

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Invitation to treat: an expression of willingness to do business (ex. providing someone
with plans)
Standard Form Contract: a “take it or leave it” contract, customer agrees to a standard
set of terms that favours the other side
Unilateral contract: only offeror is bound because offeree can perform the act or not
“Postbox rule”: acceptance is effective at the time of mailing the acceptance rather
than time of delivery
Consideration: price paid for a promise
Pre-existing legal duty: a legal obligation that a person already owes
Legal ingredients of a contract:
1. Offer
- Starting point for all contracts
- One party makes a promise to enter into a contract on a specified term (the “offer”) as
soon as the offer is accepted
- Only a complete offer can form the basis of a contract
2. Acceptance
- Occurs when the offeree indicates an unqualified willingness to enter into a contract
on the terms in the offer
- Contract comes into existence at the moment of acceptance
- Acceptance must normally be communicated to the other party to be effective
3. Consideration
- A price must be paid for a promise
- Each party must give something of value for receiving something of value from the
other
- Gratuitous promise: a promise for which has no consideration/no contract
- May often be other than money, such as goods or services, as long as something of
value
- Can even be a promise “not to do something”, such as a promise not to continue in a
lawsuit in exchange for a settlement
- Adequacy of consideration is normally not open to challenge
4. Intention
- Promise at issue must have been intended to be a contractual one
- If a business relationship, intention is presumed by the courts
- Family agreements – common law presumes that promises are non-contractual but
presumption is subject to rebuttal
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