MCS*3040_Business_and_Consumer_Law_Final.pdf

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Department
Marketing and Consumer Studies
Course
MCS 3040
Professor
Joseph Radocchia
Semester
Summer

Description
Business and Consumer Law Final Exam Notes Chapter 5 An Introduction to Contracts Contract Law A deliberate and complete agreement between two or more competent persons in writing supported by mutual consideration to perform an act It is enforceable in court Agreement composed of an offer to enter into a contract and acceptance of the contract Complete the agreement must be certainDeliberate both parties must want to enter into a contractual relationship Voluntary The agreement must be freely chosen and not manipulated Between Two or more Competent personsParties that enter into the contract must have legal capacitythat is they can sue and be sued Suppoted by mutual consideration Each party must give something of value in exchange for the goods services it receivesDoesnt have to be in writing Contracts can also come in a verbal formbut tend to be more difficult to prove in court Legal factors in their Business Context Creating the ContractCommunication can come in the form of finding a partner to do business with as well as negotiations as to what terms will comprise the contract Objective standard test the test based on how a reasonable person would view the matterEqual Bargaining Power The Capacity for businesses to look out for themselves with regards to their interestsBusiness relationships Contract law is narrow in scope in the sense that it is usually regarding one time business dealings and does not focus on long term relationships One has to know when to pursue a lawsuit and when to let it go based on how valuable the relationship is with another isEconomicreality There may be better offers on the table that a party must consider and therefore pay the penalties to a current business partner to pursue more lucrative optionsReputation management A company must be careful not to breach to many contracts in its industry lest it be seen as unreliable and undependable decreasing the amount of potential partners to do business with in the future Contract agreement between two parties that is enforceable in a court of lawA contract must be An agreement Complete certain Deliberate both parties want to enter a contractual relationship Voluntary agreement must be freely chosen Between two or more competent personsSupported by mutual consideration involves a bargain or exchange between parties Not necessarily in writingContract law ensures that each party gets what they bargained fornamely performances of the promises made or compensation in its placeRules governing contracts based on common law judgemade lawsContract law is facilitative it allows participants to create their own rights and duties that a judge can later enforce if called upon to do so Legal Factors in Their Business Context Creating the ContractMost contracts begin with communication usually informal contact between individuals in different businesses who recognise mutual needs or general inquiry made to a supplier concerning price and availability of materialsObjective standard test test based on how a reasonable person would view the matterEqual bargaining power legal assumption that parties to a contract are able to look out for their own interests courts are usually not entitled to assess the fairness or reasonableness of the contractual termsVery occasionally circumstances favour one party to such an extent that they will come to the assistance of the weaker party and set the contract aside Legal Factors in Their Business Context Performing or Enforcing the ContractContract law is narrow in scope its emphasis is often on a specific transaction such as a single sale and is not traditionally concerned with longerterm business relationshipsAn economic breach happens when one party calculates that it is more financially rewarding to breach the contract in question than to perform it if done frequently this can create an unreliable and undependable reputation for the company Chapter 6 Forming Contractual RelationshipsBefore a contract can be in place the parties must be in agreement consensus as to their rights and obligations OfferOffer A promise to perform specified acts on certain terms only a complete offer can form the basis of a contract meaning that all essential terms must be set out or the contract will fail for uncertaintyInvitation to treat An expression of willingness to do businessSuch expressions of intent have no legal repercussion because they essentially have no content Standard form contract A take it or leave it contract where the customer agrees to a standard set of terms that favours the other side ie renting a carA fundamental rule is that a contract is formed only when a complete offer is unconditionally accepted by the other side if the purported offer is sufficiently comprehensive that it can be accepted without further elaboration or clarification it is an offer in lawOfferor is the person who makes an offer and offeree is the person whom an offer is made to Termination of an Offer Revocation the withdrawal of an offerAn offer is only enforceable if some form of payment has been made for itOption agreement agreement where in exchange for payment an offeror is obligated to keep an offer open for a specified time often found in real estate developmentsLapse The expiration of an offer after a specified or reasonable periodRejection The refusal to accept an offerCounteroffer the rejection of one offer and proposal of another Acceptance Acceptance An unqualified willingness to enter into a contract on the terms of the offerIn order for acceptance to be legal the offeree must communicate email telephone an unconditional assent to the offer in its entiretyAcceptance is only effective when communicatedit is this moment that a contract comes into existencePostbox Rule If the offer makes it clear they want to apply to their offer then acceptance is effective at the time of sendingmailing the offer Ordinary rule Acceptance is effective when offer is receivedOral agreements are very difficult to prove without some independent verification or corroboration ie witness ConsiderationConsideration The price paid for a promise what is given up to gain something in a contract key ingredient that distinguishes a legally enforceable promise from one that is notGratuitous promise a promise for which no consideration is givenThe parties of a contract not a judge decide what constitutes a fair reasonable pricePreexisting legal duty a legal obligation that a person already owesJust as a contract needs to reflect a twosided bargain so must variations or changes to said contract Promises Enforceable Without ConsiderationIf a document containing a promise is signed and the seal red gummed circle or wafer affixed the fact that there is no consideration is irrelevant seal is taken as evidence of serious intent by the promisor and amounts to acknowledgement that the promise is enforceable
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