Biz Law Final Exam Notes.docx

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Western University
Management and Organizational Studies
Management and Organizational Studies 2275A/B
Terry Biggs

CHAPTER 9 - Legal Capacity to Contract and the Requirement of Legality • Inability to contract o Infants (not yet reach age of majority) • Enforceability and the Right of Repudiation o If a contract made by minor is fully performed and executed  Then bound by agreement o Any business firm or merchant assumes risk • Criteria for Necessary o Social position is taken into account o Contract of employment are enforceable (beneficial to minor) • The effect of repudiation o As long as contract has not been fully performed for non-necessary goods or services, minor or infant may repudiate contract at any time • Fraudulent Misrepresentation as to Age o Does not protect a minor that perpetrate a fraud from an unsuspecting merchant • Ratification and Repudiation o Repudiation  Refusal to perform an agreement or promise o Ratification  Adoption of a contract or act of another by a party who was not originally bound by the contract or act o To buy the boat, minor must ratify it after attaining the age of majority • Statutory Protection of Minors o Ratification must be in writing before it will be binding on the infant • Minors engaged in business o Contracts of employment are binding on minors • The Parent-Infant Relationship o Parents not normally liable o However, parents may be bound to minor’s actions as minors are parent’s agents of necessity • Drunken and Insane Persons o Similar to infants with respect to capacity to contract • Corporations o Generally considered to have all the powers to contract that a natural person may have o Ultra vires  An act that is beyond the legal authority or power of a legislature or corporate body • First Nation Bands • Labour Unions • Bankrupt persons o Limited capacity to contract o Until a bankrupt person receives discharge, he or she may not enter into a contract except for necessaries • The requirement of legality o Legality under statute law  Generally… • An illegal contract is anything that has an agreement to commit a crime, such as an agreement to rob, assault, abduct, obtain goods under false pretenses  Competition act • Illegal of any contract or agreement between business firms that represent a restraint of competition o Price fixing  AdministrativeActs • Void contracts carry no criminal penalties  Insurance policies • Acontract of insurance … therefore assumes an air of legitimacy  Un Licensed Persons • Illegal – contract between unlicensed tradesperson or professional • Legality at Common Law: Public Policy o Public policy  The unwillingness of the courts to enforce rights that are contrary to the general interests of the public • Contracts in restraint of trade o 3 categories  contrary to competition act  between vendor and purchasers of a business  employer and employee o Prima facie void and unenforceable  “on first appearance” • RestrictiveAgreements Concerning the Sale of a Business o RestrictiveAgreement  Acontractual clause limiting future behavior • RestrictiveAgreements Between Employees and Employers • SUMMARY o Minors and infants are not liable for any contract they make  Minors: liable for contracts for necessaries o Bankrupt / drunk people o Terms: Infant, Repudiation, Ratification, Ultra Vires, Public Policy, Prima Facie, Restrictive Covenant  Infant: a person who has not reached the age of majority  Repudiation: The refusal to perform an agreement or promise  Ratification: The adoption of a contract or act of another by a party who was not originally bound by the contract or act  Ultra Vires: An act that is beyond the legal authority or power of a legislature or corporate body  Public policy: the unwillingness of the courts to enforce rights that are contrary to the general interests of the public  Prima facie: On first appearance  Restrictive covenant: Acontractual clause limiting future behavior Chapter 10 - Requirements of Form, Writing and Privacy • Formal vs Simple Contracts o Formal contract: a contract deriving its validity from the form that it takes o Informal / simple contract: implied, oral or written • Power of attorney o Alegal document usually signed under seal in which a person appoints another to act as his or her attorney to carry out the contractual or legal acts specified in the documenForal contract • The statute of frauds o Imposed the requiring of writing for certain informal contracts • Assumed liability; the guarantee o Guarantee  Acollateral promise (in writing) to answer for the debt of another (the principle debtor) if the debtor should default in payment • Assumed liability; tort o Injuries • Contracts concerning interests in land o Part performance  Adoctrine that permits the courts to enforce an unwritten contract concerning land where certain conditions have been met  4 criteria • Requirements for the written memorandum o Parol evidence rule  Arule that prevents a party from introducing evidence that would add to or contract terms of a contract o EXCEPTIONS: (3) o Condition Precedent  Acondition that must be satisfied before a contract may come into effect o Implied term  The insertion by the court of a standard or customary term omitted by the parties when the contract was prepared o CollateralAgreement  An agreement that has its own consideration, but supports another agreement o SubsequentAgreement  An agreement made after a written agreement that alters or cancels the written agreement • Sales of GoodsAct • Privacy Legislation • SUMMARY: o Formal evidenced by writing o Informal: written, oral or implied, but certain ones subject to state of fraud MUST be evidenced by a memorandum Chapter 11: Failure to CreateAn enforceable contract  Mistake of law  Mistake of fact o Mistake as to the existence of the subject matter of a contract or the identity of a party o Fire, yacht burnt  Non Est Factum o Adefence that may allow illiterate or infirm persons to avoid liability on a written agreement if they can establish that they were not aware of the true nature of the document, and were not careless in its execution  Mistakes o Unilateral vs Mutual mistake  Rectification o The correction of a mistake in an agreement that would have rendered the agreement impossible to perform  Rescission o The revocation of a contract or agreement  Innocent misrepresentation o Afalse statement of a material fact made by a party that honestly believed the fact to be true  Fraudulent misrepresentation o Deceit  Atort that arises when a party suffers damage by acting upon a false representation made by a party with the intention of deceiving the other  Undue Influence o Astate of affairs whereby a person is so influenced by another that the person’s judgment is not his or her own  Duress o Threat of injury to require another to enter a contract Chapter 12: The extent of contractual rights  Privity o Aperson cannot incur liability under a contract to which he or she is not a party o EXCEPTION: LAND, constructive trusts, promises under seal, statutory exceptions  Trust o An agreement or arrangement whereby a party (called a trustee) holds property for the benefit of another (called a beneficiary or cestui que trust)  Assignment of Contractual Rights and Obligations o Novation  The substitution of parties to an agreement or the placement of one agreement by another  EquitableAssignments o Choses in action  Apaper document that represents a right or interest that has value o Equitable assignment  An assignment that could be enforced if all parties could be brought before the court o Vicarous performance  Aperformance of a contract by a third party, where the contracting party reminas liable for the performance  StatutoryAssignment o An assignment of rights that an assignee may enforce if certain conditions are met by the assignment o Set off  When two parties owe debts to each other, it can be set off  Assignments by law o Negotiable instrument  An instrument in writing that, when transferred in good faith and for value without notice of defects, pases a good title to the instrument to the transferee • Promissory note or cheque  SUMMARY: o Equitable assignment – transfer of future interest doesn’t meet legal standards, but still honored by courts Chapter 13 – Performance of Contractual Obligations  Tender: a
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