Chapter 5 Business & Consumer Law

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University of Guelph
Marketing and Consumer Studies
MCS 3040
Joseph Radocchia

Chapter 5 An Introduction to Contracts Introduction to Contract Law Contract: An agreement between 2 parties that is enforceable in a court of law Agreement: Composed of an offer to enter into a contract and contained in the agreement are known as terms  The agreement must be complete, that is, certain.  The agreement must be deliberate: most parties must want to enter into the contractual agreement  The agreement must be voluntary, The agreement must be freely chosen & must not involve coercion  Must be between 2 or more competent people  Must be supported by mutual consideration. A contract involves a bargain or exchange between the parties. This means each party must give something of value in exchange for receiving something of value from the other  Not necessarily in writing. Even oral contracts are enforceable, through its preferable for negotiators to get contract in writing  Once contract is created, it permits both parties to rely on the terms they have negotiated to plan their business affairs accordingly  For dispute resolution, parties can take matter to court  For most part, the rules governing contracts are based on common law (judge-made laws) as opposed to laws made by elected governments  This means that a judge resolving contractual conflicts is usually relying not on statute law to guide deliberation but rather on what other judges have said in past similar cases (precedents)  Contracts come in wide variety  E.g. Sale of box of pens at corner store is instantly/casually completed and the only document produced is a sales receipt Legal factors in their business context: Creating the contract Communication  Most contractual relationships start with communication which may begin through informal contract between people within the businesses who recognize mutual needs, or maybe through a general inquiry to a supplier or price of materials  It’s important for the businessperson communicating with potential partners to know when simpl
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