Chapter 5: Introduction to Contracts
Contract: Deliberate and complete agreement between two or more competent persons.
o Can vary largely, from a small purchase to investments that require negotiations and documentations
o Needed because personnel may change, memories can become self-serving and genuine differences may arise.
o Informal business arrangements also are successful, but much less common.
o Rules governing contracts are usually based on common law.
o Depending on the nature of the contract, certain legislation may also be relevant.
Agreement: An offer to enter into a contract and an acceptance of that offer
o Terms: Promises contained in the agreement
o An agreement must be:
Deliberate: Both parties must want to enter into a contractual relationship.
Voluntary: An agreement must be freely chosen and not involve coercion or other forms of unfairness
Between two or more competent persons (parties), and enforceable by law
Supported by mutual consideration. Each party must give something in return for something else.
Not necessarily in writing (some exceptions)
o Once an agreement is made,
Both parties can rely on the created terms to plan their business affairs arise.
If there is a conflict, the parties can: litigate, negotiate, arbitrate, or mediate as written in the contract.
Legal Factors in their Business Context: Creating the Contract
o Communications is not simply about discussing possibilities in that it is automaticall