Business Law Ch.8.docx

4 Pages
Unlock Document

Western University
Management and Organizational Studies
Management and Organizational Studies 2275A/B
Philip King

Business Law Ch. 8 Chapter 8 The Importance of Enforcing Contracts  There is a general rule that a contract, once formed, is enforceable  There are legal doctrines on the basis of there being: o An unequal relationship between the two parties o Misrepresentation or important mistakes concerning the contract o A defect within the contract itself  If one of these doctrines are in place, there are two possible outcomes: elect whether to keep the contract in force or have it brought to an end (see next definition)  Voidable contract: a contract that, in certain circumstances, an aggrieved party can choose to keep in force or bring to an end  Void contract: a contract involving a defect so substantial that it is of no force or effect Contracts Based on Unequal Relationships  Legal capacity: the ability to make binding contracts o Contract law emphasizes the important of consent and voluntariness o Children and those with mental incapacities are given the benefit of special legal protection from contracts  Minors o Age of minority: the age at which a person becomes an adult for legal purposes o When under the age of minority, their ability to enter contracts are in a very different position – they are not obligated by the contracts they make o Minors have the option to fulfill their contractual commitments and can enforce a contract against the other party should that party be in breach o Contracts with a minor are usually voidable, at the option of the minor alone o Minors are obligated by contracts for essentials, known in law as “necessaries” and are required to pay a reasonable price for them  Determined in relation to two questions:  Is the item being acquired necessary to this minor?  Does this minor already have an adequate supply of the item?  Two step test must be satisfied in order for the supplier to be able to enforce the specific contract o The common law generally provides that when a minor reaches the age of majority, there is not impact on contracts formed when underage  Mental Incapacity o In order for a contract to be formed freely by both parties, they must be able to understand the nature and consequences of their agreement o If impaired through illness or intoxication, and the other party was aware of their state, they may be able to avoid the contract at their option  Duress o Contracts that are made as a result of one of the parties begin threatened with physical harm are not enforceable o Economic duress: the threat of economic harm that coerces the will of the other party and results in a contract  E.g. financially pressuring the other party o When duress is established, the contract is voidable at the option of the party who was subject to the duress  Undue Influence: unfair manipulation that compromises someone’s free will o Two circumstances:  Actual pressure  Presumed pressure  E.g. between family members, or between a lawyer and client o One way of proving that the contract was freely chosen is to arrange for the weaker party to get independent legal advice concerning the transaction before it is entered into  Inequality Between the Parties o One party is unsophisticated, poorly educated, lacks language facility, or has lower economic standing  An Improvident Bargain o There must be proof of substantial unfairness o Terms greatly advantaged one party over the other Misrepresentations and Important Mistakes  Misrepresentation of Relevant Facts o Both parties are to look out for their own interests and if they want information, they should ask for it o Sometimes parties do owe a duty to disclose information without being prompted  One party provides only partial information to the other side  Must not be
More Less

Related notes for Management and Organizational Studies 2275A/B

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.