Management and Organizational Studies 2275A/B Chapter 5: Biz Law - Ch. 5 Textbook

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Business Law
Ch. 5 Readings – An Introduction to Contracts
Introduction to Contract Law
A contract is a deliberate and complete agreement between two or more competent
persons, not necessarily in writing, supported by mutual consideration, to do some act
voluntarily. By definition, a contract is enforceable in a court of law
oAn Agreement
An agreement is composed of an offer to enter into a contract and an
acceptance of that offer
“Meeting of the minds”
oComplete
The agreement must be complete, that is, certain,
oDeliberate
Both parties must want to enter into a contractual relationship
oVoluntary
Must be freely chosen and not involve coercion or other forms of serious
unfairness
oBetween two or more competent person
Those who enter into a contract are known as parties to the contract.
There must be at least two parties in any contract, who must have legal
capacity
oSupported by mutual consideration
Involves a bargain or exchange between the parties. Each party
must give something of value in exchange for receiving something
of value from the other party
Not necessarily in writing
Even oral contracts are enforceable, though it is preferable for
negotiators to get the contract in writing
In most Canadian jurisdictions there are certain kinds of contracts
that must be in writing in order to be enforceable
Once a contract is created, it permits both parties to rely on the terms they have
negotiated and plan their business affairs accordingly.
Contract law ensures that each party gets what it bargained for
Rules governing contracts are based on common law. What other judges have said in
past cases that resemble the current case. Legislation such as the Sale of Goods Act may
also be relevant
Contracts are the legal cornerstone of any commercial operation
It allows participants to create their own rights and duties within a framework of rules
that a judge will later enforce, if called upon to do so
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