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Chapter 9

BUL3130 Chapter Notes - Chapter 9: Executory Contract, American Law Institute, Negotiable Instrument

Business Law
Course Code

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Legal Environment of Business Chapter 9 Introduction to Contracts
9.1 Development of the Law of Contracts
o Common experience has shown that promises based solely on personal honesty or integrity do
not have the reliability essential to business
The law of enforceable promises
o Contract law is still undergoing changes
o Common Law
Contracts are primarily governed by State Common Law
American Law Institute (ALI)
Restatement of the Law of Consumer Contracts
Rules of contract law that treat consumer contracts differently from commercial
Regulatory rules that are prominently applied in consumer protection law
o The Uniform Commercial Code
The sale of personal property forms a substantial portion of commercial activity
Sale the passing of title to goods from seller to a buyer for a price
Personal Property
Any type of property other than an interest in real property
o Types of Contracts Outside the Code
Does not apply to employment contracts, service, insurance, contracts involving real
property, and contracts for the sale of intangibles such as patents and copyrights
Land and anything attached to it
Governed by general contract law
o International Contracts
The legal issues inherent in domestic contracts also arise in international contracts
International contract should specify official language and define all significant legal
Acceptable currency and payment method
Choice of law clause designating what law will govern any breach or dispute regarding
the contract and a choice of forum clause designating whether the parties will resolve
one nations courts system or a third-party arbitration
Force Majeure (Unavoidable Superior Force) Clause apportioning the liabilities and
responsibilities of the parties in the event of an unforeseeable occurrence
9.2 Definition of a contract
o Contract is a binding agreement that t the courts will enforce
A promise or a set of promises for the breach of which the law gives remedy, or the
performance of which the law in some way recognizes as duty
Promise a manifestation of the intention to act or refrain from acting in a specified
o Promises that meet all requirements of a binding contract are contractual and will be enforced
o Breach Failure to perform properly
If promises are not contractual
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