BUSINESS (Elements of a Contract)

Question 1

What contracts are commonly encountered in vet med?

Answer 1

-employment contracts
-purchase agreements
-partnership agreements
-leases: building, vehicle, equipment

Question 2

Contract:

Answer 2

-an agreement between 2 or more capable persons for a legal consideration to do or not to do some lawful and genuinely intended act

Question 3

5 essential elements of every contract:

Answer 3

-capable
-mutual agreement
-legal consideration
-genuinely intended
-lawful subject matter

Question 4

Capable:

Answer 4

-invalidated if an infant, mentally incompetent, drugs/alcohol, enemy alien
-exception if contract for “necessaries” (befits the person’s station in life)
-corporation is a “person”

Question 5

Mutual agreement:

Answer 5

-definite offer and acceptance
-unconditional, otherwise making a counter offer/proposal
-communicated: can withdrawal anytime before accepted
-manner: as stated in contract
-time period: as stated, otherwise ‘reasonable’ time period

Question 6

Legal consideration:

Answer 6

-what a person receives or is to receive for what they do or agrees to do
-must be valuable consideration, but not necessarily money
-“sealed”: considered as signed, sealed and delivered

Question 7

Genuinely intended:

Answer 7

-voided by fraud, misrepresentation, mistake
-“mens rea”
-“tradepuffing”

Question 8

“mens rea”:

Answer 8

-mental thing
-essentially means intent
-fraud: on purpose (intent)
-misrepresentation: can happen with no ones fault

Question 9

“tradepuffing”

Answer 9

-legal right to exaggerate
Ex. shop on street can say they have the best ______

Question 10

Lawful subject matter:

Answer 10

-crime
-civil wrong (buy a house on a Sunday?)
-contract against public policy
-champerty

Question 11

Champerty:

Answer 11

-I am engaged in a civil thing
-someone (ex. lawyer) says they will pay the legal fees if they get half the settlement

Question 12

Things that must have a written contract:

Answer 12

-all contracts that can’t be complete withing a year
-sale of real property
-where another person agrees to be responsible for a debt (guarantor or co-signor of a loan)
-relating to execution of a will/estate

Question 13

Property (chattel) vs. real property (land):

Answer 13

-chattel things we own
-land: ‘dirt’ with all attached structures (includes a mobile structure)

Question 14

When can a contract be discharged (complete):

Answer 14

-performance
-agreement
-substitution
-impossibility of performance
-operation of law
-breach of contract

Question 15

Performance:

Answer 15

-each party has performed their respective obligations

Question 16

Agreement:

Answer 16

-both parties agree to terminate or ‘waive’ their rights

Question 17

Substitution:

Answer 17

-enter into a newer agreement

Question 18

Impossibility of performance:

Answer 18

-‘force majeur’
-through no fault of one party it is impossible to complete the contract
Ex. covid weddings
>not the properties fault that the wedding couldn’t take place
>should not give the deposit money back (what would the point of taking it be then?)

Question 19

Operation of law:

Answer 19

-law puts an end to the contract (ex. bankruptcy)

Question 20

Bankruptcy:

Answer 20

-provides an orderly distribution of debtor’s assets
-allow an unfortunate but honest debtor to have most or all depts wiped out
-must be insolvent (debts exceed assests)

Question 21

Breach of contract:

Answer 21

-renunciation or failure to perform
>REMEDY TO BREACH IN THE CONTRACT IS DAMAGES

Question 22

Rights or remedies:

Answer 22

-where there is a right there is a remedy
-main and often only remedy in law is “damages”
>often money

Question 23

Tort: (remedy)

Answer 23

-civil wrong compensated by monetary damages

Question 24

Concept of damages:

Answer 24

-applies the same to both breach of contract and torts
*are compensatory not punitive
>make you whole again (where I was at the beginning)

Question 25

Restrictive covenants:

Answer 25

-non-compete clause
-designed to protect a business from competition by a former employee that could harm the business
-Canadian courts wont enforce restrictive covenants that unnecessarily restrict an employee’s freedom to earn a livelihood
>former employer has to show it is “reasonably necessary” for the protection of the business

Question 26

“non-compete”:

Answer 26

-used to describe either or both non-competition and non-solicitation covenants
*have different purposes

Question 27

Non-competition covenant:

Answer 27

-prohibits a former employee from becoming engaged in a business that competes with the business of his or her former employer

Question 28

Non-solicitation covenant:

Answer 28

-prohibits former employee from soliciting the customers or employees of his or her former employer
-previous employer would need to have proof

Question 29

Which covenant is most likely to be enforced?

Answer 29

-a non-solicitation covenant
>non-competition is not commercially necessary
-Canadian courts only enforce non-competition covenants in “exceptional” circumstances
>ex. when employee is the “face” of the employer’s business

Question 30

Best practices for drafting non-competition covenants:

Answer 30

-only prohibit same or similar to the activities that the employee was engaged in
-geographic scope no broader than the areas in which the employer is vulnerable as a consequence of the employee’s departure
-should last no longer than is necessary for an employer to regain any competitive advantage lost when an employee departs

Question 31

Typical clauses of an employment contract

Answer 31

-length often a year
-compensation and benefits
-on-call and after-hours work
-vacation?
-profit sharing
-future partnership
-etc.

Question 32

Lesson for employers (Canadian example):

Answer 32

-clarity and certainty are required to enforce a reasonable non-competition provision
-financial obligation imposed on employee who competes post-employment must be defensible as a reasonable estimation of liquated damages or expenses incurred
>must not constitute a penalty

Question 33

Shotgun clause:

Answer 33

-comes up on partnership agreements
-ABC own the clinic
-C wants to buy A+B out for $350,000 each, didn’t think it was enough=trigger the shot-gun clause
-A+B decided to buy C out for $350,000
*no negotiation: if you have a shotgun clause and put the offer in writing=you will be bought out