BUSINESS (Elements of a Contract) Flashcards
What contracts are commonly encountered in vet med?
-employment contracts
-purchase agreements
-partnership agreements
-leases: building, vehicle, equipment
Contract:
-an agreement between 2 or more capable persons for a legal consideration to do or not to do some lawful and genuinely intended act
5 essential elements of every contract:
-capable
-mutual agreement
-legal consideration
-genuinely intended
-lawful subject matter
Capable:
-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”
Mutual agreement:
-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
Legal consideration:
-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
Genuinely intended:
-voided by fraud, misrepresentation, mistake
-“mens rea”
-“tradepuffing”
“mens rea”:
-mental thing
-essentially means intent
-fraud: on purpose (intent)
-misrepresentation: can happen with no ones fault
“tradepuffing”
-legal right to exaggerate
Ex. shop on street can say they have the best ______
Lawful subject matter:
-crime
-civil wrong (buy a house on a Sunday?)
-contract against public policy
-champerty
Champerty:
-I am engaged in a civil thing
-someone (ex. lawyer) says they will pay the legal fees if they get half the settlement
Things that must have a written contract:
-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
Property (chattel) vs. real property (land):
-chattel things we own
-land: ‘dirt’ with all attached structures (includes a mobile structure)
When can a contract be discharged (complete):
-performance
-agreement
-substitution
-impossibility of performance
-operation of law
-breach of contract
Performance:
-each party has performed their respective obligations
Agreement:
-both parties agree to terminate or ‘waive’ their rights
Substitution:
-enter into a newer agreement
Impossibility of performance:
-‘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?)
Operation of law:
-law puts an end to the contract (ex. bankruptcy)
Bankruptcy:
-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)
Breach of contract:
-renunciation or failure to perform
>REMEDY TO BREACH IN THE CONTRACT IS DAMAGES
Rights or remedies:
-where there is a right there is a remedy
-main and often only remedy in law is “damages”
>often money
Tort: (remedy)
-civil wrong compensated by monetary damages
Concept of damages:
-applies the same to both breach of contract and torts
*are compensatory not punitive
>make you whole again (where I was at the beginning)
Restrictive covenants:
-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
“non-compete”:
-used to describe either or both non-competition and non-solicitation covenants
*have different purposes
Non-competition covenant:
-prohibits a former employee from becoming engaged in a business that competes with the business of his or her former employer
Non-solicitation covenant:
-prohibits former employee from soliciting the customers or employees of his or her former employer
-previous employer would need to have proof
Which covenant is most likely to be enforced?
-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
Best practices for drafting non-competition covenants:
-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
Typical clauses of an employment contract
-length often a year
-compensation and benefits
-on-call and after-hours work
-vacation?
-profit sharing
-future partnership
-etc.
Lesson for employers (Canadian example):
-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
Shotgun clause:
-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
