CH 5 slides Flashcards
What is a contact?
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, and which agreement is enforceable in a court of law.
what rules are contacts based off of
Usually judge made laws
what do contracts allow their participants to do when making them
It allows participants to create their own rights and duties within a framework of rules enforceable by a judge, if needed.
What are the 7 elements of a contract
Agreement between the parties Completed negotiations Deliberately made Voluntarily made Between two or more competent persons Supported by mutual consideration Not necessarily in writing
what are four advantages to contracts
Contracts permit both parties to rely on the terms they have negotiated and plan their business affairs accordingly.
They create binding promises that can be enforced in court.
If a dispute arises between the two parties, there are various options for dispute resolution.
They ensure that each party receives what they bargained for.
List 7 different examples of contracts found on the slides
Leases Sales contracts Loan contracts Supply purchase contracts Employment contracts Confidentiality agreements Even a simple casual sale (a pack of gum) is a contract.
what is something that all contracts have in common
ALL contracts are subject to the same legal rules.
Is communication of contracts made informally or formally
Both
what is the objective standards test in terms of contract law
Asks whether a reasonable person, observing the communication between the negotiators, would conclude that an offer and acceptance had occurred.
what does the law assume in terms of bargaining power
The law assumes both sides have equal bargaining power, “had eyes open,” during negotiations.
What is rare in terms of bargaining power
Equal bargaining power is rare—one side usually has an advantage
what does “had eyes open,” mean in terms of bargaining power
The law assumes both sides have equal bargaining power, “had eyes open,” during negotiations.
what will the law occasionally do when there is a weaker side in a dispute. and what does this contradict?
Occasionally, the courts will come to the assistance of the weaker party and set the contract aside.
this contradicts that The law assumes both sides have equal bargaining power, “had eyes open,” during negotiations.
what three things must a business consider before suing for a breach in contract
Business relationships
Economic realities
Reputation management
what three things do written contracts avoid
Written contracts avoid misunderstandings, costs, and relationship breakdowns.
Say someone in contractual negotiations makes what looks like an offer, but isn’t intend as one. And the other party accepts. is this contract binding?
yes
In a fixed term long contract. Market forces may fluctuate to put one party at a disadvantage to another. Will contract law help out the disadvantaged party?
No not generally
Describe the case of Churchill Falls (Labrador) Corporation Ltd v Hydro-Québec, 2016
The contract, signed in 1969 for a 65-year term between Churchill Falls (Labrador) Corporation Limited (CFLCo) and Hydro-Québec, obligated CFLCo to sell nearly all its power to Hydro-Québec and Hydro-Québec to purchase that entire output at a fixed price.
This was disadvantageous to CFLCo as the price of energy increased
The Court of Appeal decided in favour of Hydro-Québec, concluding that the contract was enforceable as written
What case highlighted the importance of putting a written contract in place as opposed to an oral one, even if there is a good relationship between the two parties.
Ontario Inc v Aviya Technologies Inc
what will happen to a business that makes a practice of breaching contracts due to bad planning or in order to pursue an apparently more lucrative business opportunity
will certainly be within its legal rights to breach and pay damages in lieu of performance. Such a business is also likely to acquire a reputation in the industry as an unreliable and undependable company. The long-term viability of a business organization is undoubtedly compromised if customers, suppliers, and employees grow reluctant to deal with it.
what will happen to a business that insists on strict observance of its legal rights
may damage its reputation in the marketplace. Although a manufacturer may have a valid defence for having produced a defective product, for example, it may be better in the end to compensate the customer voluntarily rather than fight out a lawsuit. A lawsuit in the circumstances of this example may result in a serious blow to reputation and a public relations disaster.
