Chapter 4 (5) Flashcards
What makes a contract legal?
- The intention to create a legal relationship 2. Offer and acceptance of the contract
- Consideration: this means each party must give something of value to the other
- Legality: the contract must conform to the law of the land
While most contracts can be legally binding from just a handshake, what types cannot be ?
The sale of land, consumer transactions, and debt payment contracts need to be in writing
What are the rules of construction?
These are the common law rules interpreting how contract disputes are to be resolved. 1. Objective test, this means that if a word or action is badly defined in a contract, the judge will ask what a reasonable person would believe. 2. Interpret against the drafter, the judge will ask how the party who did not draft the contract believed it to have meant. 3. Determine the intentions of the parties.
What is a standard form contract?
A type of contract that cannot be negotiable, an example would be a user license agreement for a program.
Why ate standard form contracts good?
They are fast to reuse for multiple customers, they are cheap, predictable and easy to use in court, helps counter legal risk by allowing businesses to read and deny the contract quickly, and they are easy to model new contacts off of
What is an implied term ?
This is a term that is entered by a court into a signed contract. For example, if it is customary in the construction business to pay a debt after 30 days, and someone does not pay in that time, the court may allow the collector to add interest to the payment even without the contract signing this
What is the privity of contract?
The doctrine that restricts the operation of a contract to those who are the parties in the contract. Basically, the contract is only binding to those identified, and named correctly, in the contracts wording
What is the Liquidated damages clause?
A clause in a contract that provides a number for payment of money if a event, normally breach of contract, occurs
What is a condition precedent ?
A clause that specifies that something must happen before a party is required to perform their obligations under the contract. For example, one party must pay in advance before any work can be started.
What is a condition subsequent?
An occurrence of an event or circumstance thst results in the termination of contractual obligations. For example, if a contract, not necessarily arising from a breach, is not profitable for a party due to sales or distribution standards of a other party, then they can terminate the contract
What is a disclaimer clause ? Aka limitation of liability?
A clause that limits the amount or type of damages that parties are otherwise required to pay. For example, if a warehouse breaks a item, this clause can dictate how much is needed to be paid
What is an exclusion clause ?
The clause that excuses parties from their contractual duty in specific situations. For example, an insurance contract for housing might say illegal acts that damage a house by the signing party will not be covered such as lighting fire to the house for insurance money.
What is an endorsement clause ?
This is a term added on to an standard form or existing contract. For example, a jewelry store may be required to install cameras before an insurance contract can be considered valid and binding
What is a force majeure?
A significant and unanticipated event, such as natural disaster, that is beyond the control of the parties and makes fulfillment of the contract impossible
What is the doctrine of frustration?
A common law doctrine thst applies to terminate a contract in situations the parties did not make provision for in the terms of their contract and that make performance of the contract fundamentally different from its original purposes
What is thd choice of law clause ?
A clause in a contract that dictates which governing body of law applies to their contract. For example, if it’s a international contract, you may state only Canadian laws apply in the contract
What is a venue clause ?
A clause in a contract specifying the place where a contractual dispute will be litigated. For example, you have state disputes will be only settled in novs scotia courts
What is an indemnity clause ?
A clause in a contract that requires one of the parties to pay forbany losses or expenses that the other party may incur as a result of claims related to the contract
