Chapter 5 Flashcards
What is a Contract?
Agreement between 2 parties that is enforceable in a court of law, based on Common Law
What Communication is needed in creating a contract?
Governed by the objective standard test, can be made with informal contact between individuals or through general inquiry to a supplier
What is the Objective Standard Test?
Test based on how a “reasonable person” would view the matter
What is Bargaining Power in creating the contract?
Usually one side will have more experience and knowledge, law doesn’t recognize this and believe in equal bargaining power: parties are able to look out for their own interests
How do Business Relationships perform/enforcing contracts?
Whether or not to sue is a business decision, litigation is not the best option as it is timely costly, and damages relationship
What is the Economic Reality in performing/enforcing contracts?
Not the best economic decision for a party to keep a commitment, the cost of compensation is acceptable to pay to release from obligations
What is the Reputation Management in performing/enforcing contracts?
Breaching contracts/leaving early will damage reputation, being too strict will as well
