Chapter 5 Intro to Contacts

Question 1

what is a contract?

Answer 1

a deliberate and complete agreement between two or more competent persons

• supported by mutual consideration to do some act voluntarily
• it’s not necessarily in writing.
• the judge rules on common law (which is judge made law from past cases)
• allows participants to create to create their own rights and duties
• enforceable by a judge if needed

Question 2

Elements of a contract (7)

Answer 2

1. completed negotiations
2. agreement between parties
3. deliberately made
4. voluntarily made
5. two or more competent persons
6. supported by mutual consideration
7. not necessarily in writing

Question 3

advantages of a contract (4)

Answer 3

1. both parties can rely on terms negotiated so they can plan their business affairs accordingly
2. binding promises enforceable in court
3. various options for dispute
4. ensures parties receive what they bargained for

Question 4

objective standard test

Answer 4

-asks whether a reasonable person observing the communications between negotiators would conclude that an offer and acceptance has occured

Question 5

bargaining power

Answer 5

• kind of contract that is influenced by business persons bargaining power- it is rarely equal but the law assumes that both sides had equal bargaining power– courts also assist the weaker side