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CHAPTER 9 INTRODUCTION TO CONTRACT LAW AND CONTRACT THEORY. DAVIDSON, KNOWLES & FORSYTHE Business Law: Cases and Principles in the Legal Environment (8 th Ed.). THE IMPORTANCE OF CONTRACT LAW. Law of contracts affects all aspects of daily life.
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CHAPTER 9INTRODUCTION TO CONTRACT LAW AND CONTRACT THEORY DAVIDSON, KNOWLES & FORSYTHE Business Law: Cases and Principles in the Legal Environment (8th Ed.)
THE IMPORTANCE OF CONTRACT LAW • Law of contracts affects all aspects of daily life. • Commercial Law Contracts: having to do with commerce. • Common Law Contracts: derived from the judgments and decrees of courts.
THE IMPORTANCE OF CONTRACT LAW • Definition of a Contract: • Legally binding. • Legally enforceable promise or set of promises. • Between two or more competent parties. • Law recognizes a duty.
ELEMENTS OF A CONTRACT • Founded on an agreement. • An offer and acceptance on that offer. • Supported by consideration. • Something bargained for and given in exchange for a promise. • Made by parties having the capacity to contract. • The legal ability to contract.
ELEMENTS OF A CONTRACT • Based on the parties’ genuine assent. • Voluntary involvement as a party to the contract. • Grounded in a legal undertaking. • Subject matter must be legal. • Expressed in proper form. • Written and oral contracts can be binding if rules are understood and followed.
FROM STATUS TO FREEDOM OF CONTRACT AND BACK AGAIN • Feudal society set social hierarchies. • Contract law calls for the performance of mutual duties and obligations. • Law merchant and contracts were more important than status. • Lawmakers lately have restricted freedom of contracts.
CLASSIFICATIONS 0F CONTRACTS • Formal vs. Informal Contracts. • Unilateral vs. Bilateral Contracts. • Valid, Voidable, Void, and Unenforceable Contracts. • Express vs. Implied Contracts. • Executory vs.Executed Contracts. • Quasi Contracts vs. Contracts Implied in Fact.
CLASSIFICATION OF CONTRACTS • Formal Versus Informal Contracts. • Formal Contracts need a seal. • Informal Contracts are simple and do not need a seal. • Unilateral Versus Bilateral Contracts. • Unilateral Contracts is a promise on one side only. • Bilateral Contracts are promises on both sides.
CLASSIFICATION OF CONTRACTS • Valid, Voidable, Void, and Unenforceable Contracts. • Valid Contract is legally binding and enforceable. • Voidable Contract can be affirmed or rejected at the option of one or more of the contracting parties. • Void Contract can never have any legal effect. • Unenforceable Contracts will not be given effect by a court of law.
CLASSIFICATION OF CONTRACTS • Express Versus Implied Contracts. • Express Contracts the parties set forth their intentions specifically and definitely in writing or oral. • Implied Contracts is inferred from the actions or conduct of the parties.
CLASSIFICATION OF CONTRACTS • Executory vs. Executed Contracts • Executory Contract is when a promise remains unfulfilled by one party. • Executed Contract is when the parties have fully performed the promise. • Quasi Contracts versus Contracts Implied in Fact • Quasi Contracts are implied in law. • Implied in Fact Contracts hold that sufficient evidence exists for a court to determine that the parties were meant to contract with each other.