INTRODUCTION TO BUSINESS ( CONTRACT ) LAW AND CONTRACT THEORY

BUSINESS LAW: Cases & Principles

Davidson Knowles Forsythe 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.

2004 West Legal Studies in Business A Division of Thomson Learning

BUSINESS LAW: Cases & Principles

Davidson Knowles Forsythe 8th Ed.

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.

2004 West Legal Studies in Business A Division of Thomson Learning

BUSINESS LAW: Cases & Principles

Davidson Knowles Forsythe 8th Ed.

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.

2004 West Legal Studies in Business A Division of Thomson Learning

BUSINESS LAW: Cases & Principles

Davidson Knowles Forsythe 8th Ed.

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.

2004 West Legal Studies in Business A Division of Thomson Learning

BUSINESS LAW: Cases & Principles

Davidson Knowles Forsythe 8th Ed.

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.
2004 West Legal Studies in Business A Division of Thomson Learning

BUSINESS LAW: Cases & Principles

Davidson Knowles Forsythe 8th Ed.

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.
2004 West Legal Studies in Business A Division of Thomson Learning

BUSINESS LAW: Cases & Principles

Davidson Knowles Forsythe 8th Ed.

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.

2004 West Legal Studies in Business A Division of Thomson Learning

BUSINESS LAW: Cases & Principles

Davidson Knowles Forsythe 8th Ed.

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.

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2004 West Legal Studies in Business A Division of Thomson Learning

BUSINESS LAW: Cases & Principles

Davidson Knowles Forsythe 8th Ed.

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.

2004 West Legal Studies in Business A Division of Thomson Learning

10

BUSINESS LAW: Cases & Principles

Davidson Knowles Forsythe 8th Ed.

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.
2004 West Legal Studies in Business A Division of Thomson Learning

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