What is a contract?
An agreement between two or more parties that’s enforceable in a court of law
What are the six elements required for a contract?
- An agreement (offer and acceptance)
- Promises contained in the agreement (terms)
- Meeting of the minds (essential obligations)
- Completeness (agreement must be certain)
- Intention to create legal relations (deliberate)
- Voluntary agreement (freely chosen)
True or False: Contracts must always be in writing to be enforceable.
False
What advantages do contracts provide to parties?
- Allow reliance on negotiated terms
- Create binding promises enforceable in court
- Provide options for dispute resolution
- Ensure each party receives what they bargained for
What is the legal basis for contract rules?
Common law
What types of business operations rely on contracts?
- Selling products or services
- Hiring employees
- Renting office space
- Borrowing money
- Purchasing supplies
What is the principle of equality of bargaining power?
The assumption that parties can look out for their own interests in contract negotiations
Fill in the blank: A contract must be supported by _______.
mutual consideration
What was the outcome of Churchill Falls (Labrador) Corporation Ltd v Hydro Quebec?
The Supreme Court of Canada decided in favor of Hydro Quebec, enforcing the contract as written.
What can lead to a breach of contract in business relationships?
- Late payments
- Wrong product delivery
- Defective products
True or False: Suing for breach of contract is always the best business option.
False
What can help avoid misunderstandings in business agreements?
A written contract
What negative consequence can arise from a business frequently breaching contracts?
Acquiring a negative reputation in the industry
Fill in the blank: Contract law is ________ and allows participants to create their own rights and duties.
facilitative
What is the objective standard test in contract law?
A test based on how a reasonable person would view the communication between negotiators
What should businesses consider before deciding to sue for breach of contract?
- Costs of litigation
- Potential impact on business relationships
- Long-term implications
What tends to influence the kind of contract a business person creates?
Their bargaining power
Fill in the blank: Contracts can be casual or require lengthy ________ and considerable documentation.
negotiations
