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what are the four elements of a contract
intention
offer and acceptance
legality
consideration
what is a breach of a contract
violating the terms and conditions + failure to fulfil them
why would businesses be afraid of breaching a contract
bad rep in the market
can be dragged in a lawsuit (sued)
why must you have contracts in the business world
diminish ambiguity
establish terms and conditions
prevent undesirable + unexpected results
governs disputes
why do many prefer written contracts over verbal
always good to have proof
serves as a record of your rights + obligations
which contracts must be in writing?
consumer transactions
sale or leasing land
guarantee payment of debt
who is the burden of proof on in the cases of breach of contract + what happens in the case of equally truthful or equally untruthful
plaintiff must go the extra mile to prove the defendant is at fault b/c they are the ones who brought the case forward
if both are truthful —» plaintiff loses
if both are lying —» plaintiff loses
what are the rules of construction + explain each
apply objective test: when there’s a vague term —» what would a reasonable person think this means
contra proferentem rule: interpret the contract against the drafter —» basically asking the non-drafter to provide the interpretation of the contract to ensure both parties’ wellbeing was considered when the contract was made
determine the parties’ intentions: enforcing the contract in terms of the intentions of the parties —» this can be hard when both parties’ intentions contradict each other
what are standard form contracts?
there are usually contracts that are drafted by one party and imposed on the other with lil to no room for negotiation
what type of agreements are standard form contracts used for?
selling products/service
service agreements
equipment rental
advertisements
insurance policies
why are standard form c’s considered efficient
save time
lowers costs
is a good template/draft to refer to
helps predict what the potential outcome may be + know the risks
produces standard results in court
what is an implied term
terms that judges insert into the contract to decrease ambiguity + put more emphasis on their intentions
often done when parties fail to convey their contractual intentions
what are some situations in which we’ll see implied terms
standard terms within an industry
obligations of good faith
business effectiveness
obvious ommission
how can parties get the courts to insert a term
the term conveys the intentions of the party
it is reasonable and does not contradict a term thats already included
what is privity of contract?
only those that are involved in the contract can reap the benefits in the same way that you cannot sue the third-party that is involved
what are some terms that must be included in contracts
quantity
how much will the buyer be receiving
quality
pricing
payment
due before, during, and after delivery
deadline
liquidated damages
automatic renewal
cancellation
condition precedent & subsequent
deposit
disclaimer of limitation of liability
exclusion
force majeure
governing law
venue
indemnity
what are liquidated damages
clause that states the amount of money that must be paid when a breach of contract occurs
courts will enforce the greatest damages from the breach is less than this set amount
what is capital punishment
putting down a ridiculous amount of money as liquidated damages to scare the other party from breaching
automatic renewal
the renewal of a contract without written notice of doing so
this is usually for phone service, photocopier rental, website hosting
may include terms that reqiure one party to give the other party notice of an inetntion to terminate the agreement
cancellation term
the rights + obligations in the event that one party wants to terminate the contract
this is usually included in contracts for things like:
exhibition space in trade shows
advertising in future editions of magazines
multi-yr contracts for cell phone service
condition precedent
something must happen before a party is required to perform their obligations under the contract
during the waiting period, he contract exists as an enforcable agreement & parties do have obligations under it
condition subsequent
a condition that comes after the agreement, if it is not fulfilled then the contract will end
KPMG says that you will get a job as a CPA in their firm as long as you get your designation by Sept 2025; if you don’t fulfill this requirement, the contract ends & you will not be working for them anymore
disclaimer (of limitation of liability)
basically this is to limit the liability that may on the parties and caps the damages’ amount as to completely bar it
if you rent a hall, they may add that if someone slips on their venue, they’re not going to be liable
by signing it, you’re agreeing not to sue them
exclusion
excuses people from their contractual obligation under special circumstances
in terms of insurance, if you will be insured except for when you caused the injury to yourself on purpose
force majeure
this is to protect in the case of natural disaster or unanticipated event
usually smth that is beyond the contract of the parties and prevents them from carrying out the terms of the contract
the effect of this is to terminate the contract
governing law
this is for parties that are operating in different countries so you must choose which country will govern your contract
venue
this will determine which country will the parties settle their disputs
what are the benefits of arbitration?
confidentiality
relative flexibility
speed of process
industry-specific expertise
indemnity
basically saying that it will take on the loss or damages and pay for them, if they did the harm
i hire a contractor and they say that if they damage the neighbour’s property, they will pay the costs
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