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Understanding Contracts: Key Legal and Business Factors

Chapter Five of "Canadian Business and the Law" introduces the fundamental concepts of contract law. It defines a contract as a deliberate agreement between competent parties, emphasizing the importance of mutual considerations. This chapter explores key factors in contractual relationships, including effective communication, equality of bargaining power, and the implications of incomplete agreements. Understanding these elements helps navigate legal and business contexts, ensuring enforceability and clarity in transactions while considering the interplay of relationships and economic realities.

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Understanding Contracts: Key Legal and Business Factors

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  1. CANADIAN BUSINESS AND THE LAW Second Edition by Dorothy Duplessis Steven Enman Shannon O’Byrne Sally Gunz Presentation prepared by Allan Elliott, Southern Alberta Institute of Technology

  2. CHAPTER FIVEAN INTRODUCTION TO CONTRACTS OBJECTIVES: • The general concept of a contract • The legal factors in the contractual relationship • The business factors influencing the formation and performance of contracts

  3. INTRODUCTION TO CONTRACT LAW DEFINING CONTRACT LAW ▪ Contract • deliberate and complete agreement between two or more competent persons, not necessarily in writing, supported by mutual considerations, to do some act voluntarily and enforceable in a court of law

  4. KEY FACTORS IN CONTRACTUAL RELATIONSHIPS KEY FACTORS • communication • start of the contractual relationship • objective standard test • how a ‘reasonable person’ would view the conduct of the parties

  5. KEY FACTORS IN CONTRACTUAL RELATIONSHIPS KEY FACTORS • equality of bargaining power • legal assumption that parties to a contract are able to look after their own interests • incomplete agreement • an agreement which is not contractual because its content is not sufficiently comprehensive • inequality of bargaining power - standard form contracts – “take it or leave it”

  6. CONTRACT LAW DEFINED CONTRACT LAW IN CONTEXT • contract law is only one relevant factor in a commercial transaction • the parties must consider the following: • business relationships • economic reality • reputation management

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