Question 1

It is a legal assumption in contract law that parties to a contract are able to look out for their own interests.

Accepted Answer

This is based on the principle of autonomy in contract law, which assumes that parties entering into a contract are best positioned to understand and protect their own interests, making contracts freely entered into enforceable.

Question 2

An alternative to a contract is a casual understanding between the parties.Explain the disadvantages of casual understandings and outline the advantages of ensuring a business understanding is formalized by a contract.

Accepted Answer

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Question 3

Alberta Carr,in his well-known article published in the Harvard Business Review,encouraged businesspeople to break the law to seek advantage in business negotiations.

Accepted Answer

Albert Carr, in his article, argued that business, like poker, has its own ethics and that bluffing (or strategic misrepresentation) is fair within the context of business ethics, but he did not encourage breaking the law.

Question 4

Luna Quan has been directed to attend a meeting tomorrow for the purpose of negotiating a new supply contract.It is vitally important that Luna pay particular attention during those negotiations to when simple business communications transform into legal obligations.

Accepted Answer

During negotiations, discussions can evolve into legally binding agreements if certain terms are agreed upon, making it crucial to recognize when simple communications become commitments.

Question 5

Do all contracts have to be in writing in order to be legally enforceable? What are the advantages of putting your contract in writing?

Accepted Answer

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Question 6

Business people regularly breach contracts because the decision to breach a contract is both a business and legal decision.

Accepted Answer

Business people may choose to breach contracts if they calculate that the cost of breaching (including legal fees and damages) is less than the cost of fulfilling the contract, making it both a business and legal decision.

Question 7

In order to be binding,an agreement must contain a bargain or exchange between the parties.

Accepted Answer

For an agreement to be legally binding, it typically must involve a bargain or exchange of value (consideration) between the parties, indicating that each party has agreed to give up something in return for receiving something else of value.

Question 8

A business should always insist on the strict observance and enforcement of its legal rights.

Accepted Answer

While it's important for a business to protect its legal rights, insisting on strict observance and enforcement in all situations can be counterproductive. Flexibility, negotiation, and compromise often lead to better long-term relationships and outcomes.

Question 9

Identify the role that a contract plays in any commercial operation.Provide several examples of what activities a business is able to do through a contract.Identify and briefly explain the role contract law plays with respect to contractual participants and their commercial operations.

Accepted Answer

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Question 10

Identify and briefly explain the circumstances where a party might opt to deliberately breach a contract by refusing to honour its promises to the other side.Provide an example and a possible alternative to an outright breach of existing contractual obligations.

Accepted Answer

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Question 11

Any contract can be written or oral; each are equally enforceable.

Accepted Answer

While both written and oral contracts can be legally enforceable, the ease of enforcement and the types of contracts that must be in writing to be enforceable vary. Certain contracts, such as those involving real estate, must be in writing under the Statute of Frauds to be legally enforceable.

Question 12

Courts will take into account the impact on the long-term relationship between the parties when applying contract law principles.

Accepted Answer

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Question 13

Identify and briefly describe the objectives that owners and managers should keep in mind when dealing with a customer who is attempting to expand or restrict an existing contract.

Accepted Answer

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Question 14

Is a lawsuit always the best response to a contractual legal dispute? Explain your answer.

Accepted Answer

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Question 15

Issues can arise in contractual relationships that will require owners and managers to be conscious of the fact that business relationships are long-term,and so is reputation.

Accepted Answer

Maintaining a positive reputation is crucial in business as it affects long-term relationships with partners, clients, and stakeholders, influencing trust, reliability, and future opportunities.

Question 16

Explain the notion of equality of bargaining power and its impact on the operation of contract law.

Accepted Answer

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Question 17

In order for a court to recognize a contract as a binding agreement between the contracting parties,there must be clear evidence of each party having given something of value in exchange for receiving something of value.

Accepted Answer

This principle is known as "consideration," which is a fundamental requirement for the formation of a legally binding contract. Consideration refers to the value that each party agrees to give or receive as part of the contract.

Question 18

The principle of equality of bargaining power follows the rationale that parties should be able to rely on contractual commitments.

Accepted Answer

The principle of equality of bargaining power suggests that parties should have equal ability to negotiate terms, ensuring that contractual commitments are fair and reliable.

Quiz 5: An Introduction to Contracts