Week 1: Basics of Commercial Contracts

A contract focused on business purposes (buying, selling, trading).

An enforceable contract satisfying legal requirements.

Essential parts of a contract: one party proposes, the other agrees unconditionally.

The legal ability of a party to enter a contract (age, mental soundness).

The stage before contract formation, including negotiations and preliminary agreements.

The value exchanged between parties in a contract (money, services).

Honesty and fair dealing expected in business transactions.

Failure to fulfill contract obligations.

Seller makes goods available at their premises; buyer handles transport, insurance, and customs.

Seller delivers to a port, loads onto ship; risk transfers when loaded.

Seller pays shipping, freight, and insurance to buyer's port.

Risk shifts to buyer when seller makes goods available for pickup.

Risk shifts to buyer when goods are loaded onto the vessel.

Risks are covered by seller until reaching buyer's port, then shift to buyer.

Seller only prepares goods for pickup.

Manages sea transport, import customs, and final delivery after risk transfer.

Companies are created to manage complex business risks and pool resources, while establishing clear organizational rules, and granting the organization independent legal entity status.

Companies are formed through a legal agreement called a contract of incorporation.

Bylaws govern a company's internal operations, specifying aspects like the company name and responsibilities.

Companies are considered separate legal entities (legal persons) distinct from their owners (natural persons).

A company has a unique name and address, allowing it to interact with the legal world.

The Board of Directors handles company operations, while the general meeting serves as the ultimate decision-making authority.

Company operation is governed mostly by the law of the country where it's incorporated or registered.

Companies have structures like the general meeting and board of directors to manage business and make decisions.

The risks the buyer faces in FOB contracts, notably during sea transportation, customs, and delivery.

A breach of contract so severe it deprives the other party of what they reasonably expected.

Whether the breaching party could have predicted the negative consequences of their actions.

A remedy for a contractual breach, aimed at compensating the injured party.

The injured party's responsibility to take reasonable action to lessen their losses.

Risk transfers when the goods leave the seller's premises

Risk transfer happens when the goods are placed on the ship at origin.

A legal principle protecting directors from liability for honest mistakes made in good faith and with due care. It encourages bold decision-making without excessive judicial intervention.

The legal and ethical standards for director decision-making. Directors must act reasonably and with prudence, considering the best interests of the company.

Directors must act selflessly, avoiding conflicts of interest that might benefit them personally at the expense of the company.

A situation where a director's personal interests might influence their decisions to the company's detriment.

When a material conflict of interest is proven, the burden of proving the fairness of their actions falls on the directors.

Directors must act honestly and with the best interests of the corporation in mind, even if their decisions don't ultimately succeed.

This case illustrates the application of the Business Judgment Rule (BJR) in a high-profile situation. It demonstrates how courts will scrutinize decisions made by directors, especially when potential conflicts of interest exist.

A landmark case concerning the Business Judgment Rule, where the court examined the board's decision-making process and whether it acted in good faith and with due care.

A landmark case involving Michael Ovitz's large severance package from Disney, which shareholders challenged, highlighting the BJR and its application in director decisions.

A legal obligation directors have to act in the best interests of the corporation, putting its needs before their own.

The standard of diligence and attention that directors must exercise when making corporate decisions.

The process of gathering and considering necessary information to make a sound business judgment, including expert advice and a thorough analysis.

The process of proving that directors did not act in good faith, with reasonable care, or in the best interests of the corporation, thereby stripping them of BJR protections.

A serious lack of care that demonstrates recklessness and disregard for the consequences of a decision.