Cha 1 people in bussiness and contract law

• Entrepreneur


  • Takes a big financial risk when setting up a business
  • Takes a personal risk because if the business fails, they may lose their self-esteem and self-confidence
• Entrepreneur


  A person who spots an opportunity and takes the initiative to set up a business to make money from that opportunity
• Entrepreneurs take risks


  Because they expect the business to be a success and they expect to make a profit
• Investor


  A person who gives the money (called capital) to the entrepreneur that he needs to set up, run and grow his business, in exchange for a return on investment
• Debt capital


  The investor lends money to the entrepreneur, which she expects to be paid back with interest
• Equity finance


  The investor gives the entrepreneur the capital in return for a share (part-ownership) in the business, and receives an annual share of the profits (dividend)
• Employer


  A person who hires others to work for her, and rewards the employee for the work he does, financially with pay, bonuses, and commission, and non-financially with more holidays
• Employee


  A person who works for an employer in return for a wage, and carries out the essential tasks needed to make the business a success
• Intrapreneur


  An employee who gives their employers ideas to make the business even more successful
• Manager


  A person whose job is to run the business and make sure that it achieves its objectives, by using the resources of the business in the best possible way
• Producer


  A business that makes finished products from scratch to sell to consumers, using the four factors of production: land, labour, capital, and enterprise
• Consumer


  A person who buys goods or services from the entrepreneur for his own personal use, providing the entrepreneur with a market and profit, as well as market research information
• Supplier


  Other firms the business buys from, providing the business with the goods and other things it needs to be successful
• Service provider


  A business that offers a range of helpful supports to an entrepreneur, for a fee, operating in the tertiary sector
• Interest group


  An organisation of people who come together and campaign for a common goal by pressurising those who make decisions, using tactics such as organising negative publicity, boycotts, and lobbying politicians
• Cooperative relationship

  When the parties work together and help each other to achieve their goals, a "win-win" situation
• Competitive relationship

  When one party in business wants to be more successful than another, a "win-lose" situation
• Contract

  A legally binding agreement between two or more people in which each promises to do something for the other, enforceable in law
• Elements of a contract

  • Offer
  • Acceptance
  • Consideration
  • Intention to Contract
  • Capacity to Contract
  • Consent to Contract
  • Legality of Form
  • Legality of Purpose
• Contract


  A legally binding agreement between two or more people in which each promises to do something for the other
• Elements of a contract

  • Offer
  • Acceptance
  • Consideration
  • Intention to Contract
  • Capacity to Contract
  • Consent to Contract
  • Legality of Form
  • Legality of Purpose
• Offer

  When one person asks another to enter into a deal with him and promises to be bound by the contract if his offer is accepted
• An advertisement, a price tag, or a display of goods on a shelf or in a shop window are not legal offers, they are invitations to treat
• Invitation to treat


  Pre-offer communication, made by someone as a way to attract others into making her an offer
• A person can withdraw an offer at any time before the other party accepts it
• Acceptance


  The person to whom the offer was made, agrees precisely to all the terms of the offer
• Consideration

  The exchange of value between the parties in a contract
• Intention to contract


  Both parties to the agreement must mean it to be a legally binding contract
• Capacity to contract

  A person has the legal right to make a legally binding contract
• People who do not have capacity to contract

  • People under 18 years of age (except for necessities)
  • People who are mentally incapacitated because they are drunk, on drugs or insane
  • Directors in a Designated Activity Company (DAC) when they do something beyond their authority
  • Diplomats who cannot make contracts because they have diplomatic immunity
• Consent to contract

  Both parties must give their real and genuine permission to enter into the contract
• Legality of form


  Certain agreements must be drawn up in a certain way if they are to be legal contracts, e.g. in writing
• Agreements to commit a crime will not be upheld in court
• Ways a contract can come to an end

  • Performance
  • Agreement
  • Frustration
  • Breach of Contract
• Performance


  A contract ends when each person carries out the duties required of them exactly as they agreed under the terms of the contract
• Agreement


  A contract comes to an end if all the parties involved in it voluntarily consent to end it, whether the purpose of the contract has been achieved or not
• Frustration


  A contract comes to an end if some event happens after it was made that was not reasonably foreseeable. For example one of the parties dieing
• Breach of Contract


  A contract is terminated as soon as one of the people involved breaks her part of the deal and fails to carry out her side of it exactly as she agreed in the contract
• Remedies for Breach of Contract

  • Damages
  • Specific Performance
  • Rescinding the Contract
• Damages


  The judge can order the person who broke the contract to pay financial compensation to the innocent party to compensate him for what he has lost and suffered as a result of the other person's breach