"The Purpose of Contract Law Is to Give Effect to the Reasonable

question 90

Essay

"The purpose of contract law is to give effect to the reasonable expectations of the parties to a contract." Discuss this observation in terms of the five elements that are required for the creation of a legally binding contract.

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Definitions:

Revolving Credit Agreement

A Revolving Credit Agreement is a financial arrangement which allows the borrower to withdraw, repay, and redraw loans repeatedly up to a certain credit limit.

Commitment Fee

A fee charged by a lender to a borrower for an agreed-upon loan or line of credit that has not yet been utilized.

Self-Liquidating Debt

A type of short-term loan that is used to finance a project or inventory that will generate enough income to pay back the loan.

Spontaneous Financing

Financing that arises naturally from the normal operation of a business, such as trade credit from suppliers.