CONTRACTS

Negotiation and Drafting

What is a Contract

An agreement between two or more persons to exchange something of value

A legally binding promise

Examples

Credit Card Agreement Signed agreement related to a job Online agreement when starting a

Facebook or email account An agreement to buy something

from a friend Eating at a restaurant

Elements of contracting

Offer

Acceptance

Consideration

Offer

Offer: an invitation to make a contract

Examples? Displaying a take it or leave it

contract online Bidding on ebay Putting a price tag on an item in a

store

Acceptance

Acceptance: the point at which one party agrees to the other party’s offer

Examples Clicking that you accept the online

contract Winning an ebay auction Buying the item from the store

Consideration

Consideration: What each side gives the other

Generally, courts will only enforce a contract if both sides are getting something.

Minors and Contracts

Minors can make contracts but usually are not bound to them Must return any consideration they have

when breaching contract Exceptions: food, clothing, shelter,

medical aid

Many places require cosigners for minors

Always Get it in WRITING!

Must have written contracts for: Real estate Goods over $500 Agreement to pay another’s debt Services scheduled >1year in advance

Oral contracts are 2nd best, and often not enforceable

Fraud

Fraud: false statement about an important fact to persuade someone to enter into a contract Cannot lie about certain features, but

don’t have to tell the whole truth

Fraud invalidates a contract

Is this a contract?

You order a book of Amazon.com. Your credit card is charged, but no book ever shows up.

Was there a legally enforceable contract?

Yes, you agreed to pay Amazon.com money and they agreed to send you a book.

Is this a contract?

Last year, your uncle promised you an iPhone for your 18th birthday. When you turned 18, he gave you his old broken basic cell phone.

Was there a legally enforceable contract?

No, while your uncle made a promise, he did not receive any consideration in return. Consideration has to be more than good feelings.

Is this a contract?

You signed up for a week long summer basketball camp which cost $100. You paid and went to the camp. When you got to the camp, they just had you watch football movies all day.

Was there a legally enforceable contract?

Yes. You agreed to pay money to the camp and they were supposed to give you basketball training.

Drafting a Contract

Include all the terms (“At issues”) Don’t be afraid of creative solutions Use specific binding language:

“Shall” not “Will” X shall pay Y $10. Y shall wash X’s car.

Not: X will pay Y $10. Y will wash X’s car.