How Contracts AriseChapter #5

When Was the last time you entered into a

contract

Contract

Is any agreement enforceable by law – Not all agreements are contracts

Theories of Contract Law Equity theory of Contract Law Will Theory of Contract Law Formalist Theory of Contact Law

Elements of a Contract

6 Elements1) Offer

2) Acceptance

3) Genuine Agreement

4) Consideration

5) Capacity

6) Legality

Offer

Is a proposal by one party to another intended to create a legally binding agreement.

Acceptance

Is the second party’s unqualified willingness to go along with the first party’s proposal

Genuine Agreement

If a valid offer is met by a valid acceptance a genuine agreement exists Item like to following can destroy a genuine

agreement Fraud Duress Undue Influence Mistake

Capacity

Is the legal ability to enter a contract

Consideration

Is the exchange of things of value

Legality

People can’t enter into contacts to commit illegal acts.

Characteristics of a Contract

Valid, Void, Voidable, or Unenforceable

Express or Implied

Bilateral or Unilateral

Oral or Written

Valid, Void, Voidable or Unenforceable

Valid – means legally good

Void – has no legal effect it is missing one of the elements of a contract.

Voidable – When a party to a contract a able of void or cancel for some legal reason

Unenforceable – is one the court will not uphold because of some rule of law.

Express Contract VS Implied Contract

Express is a contract stated in words and may be either oral or written

Implied contract comes about from the actions of the parties no words are exchanges.

Example #1

Bilateral VS Unilateral

Bilateral – means two sided Bilateral contract contains two promises – one

party promises to do something in exchange for the other’s promise to do something else.

Unilateral – Means one sided Contains a promise by only one person to do

something.

Example #2

Oral or Written

Oral – is created by word of mouth two people speak to each other.

Written – Written proof of the contract – Some types of contract must be in writing

Requirements of an offer It must have three basic requirements

Made Seriously Definite and Certain Communicated to the offeree

Serious Intent –the offer must be made with real intent to create a contract.

Invitations to Negotiate – Sales ads Example #3

Definiteness and Certainty – actual amounts

Example #4

Communication to the Offeree – Pone, Fax, Letter. E-mail

Requirements of an Acceptance

Two basic requirements1) Unconditional – The acceptance must not

change the terms of the original offer in any way.

1) Mirror Image Rule-

2) Any changes to the offer is a counteroffer1) Example #6

2) Follow rules regarding the method of acceptance –

1) Read this section aloud1) Example #7

Termination of an Offer

5 Ways to terminate Revocation – Taking back offer from offeree-

Before it is accepted Rejection- No acceptance Counteroffer- Counteroffer end the first offer

and starts another contract Expiration of Time- Time set of the deal ends Death or Insanity- It ends an offer but not a

contract.