Business LawBusiness LawContract LawContract Law

Kellie ChapmanKellie Chapman

ContractContract

Definition of a Contract:Definition of a Contract: An agreement that can be enforced An agreement that can be enforced

in court.in court. Formed by two or more parties, each Formed by two or more parties, each

of whom agree to perform or to of whom agree to perform or to refrain from performing some act refrain from performing some act now or in the future.now or in the future.

Elements of a ContractElements of a Contract

1.1. AgreementAgreement

2.2. ConsiderationConsideration

3.3. Contractual CapacityContractual Capacity

4.4. LegalityLegality

AgreementAgreement

Agreement includes an offer Agreement includes an offer andand an acceptance.an acceptance.

ConsiderationConsideration

Consideration is defined as Consideration is defined as something of value received or something of value received or promised to convince a person to promised to convince a person to make a deal.make a deal.

Contractual CapacityContractual Capacity

Contractual Capacity maintains that Contractual Capacity maintains that the law must recognize parties as the law must recognize parties as possessing characteristics that possessing characteristics that qualify them as competent.qualify them as competent.

LegalityLegality

Legality states that a contract’s Legality states that a contract’s purpose must be to accomplish purpose must be to accomplish some goal that is legal and is not some goal that is legal and is not against public policy.against public policy.

Defenses to the EnforceabilityDefenses to the Enforceabilityof a Contractof a Contract

1.1. Genuineness of Assent: Genuineness of Assent: Genuineness of Assent can be Genuineness of Assent can be described as the apparent consent described as the apparent consent of both parties must be genuine. of both parties must be genuine.

The following examples are not The following examples are not enforceable:enforceable:

FraudFraud MistakeMistake DuressDuress

Defenses to the EnforceabilityDefenses to the Enforceabilityof a Contractof a Contract

2.2. Form: A contract must be in Form: A contract must be in whatever form the law requires in whatever form the law requires in order to be enforceable.order to be enforceable.

For example, some contracts must For example, some contracts must be in writing in order to be be in writing in order to be enforceable.enforceable.

Three Types ofThree Types ofContract FormationContract Formation

1.1. Bilateral vs. Unilateral ContractsBilateral vs. Unilateral Contracts

2.2. Formal vs. Informal ContractsFormal vs. Informal Contracts

3.3. Express vs. Implied-in-Fact ContractsExpress vs. Implied-in-Fact Contracts

Bilateral vs. UnilateralBilateral vs. UnilateralContractsContracts

Bilateral ContractsBilateral Contracts can be defined as a can be defined as a promise for a promise. The contract comes promise for a promise. The contract comes into existence the moment promises are into existence the moment promises are exchanged.exchanged.

Unilateral ContractsUnilateral Contracts can be defined as a can be defined as a promise for an act. The contract comes into promise for an act. The contract comes into formation not the moment when promises are formation not the moment when promises are exchanged, but when the contract is exchanged, but when the contract is performed.performed.

Formal vs. InformalFormal vs. InformalContractsContracts

Formal ContractsFormal Contracts can be describes as can be describes as contracts that require a special form or contracts that require a special form or method of creation in order to be method of creation in order to be enforceable.enforceable.

Informal ContractsInformal Contracts, also called Simple , also called Simple Contracts, can be defined as contracts Contracts, can be defined as contracts where no special form is required except where no special form is required except contracts that must be in writing.contracts that must be in writing.

Express vs. Implied-in-FactExpress vs. Implied-in-FactContractsContracts

Express Contracts can be defined as when Express Contracts can be defined as when the terms of the agreement are fully and the terms of the agreement are fully and explicitly stated in words, oral or written.explicitly stated in words, oral or written.

Implied-in-Fact Contracts were formed if Implied-in-Fact Contracts were formed if the following conditions exist:the following conditions exist:

1.1. The plaintiff furnished some service or The plaintiff furnished some service or propertyproperty

2.2. The plaintiff expected to be paid for the The plaintiff expected to be paid for the service or propertyservice or property

3.3. The defendant had a choice to reject the The defendant had a choice to reject the services or property and did notservices or property and did not

Executed ContractsExecuted Contracts

Executed contracts can be defined Executed contracts can be defined as a contract that has been fully as a contract that has been fully performed on both sides.performed on both sides.

Executory ContractsExecutory Contracts

Executory Contracts can be Executory Contracts can be defined as a contract that has defined as a contract that has notnot been fully performed by both been fully performed by both parties.parties.