Contracts and Contract Law

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Contracts and Contract Law

• The Elements of a Contract

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Learning Goal

• To recognize the
• elements of
• a contract, including offer and acceptance.

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Contract

• Any agreement enforceable by law.
• Does NOT have to be written!!!
• To be legally complete, a contract must contain 6
  Elements.

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6 Elements of a Contract
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1 Offer

• A proposal made by one party (offeror) to another
  party (offeree) indicating a willingness to
  enter a contract.

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3 Requirements of an Offer

• Serious Intent
• Not merely an invitation to negotiate like an
  advertisement.
• Definiteness and Certainty
• Vague conditions are not legally enforceable.
• Communication to the Offeree
• MUST be communicated to be legal

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Termination of an Offer

• Revocation offeror terminates
• Rejection offeree terminates
• Counteroffer
• Expiration of Time
• Death or Insanity

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2 Acceptance

• The agreement of the offeree to be bound by the
  terms of the offer.

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Requirements of Acceptance

• Unconditional Acceptance
• Must NOT change the terms of the original offer
  in ANY way.
• If a change is made, it is a counteroffer and
  the original offeror is not obligated to accept.
• Must follow the rules regarding the Methods of
  Acceptance

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Methods of Acceptance

• When negotiating long-distance
• Acceptance is effective when sent
• Any communication qualifies
• Acceptance is implied when using the same speed
  as the offeror
• Some offers/acceptances can be implied
• Some offers require specific performance

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Contracts and Contract Law

• The Elements of a Contract

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Learning Goal

• To recognize the
• elements of
• a contract, and what makes a defective agreement.

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6 Elements of a Contract(continued)
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3 Genuine Agreement

• When a valid offer is met by a valid acceptance.
  A meeting of the minds.
• When Offer and Acceptance are both present . . .
  but . . .
• Agreement can be destroyed if it is found to be
  not genuine.

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Defective Agreements

• Concealment Choosing not to reveal important
  information that a party is obligated to reveal.
• Innocent Misrepresentation Making an innocent
  statement that turns-out to be false.
• The victim may rescind the contract, but can NOT
  collect any damages.

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(Defective Agreements)

• Mistake Entering a contract with the belief
  that certain things are true, which are in fact
  not true.
• Unilateral Mistake An error on the part of one
  party.
• The mistaken party might not be able to get out
  of the contract!
• Bilateral Mistake An error on the party of both
  parties.
• Either party can get out of the contract!

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(Defective Agreements)

• Duress Overcoming a persons will by use of
  force or by threat.
• Physical Duress
• Emotional Duress (threat of physical force)
• Economic Duress
• Threatening legal action is NOT a form of
  Duress!!!

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(Defective Agreements)

• Undue Influence When a person uses unfair or
  improper persuasive pressure to force someone to
  enter into an agreement.
• A Dependency Relationship
• Unfair or Improper Pressure
• A Beneficial Contract

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(Defective Agreements)

• Fraud Deliberate deception intended to secure
  an unfair or unlawful gain.

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Contracts and Contract Law

• The Elements of a Contract

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6 Elements of a Contract(continued)
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Learning Goal

• To recognize the
• elements of
• a contract, including capacity, consideration and
  legality.

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4 Capacity

• The legal ability to enter a contract.
• Minors
• Mentally Impaired Persons
• Intoxicated Persons
• Aliens Convicts

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Minors

• Contracts are voidable if the minor chooses.
• Even if the minor has damaged an item purchased.
• Necessities are an exception
• Minor lies about age FELONY
• Contracts are ratified when minor becomes an
  adult, and continues contract.

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Mentally Impaired

• Contracts are voidable
• If declared insane or incompetent by a court, and
  a guardian is appointed, contracts are all valid.

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Intoxicated Persons

• Sometimes able to disaffirm a contract, if
  intoxicated at the time the contract was entered.
• Must have been so intoxicated at the time as to
  not understand the purpose, nature or effect of
  the agreement.
• A court decides the persons condition.

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Aliens Convicts

• Limitations placed on contracts.
• Foreign-born people from non-allied countries are
  denied legal capacity during war.
• Sometimes there are limitations during peace.
• All states differ in limitations on these people.

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5 Consideration

• A thing of value promised to one party in
  exchange for another thing of value.
• Giving up something you have the legal right to
  keep.
• Doing something you have the legal right to not
  do.
• Not doing something you have the legal right to
  do.

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Types of Consideration

• Money
• Property and Services
• Promise not to Sue
• Forbearance
• Lawsuits are often settled in this way
• Charitable Pledges
• Legally enforceable no matter how small!

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6 Legality

• Parties are not allowed to enforce contracts that
  involve illegal acts by crime, tort or statutory
  law.
• This is called conspiracy
• Can apply to entire contracts, or to parts of
  contracts.

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Learning Goal

• To recognize the
• elements of
• a contract, including capacity, consideration and
  legality.