Contracts Think before you sign …

What is a contract? Legally enforceable agreement between 2 or more parties. Examples: credit plans, mortgages, rental agreements, cell phone usage agreements Express contracts can be written or oral, what makes them express is that the parties have stated the terms of their agreement in words.

Elements of an enforceable contract To accomplish its purpose a contract must be binding. To be legally binding, contracts must have these elements: * Agreement – mutual assent: an offer is made and accepted * Consideration – any thing of value that is exchanged as a part of a contract (item of value, money, promise) * Contractual capacity – legally competent parties Age- minors have limited capacity Mental capacity Illness

Elements continued… * Genuine Assent- no misrepresentation or fraud * Legality – contract must be lawful- acts cannot be illegal * Genuine Assent- no misrepresentation or fraud Intention to deceive Damage occurs as result * Legal form- must follow proper format

Classifications of Contracts? Valid – meets all conditions Void – missing one or more of the essential conditions

A little more vocabulary … Negotiable instrument – unconditional written promise to pay a specified amount of money upon demand of the holder Checks (most common) , Promissory Note (p186) You write it you are the maker, the person who it is made to is the payee Co-signer – someone who agrees to pay if maker fails to pay (creditors may require)

What type of product? Warranty (Guarantee) Statement about a product’s quality or performance that the seller assures the buyer are true… What type of product?