Business Law Rustemeyer Chapter 4- Contract Law Business Law Rustemeyer

Nature of Contract Contract: any agreement enforceable by law Examples: Agreeing with your parents to take out the trash? An advertisement in a newspaper offering a reward for a lost skateboard

Nature of a Contract: Three Theories Legal responsibilities = what is done and said between parties Three theories: Equity theory: Will theory: Formalist theory:

Nature of a Contract: Elements of Contracts Six elements: Offer Acceptance Genuine assent (agreement) Capacity Consideration Legality

Nature of a Contract: Elements of Contracts Offer: A proposal by one party to another intended to create a legally binding agreement with the other Offer must be communicated to the offeree Essential terms must be compete and definite Contractual intent must be present: Jests Statements made in anger Preliminary negotiations Social agreements

Nature of a Contract: Elements of Contracts Acceptance: The second party’s unqualified willingness to go along with the first party’s proposal Genuine Assent: An agreement is true and genuine “Meeting of the minds” Ability to be destroyed by fraud, misrepresentation, mistake, duress, or undue influence

Nature of a Contract: Elements of Contracts Capacity: The legal ability to enter a contract Law generally assumes everyone has the capacity, can be disputed Considerations: The exchange of value Must be both legally sufficient and bargained for by the receiving party

Nature of a Contract: Elements of Contracts Legality: Parties are not allowed to enforce contracts that involve illegal acts Contracts to commit crime Contracts to commit torts Contracts made illegal by statutory law

Nature of a Contract: Elements of Contracts I PROMISE TO TAKE YOU ALL OUT TO DINNER THIS WEEKEND. YOU CAN ORDER ANYTHING YOU WANT, AND I WILL PAY FOR IT!

Business Law Rustemeyer Chapter 4- Contract Law Business Law Rustemeyer

Classes (Characteristics) of Contracts Characteristics include: Valid, Void, Voidable, Unenforceable Expressed or Implied Bilateral or Unilateral Oral or Written

Classes of Contract: Valid, Void, Voidable, Unenforceable “legally good”, enforceable by law Meets all six of the required parts of a contract Example: Void: Having or containing no legal effect Missing at least one of the elements required

Classes of Contract: Valid, Void, Voidable, Unenforceable Having a legal reason to void the contract Contract is not void itself, but can be by one or more of the parties Example: Contract between minors Unenforceable: Something the court will not uphold due to rule of law Generally dealing with Statute of Limitations

Check your understanding If a contract is ________, it has no legal effect on either party. However, if a contract is _________, at least one of the parties involved has the legal ability to breach the contract.

Check your understanding If a contract is void, it has no legal effect on either party. However, if a contract is voidable, at least one of the parties involved has the legal ability to breach the contract.

Classes of Contract: Expressed or Implied A statement that may be oral or written Implied: A contract that comes about from the actions of the other parties Example: Herb Schneider went to a self-service gas station that requires payment before the attendant will turn on the pumps. He handed the attendant $10, pumped $10 worth of gas into his tank, and drove off. Neither party spoke a single word, yet an implied contract arose from their actions.

Check your understanding Which of the following statements is NOT true? Some contracts may be implied from conduct Certain contracts are enforceable only if they are written and signed Most contracts are enforceable even if there is no writing Contracts that are unenforceable are illegal

Check your understanding Which of the following statements is NOT true? Some contracts may be implied from conduct Certain contracts are enforceable only if they are written and signed Most contracts are enforceable even if there is no writing Contracts that are unenforceable are illegal

Classes of Contract: Bilateral or Unilateral A contract that contains two promises One party promises to do something in exchange for the other party to do something else Most common form of contracts Unilateral: A promise by only one person to do something Only happens if and when the other party performs some act Example: https://www.youtube.com/watch?v=BpqqwKOZzJA

Classes of Contract: Oral or Written Created by word of mouth Only enforceable if a legal remedy is offered if they are breached by either party Unenforceable if falls under the Statute of Frauds Written: Created by formal written document, assuring that both parties know the exact terms of the contract Providing proof of agreement Statute of Frauds

Business Law Rustemeyer Tuesday, December 12, 2017 Business Law Rustemeyer

Review: How many elements to contracts are there? Identify the different classifications of a contract? Can a contract be unenforceable and illegal? What is the age of majority?

Lesson Goals: Students will be able to: Explain the Statute of Frauds Provide examples of all classifications of contracts.

Statute of Frauds Basis of most modern laws Requires certain promises must be in writing in order to be enforceable Marriage Transfer of land ownership Contracts that cannot be filled within 1 year

Check your understanding Contracts within the statue of frauds might include Contracts to buy and sell goods for a price of $300 or less Contracts requiring less than a year to complete All of these answers are correct Promises to pay the debt of another person

Check your understanding Contracts within the statue of frauds might include Contracts to buy and sell goods for a price of $300 or less Contracts requiring less than a year to complete All of these answers are correct Promises to pay the debt of another person

Assignment: 1- What are the differences among valid, void, voidable, and unenforceable contracts? Provide an example of each. 2- What are the differences between express and implied contracts? 3- Provide examples of bilateral and unilateral contracts.