Contract Law

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Today’s Objectives Identify the six elements of a contract. Explain the effects of a contract on a minor. Identify types of contracts. Analyze the need for contracts.

THINKER QUESTION How many of you are currently subject to a contractual agreement? What are some examples of contracts?

Potential Contracts Credit Card Grocery store “club” card Selling / buying something to a friend for money Movie rental store agreement College commitment or sports agreement Part-time jobs Email accounts, iTunes, etc.

What is a Contract?

The Nature of a Contract A contract is _____________________. Not all __________ are contracts.

What makes a contract? Six Elements of a Contract

Elements of a Contract _______ __________ _________ ___________ In order to have a legally enforceable contract, all ____ elements must be present. Do contracts have to be in writing to be enforceable by law?

Offer Proposal to make a ________ and certain deal with serious ______ Must be _________ to another person Remains open until it is _______, _________, _________, or _______ ___________ can be made and close the original offer Definite – identifies the basic obligation of the contract

Acceptance Acknowledgement by the ________ (person receiving the offer) that the offer is accepted _______________ Must be ___________ to the offeror in a reasonable manner May be _______, ________, or by ________

Genuine Assent Reached when a valid offer is met by a valid acceptance The offer and acceptance together create genuine assent. Genuine agreements cannot exist if there is fraud, misrepresentation, mistake, undue influence, etc.

Is it valid? Read each example and decide.

Jim negotiated a deal to re-roof his house with a carpenter Jim negotiated a deal to re-roof his house with a carpenter. They did not sign a written agreement. The roofers showed up at the house on the agreed day, and another carpenter had already started work. Was there a contract?

Cheryl was fired from her job at the newspaper, and she sued because she thought there had been gender discrimination in her firing. Cheryl and the newspaper company agreed on the basic outline for a settlement, but before it was signed, she backed out and wanted to go to court. Should the settlement be binding?

An advertisement in a magazine promises, “Our product will clear up your acne or we will give you double your money back!” Jenny bought the product, ProAktiv, at a drug store and did not notify the company that she planned on taking them up on their offer. Does the ProAktiv have to pay Jenny double her money back if the product does not work?

The Other Elements

Capacity The _________ to enter a contract Contracts can be disaffirmed by: _______ __________________ Minors can enter into a contract provided the other party is aware of the minor’s age. The law usually gives minors the right to disaffirm contracts.

Capacity Minors can enter into a contract provided ____________________. The law usually gives minors the right to _________ contracts.

Consideration Consideration is what is ______ as a result of the contract. May be ______, ________, or __________

Legality In general, a court will not help any party to an _______ contract. Neither party can enforce the agreement. Neither party can get help from the court.

Email Account Contracts Yahoo handout

Yahoo! Who is the offeror? The offeree? What is the offer? What is being offered? Key terms? How does a user accept? When does acceptance bind the user? What is the consideration for each party? Identify any other interesting parts of the contract.

Types of Contracts What kinds of contracts are recognized by law?

The Law Recognizes… _________________– written or spoken _____________– comes from the actions of the parties ___________________– not fully performed _______________– completed by both parties ______________ – missing an element, still enforceable ____________– sale of property, rent, wills, estates ________________– business organizations

Types of Contracts _____________– contract that contains two promises. _____________– Contract that contains a promise by only one person to do something, if and when the other party performs some act. Example: Reward ______________– terms stated in the acceptance must exactly mirror or match the terms of the offer.

Termination of an Offer ___________ – the taking back of an offer by the offeror. __________ – is a refusal of an offer by the offeree that brings the offer to an end _____________ – if the offeror sets a time limit of the offer, it must be honored. ____________ – is a response to an offer in which the terms of the original offer are changed.

Termination of an Offer ____________ – If the offeror dies or becomes insane before the offer is accepted, the offer comes to an end. Although _____ ends an offer, it does not end a ________, except for contracts related to _____________.

Why do we need contracts?

We need contracts… Because they are important in a ____________________ ___________ (handshake) agreements are in decline Because they have ______________ Because the court can intervene & ____________ Because of the ________ nature of society

Enforcing Contracts

Last Class… Identify the six elements of a contract. Explain the effects of a contract on a minor. Identify types of contracts. Analyze the need for contracts.

Today’s Objectives Analyze agreements to determine if a valid contract exists. Determine when a breach of contract occurs. Identify defenses to contractual agreements. Apply contract law to negotiation deals.

Breach

Breaching a Contract If one party does not follow through with ___________ in a contract, the other party doesn’t have to perform. Failure to perform is called a ________.

Thinker Question! What happens when one party breaches a contract?

Enforcement __________ – the party who is harmed can request money (equal to the amount lost from the breach) from the other party ________________ – if it is still possible to perform the contract, the court can require the party to perform

Sam burned his hand on the stove Sam burned his hand on the stove. The burn was so bad that it permanently scarred his hand and made it difficult to grip things. A doctor told him that he could fix his hand with a simple “skin-grafting” procedure for $1200. After the surgery, Sam’s hand worked perfectly… but, he started growing hair out of the palm of his hand. He tried waxing it, but he couldn’t stop the hair from growing back. He decides to sue the doctor for giving him a hairy hand. Did the doctor breach the contract? Should the court do something about it? If so, what should the court do?

Defenses to Contracts Certain things can make contracts void, even though both parties agreed on the terms and there was valid consideration.

________________ If one party tricked another party into agreeing to an unfair contract, the court may not enforce it. Example: businesses who try to trick poor or uneducated clients

_______________ Lying or misrepresenting something in negotiations Taking advantage of someone in a bad situation

A law, the Statute of Frauds Requires _____________________. _____________ _______________ ____________________________ _______________________ __________________ _____________________________

Explain the impact of The Uniform Commercial Code on interstate commerce ________________________ ____________________________.