How Contracts Arise Chapter 5

Contracts – 5.1 Understanding contract law When was the last time you made a contract? Have you bought a car? Purchased insurance? Bought a cell phone? Maybe a new pair of shoes? Have you signed a “Code of Conduct” form?

The Nature of a Contract Contract – is any agreement enforceable by law Never enter into a contract without understanding the legal responsibilities involved Not all agreements are contracts, however Promising to take the garbage out is NOT an enforceable contract

The Elements of a Contract There are 6 elements of a contract Offer Acceptance Genuine Agreement Consideration Capacity Legality

Characteristics of a Contract Contracts can be created in different ways and can assume diverse forms A contract can be described by any of the following characteristics Valid, Void, Voidable, or Unenforceable Express or implied Bilateral or unilateral Oral or written

Characteristics of a Contract Valid, Void, Voidable, or Unenforceable Express or Implied Valid – means legally good; legally binding Void – has no legal effect Voidable – able to void or cancel for a legal reason Unenforceable – the court will not uphold because of some rule of law Express – stated in words and may be either oral or written Implied – comes about from the actions of the parties

Characteristics of a Contract Bilateral or Unilateral Oral or Written Bilateral – two-sided Contains two promises One party promises to do something in exchange for the other’s promise to do something else Unilateral – promise by only one person to do something Oral – created by word of mouth Comes into existence when two or more people form a contract by speaking to each other Written – more desirable Assures both parties know exact terms Provides proof of agreement Many contracts are required by law to be in writing

POP QUIZ Question Matt paid Jake $50 to hack into Mrs. Deaver’s computer files for a copy of the final exam, but Jake gave Matt a copy of the pre-test instead. Is this contract void, voidable, or unenforceable? Answer: VOID – it has no legal effect

POP QUIZ Question A reward advertisement placed on a bulletin board or in a newspaper for a lost item would be which kind of contract, bilateral or unilateral? Why? Answer: Unilateral There is only one promise