VALID CONTRACT Introduction to Business & Marketing

Contract  Contract: “legally enforceable agreement between two or more parties.”  Contracts can be:  Written  Verbal  Handshake

Four Elements Of A Valid Contract  Four Elements: 1. Agreement – initial step in forming a contract 2. Consideration – something of value exchanged by each party 3. Capacity- having the legal and mental ability to enter into a binding contract 4. Legality – subject matter of the contract must not be against the law

Four Elements

Written v. Unwritten Contract  Written Contract:  Formal, easier to use as evidence  Clearly highlights guidelines, conditions, and infractions of contract  Must be signed by all parties to become valid  Unwritten Contract:  Informal, becomes “my word v. your word”  Conditions are vague; speculation  Only becomes valid through recording or video evidence

Examples Of Contracts  Lease – Property borrowed in exchange for money. Payments made monthly – failure to pay = fines & loss of property.  Credit Card – Agreement between you & the credit card company. Minimum payment will be noted on bill.  Employment Agreement – Agreement between employer & employee. Include salary, hours, dress code, and infractions resulting in disciplinary actions.  Purchase Agreement (or receipt) – Agreement between company & customer. Proof of a purchase and return policy.

Sample Lease Agreement

Sample Credit Card Statement

Sample Employment Agreement

Sample Purchase Agreement

Violations of Contracts  Lawsuits  Eviction  Fines or enforcement of payment  Removal from company or workplace  Jail time

Scenarios  Nike Employment Agreement states that employees must wear Nike apparel at all times. However, Eric shows up wearing Adidas shoes. What could happen?  Part of the Employment Agreement states that all teachers must be at work by 8:45am. However, Mr. T showed up at 9:08am this entire week. What could happen to him?  The Wright family signed an apartment Lease that requires $1800 rent due on the 5 th every month. Mr. Wright has been late paying his rent for the past 2 months. If he is late for the 3rd month, what could happen?  Deena received a Credit Card Statement showing a $50 payment due by April 30 th. If it is not paid by then, what is the punishment?

Class Activity  Complete the Matching Activity  Answer the following questions: 1. What is considered a valid contract? 2. What are the requirements of a valid contract? 3. How can a valid contract be enforced?