Chapter 5 FORMS OF CONTRACTS

Capacity Must be able to contract for yourself Can not Minors Mentally Impaired Sometimes “ Intoxicated”

Social Agreements I promise to take you to lunch! Legally binding or not? Which elements are present & which are missing?

CHARACTERISTICS OF A Contract PG 110 Valid, Void, Voidable, or Unenforceable Express or Implied Bilateral or Unilateral Oral or Written

Offeror & Offerees Offeree – Person to whom the offer is made Offeror - communicates serious proposal

Oral or Written WRITTEN Some agreements must be in writing to be enforceable. ORAL By mouth Why is it desirable to have contracts in writing?

Valid, Void, Voidable, or Unenforceable Valid – binding Void – not binding (missing an element) Voidable – able to cancel contract Minors Unenforceable – will not be upheld due to a rule of law.

Express or Implied express contract implied contract stated in words oral or written. implied contract Actions of the parties.

“I’ll sell you my Ipod for $55” Bilateral Contracts A Promise for a promise Example: “I’ll sell you my Ipod for $55” I’ll buy It

I’ll give you $50 if you mow my lawn by noon today! Unilateral Contracts One Sided A promise for an action I’ll give you $50 if you mow my lawn by noon today!

First 5 people through the door get a free scarf

Example Herb went to a self-service gas station that requires payment before the attendant will turn on the pumps. He handed the attendant $10, returned to his car, pumped $10 worth of gas, and drove off. Neither party spoke a word, yet an implied contract arose from their actions.

Example “Ill sell you my DVD player for $150,” and you say, “I’ll buy it,” Bilateral First 5 people through the door get a free scarf Unilateral

Valid Offers

Creating a Valid Offer Must intend to create offer Terms must be definite & complete Offer must be communicated to offeree.

Offer must appear serious Test of reasonable person If joking, angry, or in fear, then no offer is created Angry – My car is junk, you can have it for $1

Definite & Certain Usually offers should identify Price, subject matter, and quantity Essential terms must be identified clearly for courts to enforce it. Avoid using terms that are vague

Offer must be communicated to the offeree A person who is not the intended offeree can not accept the offer. Must have known about the offer to claim.

A Reward Offer Can be made to the general public Accepted by fulfilling the requirements of the offer. Ring lost. At Zuma beach in from of the beach house. Lady’s gold band with 12 small diamonds. $1,000 reward. Call 555-2342 Several people searched the beach for the ring. Sam found it and returned it to the owner. Sam was entitled to the money.

Advertisements Generally not offers but invitations to make negotiate. Why???? Limited stock available Advertisements that are offers Clearly worded to address all receiving the ad.

Exceptions to the Rule Ads that contain specific promises First come, first served Limited Quantity Available First 5 people to call 10th caller

Invitation or Offer? New Bike, $500.00 to first person that calls. One Day only 50% off of Lawn Mowers. Invitation Subject to stock on hand. MP3 players $30.00. offer

What’s you verdict pg106 Darrow offered to trade his digital camera to Monette in exchange for her camcorder. Schorling, who had a camcorder of the same make and model, overheard the offer and said she would make the swap. Did a contract result from schorlings statement? No

Assignment Find 10 advertisements. Tell why each ad is an offer or an invitation. If you cant find any offers be sure to supply your own example of an ad that is an offer

Acceptances Review: Answer 1,5,6,7,& 8 Section 5-2 notes: ACCEPTANCES

Acceptance The acceptance must be made by the offeree Match the terms in the offer Be communicated to the offeror

Acceptances Acceptance Offer Offeree Offeror Contracts come into existence only after an acceptance. Acceptance Offer Offeree Offeror

Mirror Image Rule Terms must match

Counteroffer Any change in terms. Counteroffer Offer

Methods of Acceptance Face to Face: immediate Letter: when sent Fax: when sent Telegram: when sent Exceptions: if otherwise specified by offeror

TERMINATION OF AN OFFER REVOCATION- Taking back of an offer REJECTION – refusal of an offer COUNTEROFFER- change in terms EXPIRATION OF TIME- must answer within a time limit or pay to hold contract open(option contract) DEATH OR INSANITY- offer ends if death or insanity before acceptance.

Which one is Different? A proposal by one party to another The legal ability to enter a contract Mentally incompetent or drugged individuals are excused from contractual responsibility because they lack___________ Offer Capacity Answer is #1,

Which one is Different? The exchange of things of value The 2nd parties unqualified willingness to go along with the first parties proposal. Mr. Benes gave nothing to Vik in exchange for his promise to take out the garbage. (Which element is this lacking?) 1. Consideration 2. acceptance 3. consideration Answer is #2

Which one is different? When a valid offer is met by a valid acceptance it is known as. An agreement involving fraud, misrepresentation, mistake, or undue influence is lacking which element? Agreement to sell stolen goods is lacking which element? 1.Genuine agreement, 2. genuine agreement, 3. legality ANSWER = #3

Which one is different? True or False If you don’t satisfy the laws requirement for creating an offer, then you usually don’t have a contract. To be valid, an offer must indicate an intent to create a legal obligation. If an offer is made it can be accepted by anyone who learns of it. 1. true, 2. true, 3. false. ANSWER #3

Which one is different? An offer that is missing essential information is __________ An objective legal test used by jurors or judges rather than a subjective test based on what you say you were thinking. You can buy one of the bikes in my shop for $3,500. 1. incomplete, 2. test of the reasonable person, 3. not complete & clear info, which bike, any bike?? ANSWER #2

Which one is different? Would you take $200 for that Labrador puppy? Information that is communicated without an intent to contract. When two friends agree to go to the movies. 1. Preliminary negotiations, 2. Preliminary negotiations, 3. social agreement

Which one is different? The right to withdraw an offer at anytime before it is accepted. When the terms of the offer are changed in any way. Taking back an offer by the offeror 1.revocation, 2. counteroffer, 3. revocation ANSWER #2

Which one is different? “I refuse your offer; here is my proposal.” When the offeror dies before the offer is accepted the agreement is… 3. Serious, communicated to the offeree, & clear & complete are requirements of _______________ 1. terminated, 2. terminated 3. a valid offer ANSWER #3

Which one is different? True or False Offers expire at the time stated in the offer An offeree who rejects an offer can later accept it if the acceptance occurs within a reasonable time after the rejection. Advertisements like price tags are not treated as offers but rather invitations to negotiate. 1. true, 2. false, 3. true(option, gave something of value) ANSWER #2

Which one is Different? True or False A contract that amounts to nothing and has no legal effect. A contract that contains a promise by both parties “I’ll give you a haircut for $10 if you pay me when we are finished.” “I agree to pay you when you have cut my hair.” 1. void 2. bilateral 3. bilateral ANSWER #3

Which one is different? True or False? When an offer changes the offeror’s terms in important ways, the offeror makes an agreement. If the offeror is admitted to the hospital for medical examining & tests the offer is terminated. If the offeror dies before the acceptance is made the offer is terminated. 1. false(counteroffer), 2. false, 3. true ANSWER #3

Which one is different? Which parties action ends the deal, offeror or offeree? Counteroffer Rejection Revocation 1. Offeree. 2. offeree. 3. revocation

Which One is Different? Invitation or offer? New Bike, $500.00 to first person that calls. One Day only 50% off of Lawn Mowers. First 30 people through the door get $75 gift card if you spend $200. 1. offer, 2. Invitation, 3. Offer ANSWER #2

Which one is different? Offer or not? Nick asks Kim to go to dinner at the Sunset Restaurant at 7 p.m. on Saturday. Would you think about selling your fishing boat for $2,000.00? I’ll trade you my 2000 model car for you 2000 model truck. 1. Social agreement, no contract, 2 preliminary negotiations, not an offer, 3. offer ANSWER #3

Reviewing What You Learned What are the elements of a contract?

Reviewing What You Learned Answer Offer, acceptance, genuine agreement, capacity, consideration, and legality.

Reviewing What You Learned What are the differences among valid, void, voidable, and unenforceable contracts?

Reviewing What You Learned Answer A valid contract is legally binding. An unenforceable contract will not be upheld generally by the court because of some rule of law.

Reviewing What You Learned Answer A contract that is void has no legal effect and a voidable contract is not void in itself, but may be voided by one or more of the parties if the party so chooses.

Reviewing What You Learned What are the differences between express and implied contracts?

Reviewing What You Learned Answer An express contract involves words, while an implied contract does not.

Reviewing What You Learned What are the differences between unilateral and bilateral contracts?

Reviewing What You Learned Answer A unilateral is a one-sided contract, in which one party makes a promise in exchange for an act. In a bilateral contract, a contract legally comes into existence when promises are exchanged.