ENTERING INTO CONTRACTS

Elements of a Contract Contract – agreement enforceable at law. Offer Acceptance Genuine Agreement Consideration Capacity Legality To be legally complete a contract must include all 6 elements. Not all contracts have to be in writing to be enforceable.

Characteristics of a Contract Valid, void, voidable or unenforceable Express or implied Bilateral or unilateral Oral or written

Characteristics Express Contract – stated in words and may be oral or written Implied Contract – one that comes from the actions of the parties, sometimes without exchanging a word.

Characteristics Bilateral – contains two promises, one by each person Unilateral – contains only one promise; promise for an act

Characteristics Oral – by word of mouth Written – provides proof that the agreement was made

Requirements of an Offer Must be seriously intended No jokes An invitation to negotiate or trade is not an offer(store advertisements, price tags, signs in the window) Must be definite and certain Example. If someone agrees to pay “a share” this is not definite or certain Must be communicated to the offeree By phone, letter, fax machine, etc.

Requirements of an Acceptance Unconditional Acceptance – “Mirror Image Rule“– Must not change the terms of the original offer in any way. Counteroffer – acceptance that changes the terms of the original offer and terminates the offer. UCC – Uniform Commercial Code – unified set of statutes that covers the law of sales, etc.

Methods of Acceptance Same form = contract comes into existence when the acceptance is sent. Different form = contract comes into existence when the acceptance is received. If the offeror states in the offer the method that the oferree must use that method of acceptance must be followed. The offeror cannot impose silence on the offeree as the means of acceptance unless the offeree has agreed to this.

Termination of an Offer Revocation – taking back of an offer An offer can be revoked any time before acceptance A revocation becomes effective when it is received or communicated to the offeree Rejection – the offeree does not want to accept the offer; refusal Counteroffer – ends the first offer Expiration of time – if a time frame is listed in the offer, and that time frame ends, the offer ends too. Option – payment to keep the offer open for a period of time. Death or Insanity – if the offeror dies or becomes insane before the offer is accepted, the offer comes to an end.