© 2012 Cengage Learning

Contract Law Chapter 7

© 2012 Cengage Learning In This Chapter You will be introduced to contract law and how a contract is created.

© 2012 Cengage Learning Contract A contract is a legally enforceable agreement to do or not to do a specific thing.

© 2012 Cengage Learning Legally Enforceable Agreements Expressed – declare intentions Implied - created by action Bilateral - promise exchanged for a promise

© 2012 Cengage Learning Legally Enforceable Agreements Unilateral - promise exchanged for performance. Executory- both parties have work to be done after the contract is signed. Executed - one that is complete upon signing.

© 2012 Cengage Learning Bilateral ContractUnilateral Contract Promise for PromisePromise for Performance Bilateral and Unilateral Contracts

© 2012 Cengage Learning Legal Effect of Contracts Valid - meets all requirements of law. Void - no legal effect & not a contract. Voidable - one party bound but not the other. Unenforceable – may have been valid at an earlier time but now enforcement is barred.

© 2012 Cengage Learning Contract Essentials 1. Competent parties 2. Mutual assent 3. Lawful objective 4. Consideration or cause 5. Written

© 2012 Cengage Learning Meeting of the Minds Offer Acceptance Counteroffer Offer Acceptance

© 2012 Cengage Learning Mutual Agreement Offer Acceptance Counteroffer

© 2012 Cengage Learning Problems Fraud Innocent misrepresentation Mistake Duress

© 2012 Cengage Learning Parol Evidence Rule Rule permits oral evidence to complete an otherwise incomplete or ambiguous written contract.

© 2012 Cengage Learning STATUE OF FRAUDS Requires real estate contracts be written Electronic form acceptable - Esign

© 2012 Cengage Learning Electronic Transactions Effective March 1, 2001 Esign – electronic signature legal Applies only to interstate commerce Texas passed UETA in 2001 Watch for  Electronic closings  Recordings  Commercial contracts

© 2012 Cengage Learning Performance Most contracts are discharged by being fully performed or executed by the contracting parties in accordance with the contract terms.

© 2012 Cengage Learning Discharge Being fully performed by the contracting parties in accordance with the contract terms.

© 2012 Cengage Learning Novation A contract can also be performed by novation. The substitution of a new contract between the same or new parties.

© 2012 Cengage Learning Breach of Contract Partial performance Unilateral Rescission Specific performance Money damages Liquidated damages Mutual Rescission

© 2012 Cengage Learning Statute of Limitations Written contracts have 4 years. Oral contracts have 2 years limit.

© 2012 Cengage Learning Implied Obligations Contractual obligations by implication. No more “caveat emptor.”

© 2012 Cengage Learning Key Terms Breach of contract Competent parties Contract Duress Fraud Liquidated damages Minor, Infant Specific performance Void contract Voidable contract