1. Objectives
Students will be able to list and describe the elements of a contract.
Students will be able to read and understand the elements of contracts.

2. Contracts
Contract: an agreement between two or more people to exchange something of value creating obligations that are enforceable by law
Each person involved is legally bound to do what is promised in the contract
If someone involved fails to do what is promised, it is called a breach of contract
Examples of contracts
Buying anything!
Job contracts
Getting something repaired
Renting or buying an apartment

3. Elements of a Contract
What is required for something to be considered a contract?
Offer- a definite proposal to make a deal
Ex. Menu offers food for a certain price
Acceptance- the act of agreeing to the offer and becoming legally bound to terms of contract
Ex. Restaurant “accepts” by cooking (begins performance)
Considerations- Something of value was promised for something else of value
Ex. Person’s money
restaurant’s food

4. Must a contract be written?
NO!
You don’t sign a contract every time you order food
However contracts must be written in cases of
Contracts about land
Exchanges of $500 or more
Contracts about loans/owing money

5. Who can make a contract? Legally competent people
Excludes mentally ill
Excludes intoxicated people
Minors (those under 17) can make contracts, BUT
Can’t be forced to carry out promises
Can cancel or refuse contracts
These exceptions don’t apply to necessities like food, shelter, medical aid)
This is why you might need to get a cosigner for an apartment or loan

6. When are contracts illegal/ invalid?
“Unconscionable contracts”: contracts so unfair that the court will not accept them
Ex. Consumer presented with a “take it or leave it” offer
Ex. Those agreeing to a contract have uneven bargaining power, like the only bank in a town offering an unfair deal to someone in the town who has no other choice but to use that bank
Fraud and misrepresentation invalidate contracts
Ex. of Misrepresentation: someone offers you a drug that claims to make someone live forever
This is intentional deception

7. Is this a contract?
A person says to a friend: “I offer to sell you my iPod.”
Explanation: Not sufficient to form a contract because it doesn’t include price. An offer must be specific.
How can you rewrite it to make it a valid contract?

8. Purchasing Stock- A contract?
You purchase 10 shares of stock in Apple for 325 a share.
What was the offer?
Apple Stock (for $325/share)
What was the acceptance?
You agreed to this price
What consideration was exchanged?
You exchanged your $3,250
Apple gave you 10 shares