1. How Contracts Arise
Chapter 5

2. Contracts – 5.1 Understanding contract law
When was the last time you made a contract?
Have you bought a car?
Purchased insurance?
Bought a cell phone?
Maybe a new pair of shoes?
Have you signed a “Code of Conduct” form?

3. The Nature of a Contract
Contract – is any agreement enforceable by law
Never enter into a contract without understanding the legal responsibilities involved
Not all agreements are contracts, however
Promising to take the garbage out is NOT an enforceable contract

4. The Elements of a Contract
There are 6 elements of a contract
Offer
Acceptance
Genuine Agreement
Consideration
Capacity
Legality

5. Characteristics of a Contract
Contracts can be created in different ways and can assume diverse forms
A contract can be described by any of the following characteristics
Valid, Void, Voidable, or Unenforceable
Express or implied
Bilateral or unilateral
Oral or written

6. Characteristics of a Contract
Valid, Void, Voidable, or Unenforceable
Express or Implied
Valid – means legally good; legally binding
Void – has no legal effect
Voidable – able to void or cancel for a legal reason
Unenforceable – the court will not uphold because of some rule of law
Express – stated in words and may be either oral or written
Implied – comes about from the actions of the parties

7. Characteristics of a Contract
Bilateral or Unilateral
Oral or Written
Bilateral – two-sided
Contains two promises
One party promises to do something in exchange for the other’s promise to do something else
Unilateral – promise by only one person to do something
Oral – created by word of mouth
Comes into existence when two or more people form a contract by speaking to each other
Written – more desirable
Assures both parties know exact terms
Provides proof of agreement
Many contracts are required by law to be in writing

8. POP QUIZ
Question
Matt paid Jake $50 to hack into Mrs. Deaver’s computer files for a copy of the final exam, but Jake gave Matt a copy of the pre-test instead. Is this contract void, voidable, or unenforceable?
Answer:
VOID – it has no legal effect

9. POP QUIZ
Question
A reward advertisement placed on a bulletin board or in a newspaper for a lost item would be which kind of contract, bilateral or unilateral? Why?
Answer:
Unilateral
There is only one promise