1. Introduction to Contracts and Their Formation OBE-118, Section 10 Fall 2004 “It’s a deal, I’ll take it”

2. Basic Elements of a Contract Usually looked at as six elements Agreement (or “Mutual Assent”) Consideration Capacity Legality Genuineness of assent Writing and Form These four are sometimes called the elements “Defenses” to Formation

3. Classifying Contracts Bilateral versus Unilateral Express versus Implied Formal versus Informal Valid, Void, Voidable, and Unenforceable

4. Formation Mutual Agreement or Mutual Assent Requires acceptance of an offer The “objective theory of contracts” resolves issues as to what was an offer,

5. Offer Basic Elements of an offer –Serious objective intent by offeror –Terms reasonable definite and certain –Offer communicated to offeree No: “ Want to buy my car?” “My car is for sale” ‘I want to sell my 2000 BMW for $40,000”

6. Acceptance Voluntary act that expresses assent or agreement to terms of offer Unequivocal or absolute Communicated to the offeror No: “Maybe” “Okay but only if…” “Yes if you increase the the price by…”

7. Did the Offer Survive to be Accepted? OfferAcceptance Revocation? Rejection? Counteroffer? Operation of Law? Offer Terminated? Was offer non-revocable?

8. Revocation of Offers Direct repudiation Behavior conforming to repudiation Generally, revocation must be received by offeror or offeror’s agent. Irrevocable offers Firm Offers Option contract

9. Termination by Rejection Words or acts that convey “no” Termination by Counteroffer A rejection with a new offer Watch out for inquiries: “Would you accept $50? Mirror-image rule (common law)

10. Termination by Operation of Law Lapse of time Destruction of Subject matter Death or incompetence of offeror Illegality of proposed contract