1. Chapter 5 How Contracts Arise

2. Contract: Any agreement enforceable at law

3. Elements of a Contract: Offer: Proposal made by one party (the offeror) to another party (the offeree). Acceptance: The agreement of the offeree to be bound by the terms of the offer.

4. Elements of a Contract: Genuine Agreement: Offer +Acceptance Capacity: Do they have the legal ability to enter into a contract? (minors, mentally impaired, drunk or drugged)

5. Elements of a Contract: Consideration: Something of value promised to the other party in a contract in exchange for something else. Legality: Parties are not allowed to enforced contracts that involve something illegal.

6. Characteristics of a Contract

7. Valid, Void, Voidable, Unenforceable Valid: Legally Good Void: No Legal Force Voidable: When one party cancels a contract for a legal reason Unenforceable: Due to a rule of law, the contract cannot be enforced.

8. Express, Implied Express Contract: Stated in words; either orally or in writing Implied Contract: Comes about from the actions of the parties ~ don’t have to say a word

9. Bilateral, Unilateral Bilateral Contract: Two promises; one by each party Unilateral Contract: One promise only (reward offer)

10. Oral, Written Oral: Word of Mouth Written: Certain contracts must be in writing.

11. Requirements of an Offer Serious Intent (Invitations to Negotiate) Definite and Certain Communicated to the Offeree

12. Requirements of an Acceptance Unconditional Acceptance Mirror Image Rule: Terms must not change Uniform Commercial Code (UCC) 1952 Unified set of statutes that cover the law of sales Non-merchants are an exception Merchant to merchant are also exceptions when… New or different terms are not crucial The offeror does not object to the changes The original offer did not expressly limit acceptance to the terms.

13. Methods of Acceptance When the acceptance takes place, the contract comes into existence Time constraints may apply if stated in the offer.

14. Methods of Acceptance If you are face to face or on the phone, this happens immediately

15. Methods of Acceptance If you use the same method of communication, acceptance occurs when it is sent.

16. Methods of Acceptance If you use a different method of communication, acceptance occurs when it is received.

17. Termination of the Offer Revocation: Taking back an offer Any time before it is accepted Becomes effective when it is received by or communicated to the offeree

18. Termination of the Offer Rejection By the offeree Counteroffer Ends the first offer Expiration of time Must be stated in the offer or assume reasonable time Death or Insanity