1. Contract Law

2. What is a contract?
A contract is an agreement between 2 or more people to exchange something of value.
Examples
Cell phone
Hiring someone to work on your house
Hiring a tutor for school
Ordering food at a resturant

3. Elements of a Contract
All 4 elements are required for a valid contract
Offer – I will buy your bike for $20
Acceptance – Okay
Mutual Agreement – both parties agree to everything about the contract
Consideration – something of value is exchanged

4. Does a contract have to be in writing?
Most do not, however, having a paper document is better in case of future legal actions. (paper is proof)
Contracts that have to be in writing
Sale of real estate
Agreements to pay someone else’s debt
Agreements lasting longer than 1 year

5. Contracts that aren’t contracts
Some contracts are never legally contracts (void) or can be terminated legally (voidable)
Contracts for illegal acts are void
Contracts which are unconscionable (heavily in favor of one party) are usually void
Most contracts with minors are voidable

6. Exceptions for contracts with minors
Most contracts with minors are voidable at the discretion of the minor party
Exceptions
Contracts for necessities
Contracts for business purposes
If a contract has been ratified (minor turns 18 during term of contract)
Fraud on the part of the minor

7. What makes a valid offer
Serious Intent – Must intend to enter a contract with someone
Ads are not offers, they are invitations to make an offer
Definite and Certain
Specific with regards to terms and conditions
Communicated to the Offeree
Person to whom the offer is intended receives the offer

8. How to terminate an offer
Revocation – take back the offer before it is accepted
Rejection – the offeree rejects the offer
Counter Offer – roles are reversed and the offeree becomes the offeror
Time Expires – if a time limit is specified for an offer to be accepted.
Death or insanity of the offeror – if offeror dies or is declared insane before acceptance, then offer is terminated

9. Acceptance
Mirror image rule – must accept the offer exactly as it is made or it becomes a counter offer.
Acceptance can be shown in multiple forms
Saying yes, I accept
Signing an agreement
Performing / upholding you part of the contract

10. Mutual Agreement
If the offer is accepted then usually there is mutual agreement between the parties.
How do mistakes affect mutual agreement
Unilateral mistakes – one party makes a mistake
Can’t cancel the contract
Bilateral mistakes – Both parties make a mistake. Either party can usually cancel

11. Other problems with mutual agreement
Fraud – deliberate misstatement of facts by on party
Party who was defrauded can cancel contract and sue for punitive damages
Innocent Misrepresentation – innocent mistake by one party
Party who was victim of mistake can cancel but can’t get damages
Duress – when one party is forced to agree to a contract
Contract is voidable
Undue influence – one party has special influence over the other party – contract is voidable

12. Consideration Consideration for a contract can take 3 forms
Giving up something of value
Money, items
Doing something you don’t have to do
Giving your time at work
Forbearance – giving up the right to do something you are allowed to due
Ie – give up the right to sue someone in exchange for some kind of settlement

13. These aren’t consideration
Promise to make a gift
Promise to obey the law
Preexisting duty – it is something you are already required to do
Past Consideration
Illusory Promise – looks like a promise but really isn’t
Promise to attend a social function

14. How a contract ends
Discharge by performance – everyone does what they are supposed to do
Discharge by agreement – both parties can agree to cancel or adjust the contract
Discharge by Impossibility of performance – property is destroyed, death of one of the parties.
Discharge by operation of law – statute of limitations has expired, bankruptcy

15. Other contract facts
Both parties must by legally competent to enter into a contract
The rights of a contract can be assigned to someone else and the oligations can be delegated to unless it would change the nature of the contract.
Promissory estoppel – courts will enforce a contract even without consideration.