5#1: OfferA proposal made by one party (offeror) to another party (offeree) indicating a willingness to enter a contract.
63 Requirements of an Offer Serious IntentNot merely an “invitation to negotiate” like an advertisement.Definiteness and CertaintyVague conditions are not legally enforceable.Communication to the OffereeMUST be communicated to be legal
7#2: AcceptanceThe agreement of the offeree to be bound by the terms of the offer.
8Requirements of Acceptance Unconditional AcceptanceMust NOT change the terms of the original offer in ANY way.If a change is made, it is a “counteroffer” and the original offeror is not obligated to accept.Must follow the rules regarding the Methods of Acceptance
9Methods of Acceptance When negotiating long-distance: Acceptance is effective when sentAny communication qualifiesAcceptance is implied when using the same speed as the offerorSome offers/acceptances can be impliedSome offers require specific performance
10Termination of an Offer Revocation – offeror terminatesRejection – offeree terminatesCounterofferExpiration of TimeDeath or Insanity
11Contracts and Contract Law The Elements of a Contract
12a contract, and what makes a defective agreement. Learning GoalTo recognize theelements ofa contract, and what makes a defective agreement.
14#3: Genuine AgreementWhen a valid offer is met by a valid acceptance. “A meeting of the minds.”When Offer and Acceptance are both present but . . .Agreement can be destroyed if it is found to be not genuine.
15Defective AgreementsConcealment – Choosing not to reveal important information that a party is obligated to reveal.Innocent Misrepresentation – Making an innocent statement that turns-out to be false.The victim may rescind the contract, but can NOT collect any damages.
16(Defective Agreements) Mistake – Entering a contract with the belief that certain things are true, which are in fact not true.Unilateral Mistake – An error on the part of one party.The mistaken party might not be able to get out of the contract!Bilateral Mistake – An error on the party of both parties.Either party can get out of the contract!
17(Defective Agreements) Duress – Overcoming a person’s will by use of force or by threat.Physical DuressEmotional Duress (threat of physical force)Economic DuressThreatening legal action is NOT a form of Duress!!!
18(Defective Agreements) Undue Influence – When a person uses unfair or improper persuasive pressure to force someone to enter into an agreement.A Dependency RelationshipUnfair or Improper PressureA Beneficial Contract
19(Defective Agreements) Fraud – Deliberate deception intended to secure an unfair or unlawful gain.Fraud MUST contain 5 Elements!!!Must be a false representation of fact.The party making it must know it is false.
20(Defective Agreements) Elements of Fraud . . .The false representation must be made knowing it is relied upon by the other party.The innocent party must reasonably rely upon the false representation.The innocent party must actually suffer some monetary loss.
21Contracts and Contract Law The Elements of a Contract
23a contract, including capacity, consideration and legality. Learning GoalTo recognize theelements ofa contract, including capacity, consideration and legality.
24#4: Capacity The legal ability to enter a contract. Minors Mentally Impaired PersonsIntoxicated PersonsAliens & Convicts
25Minors Contracts are voidable if the minor chooses. Even if the minor has damaged an item purchased.Necessities are an exceptionMinor lies about age = FELONYContracts are ratified when minor becomes an adult, and continues contract.
26Mentally Impaired Contracts are voidable If declared insane or incompetent by a court, and a guardian is appointed, contracts are all valid.
27Intoxicated PersonsSometimes able to disaffirm a contract, if intoxicated at the time the contract was entered.Must have been so intoxicated at the time as to not understand the purpose, nature or effect of the agreement.A court decides the person’s condition.
28Aliens & Convicts Limitations placed on contracts. Foreign-born people from non-allied countries are denied legal capacity during war.Sometimes there are limitations during peace.All states differ in limitations on these people.
29#5: ConsiderationA thing of value promised to one party in exchange for another thing of value.Giving up something you have the legal right to keep.Doing something you have the legal right to not do.Not doing something you have the legal right to do.
30Types of Consideration MoneyProperty and ServicesPromise not to Sue“Forbearance”Lawsuits are often settled in this wayCharitable PledgesLegally enforceable – no matter how small!
31#6: LegalityParties are not allowed to enforce contracts that involve illegal acts by crime, tort or statutory law.This is called “conspiracy”Can apply to entire contracts, or to parts of contracts.
32a contract, including capacity, consideration and legality. Learning GoalTo recognize theelements ofa contract, including capacity, consideration and legality.