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UNIT 7 The Essentials of Contract Law SUNY CRIMINAL & BUSINESS LAW/MUSOLINO.

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Presentation on theme: "UNIT 7 The Essentials of Contract Law SUNY CRIMINAL & BUSINESS LAW/MUSOLINO."— Presentation transcript:

1 UNIT 7 The Essentials of Contract Law SUNY CRIMINAL & BUSINESS LAW/MUSOLINO

2 7-2 Learning Objectives 1. Explain the three theories of contract law. 2. Identify the six elements of a contract. 3. Explain the place of the UCC in contract law. 4. Distinguish contracts from other agreements between different parties. 5. Explain the concept of privity and contract law. 6. Explain the nature of valid, void, voidable, and unenforceable contracts

3 7-3 Learning Objectives 6. Contrast unilateral and bilateral contractual arrangements. 7. Outline the difference between express and implied contracts. 8. Discuss the difference between quasi- contracts and implied-in-fact contracts. 9. Differentiate between formal and informal contracts. 10. Explain how executory contracts differ from executed contracts.

4 7-4 Question? What is an agreement between two or more competent parties? A. Deal B. Bond C. Treaty D. Contract

5 7-5 The Basics of Contract Law Contract –an agreement between two or more competent parties, based on mutual promises, to do or refrain from doing some particular thing that is neither illegal nor impossible –results in an obligation or a duty that can be enforced in a court of law

6 7-6 Question? What is the contracting party who makes a promise? A. Promisee B. Promisor C. Obligee D. Obligor

7 7-7 Question? What is the contracting party to whom a party owes an obligation? A. Promisee B. Promisor C. Obligee D. Obligor

8 7-8 The Basics of Contract Law Promisor –the contracting party who makes a promise Promisee –the one to whom the promise is made is the Obligor –the party who is obligated to deliver on a promise or undertake some act of performance Obligee –the contracting party to whom this party owes an obligation

9 7-9 The Objectives of Contract Law The courts goal in the remedy phase of a contract dispute is to place the injured party in as good a position as he or she would have been had the contract been carried out Mitigation Punitive damages

10 7-10 Question? Which theory states that a contract will exist once all of the parties with the legal capacity to contract have actually accepted all obligations and benefits under the contract ? A. Equal value theory B. Equity theory C. Will theory D. Judgment theory

11 7-11 Three Theories of Contract Law The will theory –a general principle of law that states that a contract will exist once all of the parties with the legal capacity to contract have actually accepted all obligations and benefits under the contract and have exchanged, or promised to exchange, things of value

12 7-12 Three Theories of Contract Law The equal value theory or equity theory –insisted that a contract would be valid only if the things exchanged were of equal value –bartering

13 7-13 Three Theories of Contract Law If each element is present, then a contract exists, regardless of what the parties may argue after the fact The formalist theory of contract law –the courts look to see if certain elements exist –offer, acceptance, mutual, assent, capacity, consideration, and legality.

14 7-14 The Six Elements of a Contract

15 7-15 Contracts and the UCC The Uniform Commercial Code (UCC) is a unified set of statutes designed to govern almost all commercial transactions Article 2 of the UCC sets down the rules that govern sale-of- goods contracts

16 7-16 Contracts and Other Agreements All contracts are agreements, but not all agreements are contracts. To be enforceable, an agreement must conform to the law of contracts.

17 7-17 Question? When both parties have a legally recognized interest in the subject of the contract it is called ________. A. Privity B. Judgment C. Contractual obligation D. Gordon defense

18 7-18 Contracts and Privity Privity –both parties have a legally recognized interest in the subject of the contract if they are to be bound by it

19 7-19 Contractual Characteristics Valid contract –one that is legally binding and fully enforceable by the court Void contract –one that has no legal effect whatsoever

20 7-20 Contractual Characteristics Voidable contract –one that may be avoided or canceled by one of the parties Unenforceable contract –one that, because of some rule of law, cannot be upheld by a court of law

21 7-21 Question? What type of contract is one in which both parties make promises? A. Voided contract B. Unilateral contract C. Express contract D. Bilateral contract

22 7-22 Contractual Characteristics Unilateral contract –an agreement in which one party makes a promise to do something in return for an act of some sort Bilateral contract –one in which both parties make promises Breach of contract –occurs when one of the two parties fails to keep the promise

23 7-23 Contractual Characteristics Express contract –requires some sort of written or spoken expression indicating a desire to enter the contractual relationship Implied contract –created by the actions or gestures of the parties involved in the transaction

24 7-24 Contractual Characteristics Informal contract –Any oral or written contract that is not under seal or is not a contract of record Formal contract –has to be (1) written; (2) signed, witnessed, and placed under the seal of the parties; and (3) delivered –Contract of record

25 7-25 Contractual Characteristics Executory contract –A contract that has not yet been fully performed by the parties is called an Executed contract –When a contracts terms have been completely and satisfactorily carried out by both parties


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