Presentation on theme: "CONTRACT Law Offer & Acceptance Genuineness of Assent Consideration"— Presentation transcript:
1 CONTRACT Law Offer & Acceptance Genuineness of Assent Consideration Legal Capacity to ContractLegal Purpose & Proper FormContractual Obligations & their Enforcement
2 Offer & Acceptance Chapter 6 Creation of OffersTermination of OffersAcceptancesAdditional Info – backing out, mistakes,misrepresentation, & capacity rights
3 CREATION OF OFFERSWHAT IS A CONTRACT?An Agreement that Courts will Enforce,Legal links between the individuals and companies producing & consuming goods and services,Offer – Proposal by Offeror to do something provided the offeree does something in return.Offeror – party who makes an offer to form a contract,Offeree – party to whom the offer is madeAcceptance – occurs when a party to whom an offer has been made Agrees to the Proposal.
4 Elements Required to Form a Contract… There are 6 major requirements that must be satisfied before courts will treat transactions as contracts:OFFER & ACCEPTANCEOffer must be Serious, Definite/CertainTerms of offer Must be Accepted by Person to whom it was Communicated.Without Both Offer and Acceptance on Mutually Agreed Terms, there is no contract2. GENUINE ASSENT – honest/sincere agreementAgreement must NOT be based on deception, an important mistake, or on the use of unfair pressure
5 Elements Required to Form a Contract… continued… LEGALITY – what parties agree to Must be Legal,CONSIDERATION –Both parties Receiving Something of legal value,CAPACITY –Parties Must be able to Contract for Themselves, rather than being obligated to use parents or legal representatives6. PROPER FORM – some agreements must be in Writing
6 Nature & Classes of Contracts Executed and Executory Contracts:Executed – fully performed, both parties done all they promisedExecutory – Not fully performed, something remains to be doneExpress, Implied-in-Fact, and Implied-at-Law Contracts:Express – All terms are stated orally or in writing,Implied-in-Fact – can be inferred from acts/conductImplied-at-Law – Quasi, not really a contract, justice/law enforcesUnilateral and Bilateral (Multilateral) Contracts:Unilateral – offeror promises something in return for theofferee’s PERFORMANCE,Bilateral – mutual exchange of legally binding promises
7 REQUIREMENTS of an Offer Offer – proposal by offeror to do something provided the offeree does something in return.If the offeree accepts the proposal, a contract is formed.To CREATE a VALID OFFERThe Offeror Must Appear to INTEND to create a Legal Obligation,How would a Reasonable Person interpret your conduct?TEST of the REASONABLE PERSON. – objective legal test used by jurors/judges, rather than a subjective test based on what you say you were thinking.Facts & Circumstances – Test of RP examines the offeror’s words & conduct in light of all the relevant facts and circumstances, (Jest/Anger/Terror)Preliminary Negotiations – determine if interested, inviting others to make offers, Not indicating an intent to contract.Social Agreements – Do Not create legal obligations
8 REQUIREMENTS of an Offer To CREATE a VALID OFFER (continued):The Terms of the Offer must be Definite & COMPLETE,Is offer missing Essential information?Does it identify - Price, Subject Matter, Quantity, Date?Implied Terms – some contracts a term might be a common business practice.Ex: contracts between merchants for the sale of goods, when price is not specified, current market price is the basis for the contract.Advertisements – Generally Not Offers, instead are viewed as Invitations to customers to make offers.Occasionally Ads May Be Offers if –Ad is clearly worded in ways that address the problem of numerous people receiving the ad for a limited amount of product, orAd asks the offeree to perform an act as a way of accepting.
9 REQUIREMENTS of an Offer To CREATE a VALID OFFER (continued):The Offer must be Communicated to OffereeA person who is Not the intended offeree, cannot accept the offer,Nor can a person accept an offer without knowing it has been made
10 TERMINATION of Offers HOW CAN OFFERS BE ENDED? An offer does not last forever…REVOCATION by the OfferorTIME STATED in the OfferREASONABLE LENGTH of TIMEREJECTION by the OffereeCOUNTEROFFERDEATH or INSANITY of either Offeror or OffereeDestruction of the Specific Subject Matter
11 How Can An Offer Be Kept Open? Generally, an offeror is not obligatedto keep an offer open for a specified time…WHY? - offeree has given nothing in exchange for the promise.OPTION – a binding contract arising when the offeree gives the offeror something of value in return for a promise to leave an offer open.FIRM OFFER – a binding offer stating in writing how long it is to be held open. (no longer than 3 months)NEITHER Death nor Insanity, of either party,Terminates an Option or Firm Offer, unless it is dependent on the personal performance.
12 ACCEPTANCES Be made by person to whom offer was made, HOW ARE ACCEPTANCES CREATED?To create an enforceable contract, the acceptance must:Be made by person to whom offer was made,Match terms in offer,Be Communicated to the Offeror
13 ACCEPTANCE MUST MATCH THE OFFER WHO CAN ACCEPT AN OFFER?An offer made to one person Cannot be accepted by another,An offer can be made to a particular group or public – may accept by doing whatever the offer requiresACCEPTANCE MUST MATCH THE OFFERAny change by offeree, ends the original offer, resulting in a counteroffer,MIRROR IMAGE RULE – requires the terms in the acceptance must exactly match terms contained in offer
14 COMMUNICATED to OFFEROR Acceptance must beCOMMUNICATED to OFFERORSILENCE – offeree is not required to reply to offer, so silence is not acceptable.EXCEPTION – in a Continuing Relationship, the parties may agree in advance that silence is to be regarded as acceptanceUNILATERAL Acceptance – In some offers, the offeror requires the offeree indicate Acceptance by PERFORMING their obligations under the contract. – Unilateral Contract.BILATERAL Acceptance - most offers are Bilateral, means the offer implies that it can be Accepted by communicating a PROMISE instead of performing the contracted-for act.
15 COMMUNICATED to OFFEROR Acceptance must beCOMMUNICATED to OFFERORWhen Acceptance is EFFECTIVE?Contract Communications - Offers, Acceptances, Rejections, Revocations, & CountersoffersWays to be Communicated: Orally, In Person, Fax, Phone, Writing, Mail, Delivery, , & TextingAll Forms of CC, Except Acceptance, take effect when Received…Acceptance is effective when Sent, Unless the offeror specified the acceptance would be effective when received.
16 Additional Information… Rescission – backing out & both parties returning…Ratification – conduct suggesting intention…Disaffirmance – giving back the consideration to…Mistakes…Unilateral v. MutualMisrepresenting your Age – tort, false representationCAPACITY RIGHTS – minors, the intoxicated, & the mentally incapacitated lack contractual capacity.Meaning they are assumed by law to lack the maturity & experience to protect their self interests. So they are given special contractual rights designed to protect them from being cheated.
17 2 rights given to those who lack capacity are: CAPACITY RIGHTS…2 rights given to those who lack capacity are:The right to disaffirm (giving back consideration by both) contracts for non-necessaries (not needed to maintain one’s economic or social status; cosmetics/jewelry/liquor/expensive food) &,The right to pay a fair price instead of the contract price for contracts for necessaries. (g/s that are reasonably required to maintain a person’s lifestyle; basic food/clothing/shelter/transportation)varies from one person to another,must not already possess.
18 What Contracts CANNOT be Disaffirmed? Some contracts of minors for Non-necessaries cannot be disaffirmed. Vary from state to state. MOST COMMON EXCEPTIONS ARE:Court-Approved Contracts - In all states, minors cannot void any contracts approved for them by a court.Ex: minors who are employed as actors or as professionals in sports usually have their contracts approved by a court.Major Commitments – In all states, contracts to enlist in armed services, contracts for educational loans, & marriage contracts cannot be disaffirmed.Banking/Insurance/Rental Contracts - can’t be disaffirmed…