2 Elements of a Contract Contract – agreement enforceable at law. OfferAcceptanceGenuine AgreementConsiderationCapacityLegalityTo be legally complete a contract must include all 6 elements. Not all contracts have to be in writing to be enforceable.
3 Characteristics of a Contract Valid, void, voidable or unenforceableExpress or impliedBilateral or unilateralOral or written
4 CharacteristicsExpress Contract – stated in words and may be oral or writtenImplied Contract – one that comes from the actions of the parties, sometimes without exchanging a word.
5 Characteristics Bilateral – contains two promises, one by each person Unilateral – contains only one promise; promise for an act
6 Characteristics Oral – by word of mouth Written – provides proof that the agreement was made
7 Requirements of an Offer Must be seriously intendedNo jokesAn invitation to negotiate or trade is not an offer(store advertisements, price tags, signs in the window)Must be definite and certainExample. If someone agrees to pay “a share” this is not definite or certainMust be communicated to the offereeBy phone, letter, fax machine, etc.
8 Requirements of an Acceptance Unconditional Acceptance – “Mirror Image Rule“– Must not change the terms of the original offer in any way.Counteroffer – acceptance that changes the terms of the original offer and terminates the offer.UCC – Uniform Commercial Code – unified set of statutes that covers the law of sales, etc.
9 Methods of AcceptanceSame form = contract comes into existence when the acceptance is sent.Different form = contract comes into existence when the acceptance is received.If the offeror states in the offer the method that the oferree must use that method of acceptance must be followed.The offeror cannot impose silence on the offeree as the means of acceptance unless the offeree has agreed to this.
10 Termination of an Offer Revocation – taking back of an offerAn offer can be revoked any time before acceptanceA revocation becomes effective when it is received or communicated to the offereeRejection – the offeree does not want to accept the offer; refusalCounteroffer – ends the first offerExpiration of time – if a time frame is listed in the offer, and that time frame ends, the offer ends too.Option – payment to keep the offer open for a period of time.Death or Insanity – if the offeror dies or becomes insane before the offer is accepted, the offer comes to an end.