1. Contract Basics Business Law

2. From tort law to contract law TortContract What binds individuals Laws of society, as defined by statutes and precedents Specific Agreements Who is boundGroups of people (often, everybody) who have a duty The specific individuals who willfully enter into the agreement, thereby creating a duty for themselves

3. A contract is an agreement between two or more persons to exchange something of value.

4. Nature of the Contract  To determine if there is a contract, the courts look for a “meeting of the minds”

5. What do you think needs to be in a contract????

6. Elements of a Contract Offer – proposal by 1 st party Acceptance – 2 nd party agrees Genuine Agreement – “meeting of the minds” Consideration – thing of value exchanged Capacity - >=18 and able to understand Legality – Has to be for a legal venture!~

7. Offer Capacity Acceptance Capacity Genuine Agreement Consideration Contract (Legality) Contract Formula

8. Characteristics of Contracts Valid – legally good Void – has no legal effect Voidable – when a party is able to cancel a contract Unenforceable – a contract the court won’t uphold

9. Express –Stated in words or spoken –Oral or written Implied –Comes from the actions of the parties Characteristics of Contracts

10. Bilateral –Contains two promises Unilateral –Contains a promise by only one person to do something, if and when the other person performs an act Characteristics of Contracts

11. Oral Written Some contracts are only valid if they are in writing Characteristics of Contracts

12. To Write or Not to Write Contracts for the sale of land or real estate Contracts to pay deceased person’s debts Contracts for the sale of goods priced at $500 or more Agreements to pay another person’s debt Agreements that cannot be performed within a year from the date of the agreement Contracts in consideration of marriage

13. Characteristics of Contracts Valid VoidImpliedBilateralOral VoidableExpressUnilateralWritten Unenforceable

14. Offer 1.Made seriously Made with the intention of entering into a legal obligation Newspaper ads – invitation to negotiate 2.Definite and certain 3.Communicated to the offeree How? Example on page 116

15. Acceptance Time at which a contract comes into existence Unconditional Acceptance –Mirror Image Rule –Counteroffer Method of Acceptance –Accepted by an action –Implied when the offeree accepts by the same or faster means than the offer

16. Termination of the Offer  Not the same as termination of contract 1.Revocation Taking back of offer by the offeror 2.Rejection Refusal of offer by offeree 3.Counteroffer 4.Expiration of Time Stated in offer Reasonable amount of time 5.Death or Insanity

17. WHEN DID THE CONTRACT OCCUR?

18. Defective Agreements Fraud –Deliberate deception intended to secure an unfair or unlawful gain Duress Undue Influence Mistake/Misrepresentation

19. Fraud Five elements which need to be proved for fraud: 1.False Representation of Fact Concealment 2.Representation known to be false 3.False Representation intended to be relied upon 4.False Representation actually relied upon 5.Resulting Loss

20. Remedies for Fraud Rescind the contract Sue for money damages

21. Duress Overcoming a person’s will by use of: – force OR –by threat of force OR –bodily harm Types –Physical Duress: actual physical –Emotional Duress: threat of physical –Economic Duress: threat to business

22. Undue Influence Person uses unfair and improper persuasive pressure to force another person to enter an agreement –Age –Health –Mental immaturity

23. Capacity The legal ability to enter a contract Must be 18 or over Have to be able to understand what you’re getting into

24. Minority v. Majority Minor - <18 Misrepresenting your age = fraud A minor can void a contract –Must return merchandise –Disaffirm the whole contract After reaching 18 can “ratify” contract Contracts for necessities Minors can be held to these contracts

25. Capacity – cont’d Other individuals who lack capacity –Mentally impaired persons Have a Guardian appointed –Intoxicated persons –People with a condition that prevents them from understanding Alzheimers, Dementia, etc. Also have a guardian or POA appointed

26. Consideration Item of value that is exchanged Benefits & Detriments – each party gives something up; each party receives something –Example – I buy your car for $1000; you give up your car & receive $1000; I give up $1000 & receive your car

27. Characteristics of Consideration Bargained-for exchange Something of value Benefits and detriments promised must be legal

28. Types of Consideration Money Property/Services Promise not to… Charitable Pledges

29. Legality Agreements that violate statutes Agreements contrary to Public Policy Effect: –Court will not aid either party to an illegal contract

30. Contract Formula Capacity Acceptance Offer Consideration Contract (Legality) Genuine Agreement

31. How Contracts End Discharge by Performance Discharge by Agreement Discharge by Impossibility of Performance Discharge by Operation of Law

32. Discharge by Performance Time for performance Satisfactory performance Substantial performance Tender of performance

33. Discharge by Agreement Mutual agreement Accord and satisfaction

34. Discharge by Impossibility of Performance Death or illness in a personal service contract Destruction of the exact subject matter

35. Discharge by Operation of Law Wrongful alteration Statute of limitations Bankruptcy

36. Transfer of Contract Transfer duties Transfer rights Beneficiary All rights can be assigned unless: –Contract is Person specific –Stated in the contract

37. Breach of Contract One party to a contract fails to perform the duties set out in the agreement Acceptance of Breach or Remedies

38. Damages Money Damages Actual/Incidental Damages Liquidated Damages

39. Minimizing Damages Injured party must take reasonable steps to minimize their damages

40. Remedies for Breach of Contract Money Damages Specific Performance Injunction

41. Contract Basics Business Law