1. How Contracts Arise
Chapter #5

2. When Was the last time you entered into a contract

3. Contract
Is any agreement enforceable by law – Not all agreements are contracts
Theories of Contract Law
Equity theory of Contract Law
Will Theory of Contract Law
Formalist Theory of Contact Law

4. Elements of a Contract 6 Elements Offer Acceptance Genuine Agreement
Consideration
Capacity
Legality

5. Offer
Is a proposal by one party to another intended to create a legally binding agreement.

6. Acceptance
Is the second party’s unqualified willingness to go along with the first party’s proposal

7. Genuine Agreement
If a valid offer is met by a valid acceptance a genuine agreement exists
Item like to following can destroy a genuine agreement
Fraud
Duress
Undue Influence
Mistake

8. Capacity
Is the legal ability to enter a contract

9. Consideration
Is the exchange of things of value

10. Legality
People can’t enter into contacts to commit illegal acts.

11. Characteristics of a Contract
Valid, Void, Voidable, or Unenforceable
Express or Implied
Bilateral or Unilateral
Oral or Written

12. Valid, Void, Voidable or Unenforceable
Valid – means legally good
Void – has no legal effect it is missing one of the elements of a contract.
Voidable – When a party to a contract a able of void or cancel for some legal reason
Unenforceable – is one the court will not uphold because of some rule of law.

13. Express Contract VS Implied Contract
Express is a contract stated in words and may be either oral or written
Implied contract comes about from the actions of the parties no words are exchanges.
Example #1

14. Bilateral VS Unilateral
Bilateral – means two sided
Bilateral contract contains two promises – one party promises to do something in exchange for the other’s promise to do something else.
Unilateral – Means one sided
Contains a promise by only one person to do something.
Example #2

15. Oral or Written
Oral – is created by word of mouth two people speak to each other.
Written – Written proof of the contract –
Some types of contract must be in writing

16. Requirements of an offer
It must have three basic requirements
Made Seriously
Definite and Certain
Communicated to the offeree
Serious Intent –the offer must be made with real intent to create a contract.
Invitations to Negotiate – Sales ads
Example #3
Definiteness and Certainty – actual amounts
Example #4
Communication to the Offeree – Pone, Fax, Letter.

17. Requirements of an Acceptance
Two basic requirements
Unconditional – The acceptance must not change the terms of the original offer in any way.
Mirror Image Rule-
Any changes to the offer is a counteroffer
Example #6
Follow rules regarding the method of acceptance –
Read this section aloud
Example #7

18. Termination of an Offer
5 Ways to terminate
Revocation – Taking back offer from offeree- Before it is accepted
Rejection- No acceptance
Counteroffer- Counteroffer end the first offer and starts another contract
Expiration of Time- Time set of the deal ends
Death or Insanity- It ends an offer but not a contract.