1. How Contracts Arise What Are Contracts? Any agreement enforceable by law.

2. Six Elements of a Contract  Proposal by one party to another intended to create a legally binding contract.  Unqualified willingness to go along with the offer.  Meeting of the minds.  Legal ability to enter a contract.

3. Elements of a Contract, cont.  Exchange of things of value that creates the bond between the parties.  Parties are not allowed to enforce contracts that involve doing something that is illegal. Writing Some agreements must be placed in writing to be fully enforceable in court. Characteristics of a Contract ValidVoidVoidableUnenforceable

4. Types of Contracts Express Contract Stated in words and may be either oral or written. Implied Contract Contract that comes about from the actions of the parties. Bilateral Contract Contains two promises--one by each person. Unilateral contract Contains one promise only. What about oral contracts vrs. written?

5. Requirements of an Offer Offer Proposal by one party to another party to enter into a contract. Person making the offer Person to whom the offer is made

6. 3 Basic Requirements of an Offer n It must be seriously intended. n It must be definite and certain. n It must be communicated to the offeree.

7. Requirements of Acceptance Acceptance Unqualified willingness to go along with the offer. Mirror Image Rule Counteroffer Any change in the terms of the offer

8. Termination of an Offer Revocation-Taking back of an offer by the offeror Rejection-Refusal of an offer Counteroffer-Ends the first offer Expiration of Time-If the offer puts a time limit for acceptance Death or Insanity-Ends the offer if prior to acceptance

9. Genuine Agreement What happens if there is a mistake in the contract? n Unilateral Mistake - n Bilateral Mistake - n Fraud Deliberate deception to secure an unfair or unlawful gain.

10. Material Fact Important, it matters to one of the parties Concealment Not saying something you should say. Innocent Misrepresentation Untrue statement of facts. Duress Overcoming a person’s will by use of force or by threat of force or bodily harm. (E.D.) Undue Influence Unfair and improper persuasive pressure exercised by one person in a relationship of trust with another person.

11. Consideration Exchange of benefits and detriments. Something that a party was not previously entitled to receive. Giving up something, or promising to give up something. (3 kinds) Not doing something that you have the legal right to do.

12. Can you make contracts without consideration? Gift Something given freely. What if you give consideration in the past? Illusory False promise. Are all agreements contracts? What if the value of consideration was not fair for both parties? Unconscionable - What promises are enforceable without consideration?

13. Promissory Estoppel Used on occasion to prevent injustice when one changes one’s position significantly in reliance on another’s promise, and the promise is not fulfilled. Example 15, page 138

14. Capacity to Contract Legal ability to enter into a contract. When does a teenager become 18 according to the law? Majority--legal adulthood Minority--someone who hasn’t reached majority Minors may disaffirm (or void) a contract if they choose! What if you lie about your age? What happens when two minors make contracts? What happens if you are married and a minor?

15. Capacity, cont. Ratify Approve contracts made during minority. Necessaries - Guardian Person or persons appointed to look after the affairs of minors or mentally impaired. What about aliens?

16. Form of a Contract Memorandum Written evidence of an agreement. 1. 2. 3. 4. 5. 6. 7.

17. Form of a Contract, cont. Breach of Contract Wrongful failure to perform one or more promises of a contract. The accused cannot testify--only witnesses! Ambiguous Understood in different ways. Who does the court believe? Statute of Frauds Requires certain contracts to be in writing. Executory Contracts Statute of frauds applies only to contracts that have not been fully performed.

18. Contracts that must be in writing: 1.Contracts to pay off the debts of others. 2.Contracts by executors of estates to pay debts of deceased. 3.Contracts requiring more than one year to perform. 4.Contracts in consideration of marriage. 5.Contracts to sell an interest in real property. 6.Contracts for the sale of goods valued at $500 or more.

19. Real Property Land and anything permanently attached to it. Goods Moveable items. Parol Evidence Rule Word of mouth. Evidence of oral statements made before signing a written agreement cannot be presented in court to change or add to the terms of that written agreement.

20. REMEMBER... n Read all text before signing a document. n Don’t understand or don’t agree--cross it out before signing. n If promises are made to you, write them down. n Refuse to sign if you do not agree with everything contained in the writing.