CONTRACTS Negotiation and Drafting

What is a Contract  An agreement between two or more persons to exchange something of value  A legally binding promise

Examples  Credit Card Agreement  Signed agreement related to a job  Online agreement when starting a Facebook or account  An agreement to buy something from a friend  Eating at a restaurant

Elements of contracting  Offer  Acceptance  Consideration

Offer  Offer: an invitation to make a contract  Examples?  Displaying a take it or leave it contract online  Bidding on ebay  Putting a price tag on an item in a store

Acceptance  Acceptance: the point at which one party agrees to the other party’s offer  Examples  Clicking that you accept the online contract  Winning an ebay auction  Buying the item from the store

Consideration  Consideration: What each side gives the other  Generally, courts will only enforce a contract if both sides are getting something.

Minors and Contracts  Minors can make contracts but usually are not bound to them  Must return any consideration they have when breaching contract  Exceptions: food, clothing, shelter, medical aid  Many places require cosigners for minors

Always Get it in WRITING! Must have written contracts for:  Real estate  Goods over $500  Agreement to pay another’s debt  Services scheduled >1year in advance Oral contracts are 2 nd best, and often not enforceable

Fraud  Fraud: false statement about an important fact to persuade someone to enter into a contract  Cannot lie about certain features, but don’t have to tell the whole truth  Fraud invalidates a contract

Is this a contract?  You order a book of Amazon.com. Your credit card is charged, but no book ever shows up.  Was there a legally enforceable contract?  Yes, you agreed to pay Amazon.com money and they agreed to send you a book.

Is this a contract?  Last year, your uncle promised you an iPhone for your 18 th birthday. When you turned 18, he gave you his old broken basic cell phone.  Was there a legally enforceable contract?  No, while your uncle made a promise, he did not receive any consideration in return. Consideration has to be more than good feelings.

Is this a contract?  You signed up for a week long summer basketball camp which cost $100. You paid and went to the camp. When you got to the camp, they just had you watch football movies all day.  Was there a legally enforceable contract?  Yes. You agreed to pay money to the camp and they were supposed to give you basketball training.

Drafting a Contract  Include all the terms (“At issues”)  Don’t be afraid of creative solutions  Use specific binding language:  “Shall” not “Will”  X shall pay Y $10.  Y shall wash X’s car.  Not:  X will pay Y $10.  Y will wash X’s car.