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Contract Law ©OnCourse Learning. All Rights Reserved. Chapter 7

©OnCourse Learning. All Rights Reserved. In This Chapter You will be introduced to contract law & how a contract is created.

Contract A contract is a legally enforceable agreement to do or not to do a specific thing. ©OnCourse Learning. All Rights Reserved.

Legally Enforceable Agreements Expressed – declare intentions Implied - created by action Bilateral - promise exchanged for a promise ©OnCourse Learning. All Rights Reserved.

Legally Enforceable Agreements Unilateral - promise exchanged for performance. Executory- both parties have work to be done after the contract is signed. Executed - one that is complete upon signing. ©OnCourse Learning. All Rights Reserved.

Bilateral ContractUnilateral Contract Promise for PromisePromise for Performance Bilateral and Unilateral Contracts ©OnCourse Learning. All Rights Reserved.

Legal Effect of Contracts Valid - meets all requirements of law. Void - no legal effect & not a contract. Voidable - one party bound but not the other. Unenforceable – may have been valid at an earlier time but now enforcement is barred. ©OnCourse Learning. All Rights Reserved.

Contract Essentials 1. Competent parties 2. Mutual agreement 3. Lawful objective 4. Consideration or cause 5. Written ©OnCourse Learning. All Rights Reserved.

Meeting of the Minds ©OnCourse Learning. All Rights Reserved. Offer Acceptance Counteroffer Offer Acceptance

Mutual Agreement Offer Acceptance Counteroffer ©OnCourse Learning. All Rights Reserved.

Problems Fraud Innocent misrepresentation Mistake Duress ©OnCourse Learning. All Rights Reserved.

Parol Evidence Rule Rule permits oral evidence to complete an otherwise incomplete or ambiguous written contract. If contract is complete & clear the courts presume what the parties put into writing is what they agreed upon. ©OnCourse Learning. All Rights Reserved.

STATUE OF FRAUDS Requires real estate contracts be written Electronic form acceptable - Esign ©OnCourse Learning. All Rights Reserved.

Electronic Transactions Effective March 1, 2001 Esign – electronic signature legal Applies only to interstate commerce Texas passed UETA in 2001 Watch for  Electronic closings  Recordings  Commercial contracts ©OnCourse Learning. All Rights Reserved.

Performance Most contracts are discharged by being fully performed or executed by the contracting parties in accordance with the contract terms. ©OnCourse Learning. All Rights Reserved.

Discharge Being fully performed by the contracting parties in accordance with the contract terms. ©OnCourse Learning. All Rights Reserved.

Novation A contract can also be performed by novation. The substitution of a new contract between the same or new parties. ©OnCourse Learning. All Rights Reserved.

Breach of Contract Partial performance Unilateral Rescission Specific performance Money damages Liquidated damages Mutual Rescission ©OnCourse Learning. All Rights Reserved.

Statute of Limitations Written contracts have 4 years. Oral contracts have 2 years limit. ©OnCourse Learning. All Rights Reserved.

Implied Obligations Contractual obligations by implication. No more “caveat emptor.” ©OnCourse Learning. All Rights Reserved.

Courts Courts of Law Courts of Equity Current Civil Court Systems State Courts Federal Courts Court Procedure ©OnCourse Learning. All Rights Reserved.

Key Terms Bilateral contract Breach of contract Competent parties Contract Counteroffer Duress Executed contract Executory contract Express contract Fraud Implied contract Innocent misrepresentation Liquidated damages Minor, infant Mistake Novation Specific performance Statute of frauds Statute of limitations Unenforceable contract Unilateral contract Void contract Voidable contract ©OnCourse Learning. All Rights Reserved.