 CONTRACT Legally enforceable Between two or more parties  We commonly encounter contractual agreements as we carryout our daily routines and activities.

 If you have a suit altered, the alterations shop agrees to make the alteration by a certain date for a stated price and you agree to pay the price.  Other common contractual agreements involve credit plans, mortgages, and rental agreements.

 These contractual agreements (rent, mortgage, and credit plan) are examples of Express Contracts.  Express contracts can be oral or written. What makes them express is that the parties have stated the terms of their agreement in words.

 In contrast to an Express contract, an Implied contract is an unwritten agreement. The agreement is not stated in words. Can you think of an example of an implied contract?  When you drive a car you have made an implied contract to obey traffic laws.

For a contract to be enforceable, it must be binding. To be binding, a contract must have the following elements: AGREEMENT CONSIDERATION CONTRACTUAL CAPACITY LEGALITY

 Some contracts must be in writing: For example: - Contracts for the sale of Real Property (homes and land) -Contracts that cannot be fully performed in less than a year -Contracts involving $500 and more -Contracts where one person agrees to pay the debts of another

 Agreement – A valid offer is made and accepted.  Consideration – Anything of value exchanged as part of a contract  Contractual Capacity – Competence of the parties involved  Legality – A contract must be lawful

 Counteroffer – When one person makes an offer and another person changes a part of it.  Notarized – receiving a seal that says a person signed a document of his or her free will.

 Negotiable – Legally Collectible  Negotiable Instrument – an unconditional written promise to pay a specified sum of money upon demand of the holder.  Negotiable Instruments most people use: checks and Promissory Notes

 Is a promissory note a legal document? Can it e enforceable by law? Yes  In some cases, a creditor may require a second signature (co-signer) with a good credit rating as additional security for repayment of a note.

 If you were to sign a note as a co-signer and the person owing the money failed to pay, would you be held liable?  yes

 A statement about a product’s qualities of performance that the seller assures the buyer are true. What is this?  A Warranty

 What is the Warranty of Merchantability? A product is supposed to do what it is made to do. All products contain implied warranties, and some also have written warranties.

If the product fails to live up to the standards specified, the warranty usually states what the seller will do as a remedy, such as return the purchase price or repair the product at not extra charge.

 Contracts that are missing one or more essential elements are considered what?  VOID!!

 What does it mean to be solvent? Insolvent? Find this info in your textbook.

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