1. Essentials of the legal environment today, 5e
Roger leroy miller
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2. THE Formation of traditional and e-contracts
Chapter 12
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3. Learning Objectives
What are the four basic elements necessary to the formation of a valid contract?
What is the difference between express and implied contracts?
What are the elements necessary for an effective acceptance?
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4. LEARNING OBJECTIVES (CONT’D)
How do shrink-wrap and click-on agreements differ from other contracts? How have traditional laws been applied to these agreements?
Under what circumstances will a covenant not to compete be enforced? When will such covenants not be enforced?
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5. Introduction
Contract law reflects our social values, interests, and expectations at a given point in time.
Distinguishes between “moral” promises which are not legally binding, and promises that are legally binding.
Common law governs all contracts (such as services, real estate, employment) except when modified by statutory law such as the UCC.
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6. An Overview of Contract Law
A contract is “a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.”
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7. An overview of contract law
Sources of Contract Law
Common law governs all contracts except when it has been modified or replaced by statutory law, such as the UCC or by administrative agency regulations.
The Objective Theory of Contracts
Determines intent in contract law
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8. An Overview of Contract Law
Elements of a Valid Contract
A valid, enforceable contract includes the following four elements:
Agreement (Offer and Acceptance)
Consideration
Capacity
Legality
LO-1
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9. An overview of contract law
Defenses to the Enforceability of a Contract
However even if all four elements are present, a contract may be unenforceable based on a defense.
Voluntary consent
Form
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10. Types of Contracts Contract Formation Bilateral contracts
Every contract has at least two parties: the offeror (promisor) and the offeree (promisee).
The contract is formed when the offeror and offeree exchange promises to each other.
Unilateral contracts
The offeror is ‘bargaining’ for performance in exchange for his promise. Contract is formed when the offeree performs.
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11. Types of Contracts Express vs. implied contracts
Express: terms of agreement are set forth either in writing or orally.
Implied: based on conduct
Plaintiff furnished service or property
Plaintiff expected to be compensated and defendant knew or should have known that payment was expected
Defendant had a chance to reject and did not
LO-2
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12. Types of contracts Contract Performance Contract Enforceability
Executed vs. executory contracts
Executed: fully performed by both sides
Executory: at least one of the parties has not performed
Contract Enforceability
Voidable contracts
Unenforceable contracts
Void contracts
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13. Exhibit 12.1
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14. agreement
A mutual understanding or meeting of the minds between two or more individuals regarding the terms of a contract.
Requirements of the Offer
The offeror must have a serious intention to become bound by the offer.
The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract.
The offer must be communicated to the offeree.
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15. agreement Intention Definiteness of terms Communication
Identification of the parties
Identification of the object or subject matter
Consideration to be paid
Time of payment, delivery, or performance
Communication
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16. agreement Termination of the Offer
Termination by action of the parties
Revocation
Rejection
Counteroffer
Termination by operation of law
Lapse of time
Destruction of the specific subject matter of the offer
Death or incompetence of the offeror or offeree
Supervening illegality of proposed contract
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17. Agreement Acceptance Shows agreement to the terms of an offer
Unequivocal acceptance
Communication of acceptance
Mode and timeliness of acceptance
The mailbox rule
Authorized means of acceptance
Substitute method of acceptance
LO-3
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18. E-contracts A contract that is formed electronically Online Offers
Provisions to include
Acceptance of terms
Payment
Return policy
Disclaimer
Limitation on remedies
Privacy policy
Dispute resolution
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19. E-contracts Online Acceptances Dispute-settlement provisions
Forum-selection clause – location in which contract disputes will be resolved
Choice-of-law clause – specifies any dispute will be settled according to the law of a particular jurisdiction
Online Acceptances
Click-on agreements
Shrink-wrap agreements
Browse-wrap terms
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20. Exhibit 12.2
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21. E-contracts E-Signature Technologies
Federal Law on E-Signatures and E-Documents
Electronic Signatures in Global and National Commerce Act (E-SIGN Act)
The Uniform Electronic Transactions Avt (UETA)
Scope and applicability
Signatures on electronic records
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22. consideration Elements of Consideration Legally sufficient value
A promise to do something that one has no prior legal duty to do
The performance of an action that one is otherwise not obligated to undertake
The refraining from an action that one has a legal right to undertake; forbearance
Bargained-for exchange
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23. consideration Agreements That Lack Consideration
Preexisting duty – meant to prevent extortion and the so-called holdup game
Past consideration – an act that has already taken place at the time a contract is made and that ordinarily, by itself, cannot be consideration for a later promise to pay for the act
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24. Contractual capacity
Legal ability to enter into a contractual relationship
Minors – age of majority for contractual purposes = 18 years
Intoxication – contract entered into by intoxicated person can be voidable or valid
Mental Incompetence – contracts can be void, voidable, or valid
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25. legality Contracts Contrary to Statute
Gambling
Licensing statutes
Contracts Contrary to Public Policy
Contracts in restraint of trade
Covenants not to compete and the sale of an ongoing business
Covenants not to compete in employment contracts
Enforcement problems
LO-5
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26. legality Unconscionable contracts or clauses Exculpatory clauses
A contract or clause that is void on the basis of public policy because one party was forced to accept terms that are unfairly burdensome and that unfairly benefit the stronger party.
Exculpatory clauses
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.
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27. form
A contract that is otherwise valid may be unenforceable if it is not in the proper form.
Statute of Frauds – a state statute under which certain types of contracts must be in writing or in an electronic record to be enforceable
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