1. Business Law Rustemeyer
Chapter 4- Contract Law
Business Law
Rustemeyer

2. Nature of Contract Contract: any agreement enforceable by law
Examples:
Agreeing with your parents to take out the trash?
An advertisement in a newspaper offering a reward for a lost skateboard

3. Nature of a Contract: Three Theories
Legal responsibilities = what is done and said between parties
Three theories:
Equity theory:
Will theory:
Formalist theory:

4. Nature of a Contract: Elements of Contracts
Six elements:
Offer
Acceptance
Genuine assent (agreement)
Capacity
Consideration
Legality

5. Nature of a Contract: Elements of Contracts
Offer:
A proposal by one party to another intended to create a legally binding agreement with the other
Offer must be communicated to the offeree
Essential terms must be compete and definite
Contractual intent must be present:
Jests
Statements made in anger
Preliminary negotiations
Social agreements

6. Nature of a Contract: Elements of Contracts
Acceptance:
The second party’s unqualified willingness to go along with the first party’s proposal
Genuine Assent:
An agreement is true and genuine
“Meeting of the minds”
Ability to be destroyed by fraud, misrepresentation, mistake, duress, or undue influence

7. Nature of a Contract: Elements of Contracts
Capacity:
The legal ability to enter a contract
Law generally assumes everyone has the capacity, can be disputed
Considerations:
The exchange of value
Must be both legally sufficient and bargained for by the receiving party

8. Nature of a Contract: Elements of Contracts
Legality:
Parties are not allowed to enforce contracts that involve illegal acts
Contracts to commit crime
Contracts to commit torts
Contracts made illegal by statutory law

9. Nature of a Contract: Elements of Contracts
I PROMISE TO TAKE YOU ALL OUT TO DINNER THIS WEEKEND. YOU CAN ORDER ANYTHING YOU WANT, AND I WILL PAY FOR IT!

10. Business Law Rustemeyer
Chapter 4- Contract Law
Business Law
Rustemeyer

11. Classes (Characteristics) of Contracts
Characteristics include:
Valid, Void, Voidable, Unenforceable
Expressed or Implied
Bilateral or Unilateral
Oral or Written

12. Classes of Contract: Valid, Void, Voidable, Unenforceable
“legally good”, enforceable by law
Meets all six of the required parts of a contract
Example:
Void:
Having or containing no legal effect
Missing at least one of the elements required

13. Classes of Contract: Valid, Void, Voidable, Unenforceable
Having a legal reason to void the contract
Contract is not void itself, but can be by one or more of the parties
Example: Contract between minors
Unenforceable:
Something the court will not uphold due to rule of law
Generally dealing with Statute of Limitations

14. Check your understanding
If a contract is ________, it has no legal effect on either party. However, if a contract is _________, at least one of the parties involved has the legal ability to breach the contract.

15. Check your understanding
If a contract is void, it has no legal effect on either party. However, if a contract is voidable, at least one of the parties involved has the legal ability to breach the contract.

16. Classes of Contract: Expressed or Implied
A statement that may be oral or written
Implied:
A contract that comes about from the actions of the other parties
Example: Herb Schneider went to a self-service gas station that requires payment before the attendant will turn on the pumps. He handed the attendant $10, pumped $10 worth of gas into his tank, and drove off. Neither party spoke a single word, yet an implied contract arose from their actions.

17. Check your understanding
Which of the following statements is NOT true?
Some contracts may be implied from conduct
Certain contracts are enforceable only if they are written and signed
Most contracts are enforceable even if there is no writing
Contracts that are unenforceable are illegal

18. Check your understanding
Which of the following statements is NOT true?
Some contracts may be implied from conduct
Certain contracts are enforceable only if they are written and signed
Most contracts are enforceable even if there is no writing
Contracts that are unenforceable are illegal

19. Classes of Contract: Bilateral or Unilateral
A contract that contains two promises
One party promises to do something in exchange for the other party to do something else
Most common form of contracts
Unilateral:
A promise by only one person to do something
Only happens if and when the other party performs some act
Example:

20. Classes of Contract: Oral or Written
Created by word of mouth
Only enforceable if a legal remedy is offered if they are breached by either party
Unenforceable if falls under the Statute of Frauds
Written:
Created by formal written document, assuring that both parties know the exact terms of the contract
Providing proof of agreement
Statute of Frauds

21. Business Law Rustemeyer
Tuesday, December 12, 2017
Business Law
Rustemeyer

22. Review: How many elements to contracts are there?
Identify the different classifications of a contract?
Can a contract be unenforceable and illegal?
What is the age of majority?

23. Lesson Goals: Students will be able to: Explain the Statute of Frauds
Provide examples of all classifications of contracts.

24. Statute of Frauds Basis of most modern laws
Requires certain promises must be in writing in order to be enforceable
Marriage
Transfer of land ownership
Contracts that cannot be filled within 1 year

25. Check your understanding
Contracts within the statue of frauds might include
Contracts to buy and sell goods for a price of $300 or less
Contracts requiring less than a year to complete
All of these answers are correct
Promises to pay the debt of another person

26. Check your understanding
Contracts within the statue of frauds might include
Contracts to buy and sell goods for a price of $300 or less
Contracts requiring less than a year to complete
All of these answers are correct
Promises to pay the debt of another person

27. Assignment:
1- What are the differences among valid, void, voidable, and unenforceable contracts? Provide an example of each.
2- What are the differences between express and implied contracts?
3- Provide examples of bilateral and unilateral contracts.