1. Chapter 5
FORMS OF CONTRACTS

2. Capacity Must be able to contract for yourself Can not Minors
Mentally Impaired
Sometimes “ Intoxicated”

3. Social Agreements I promise to take you to lunch!
Legally binding or not?
Which elements are present & which are missing?

4. CHARACTERISTICS OF A Contract PG 110
Valid, Void, Voidable, or Unenforceable
Express or Implied
Bilateral or Unilateral
Oral or Written

5. Offeror & Offerees Offeree – Person to whom the offer is made
Offeror - communicates serious proposal

6. Oral or Written WRITTEN
Some agreements must be in writing to be enforceable.
ORAL
By mouth
Why is it desirable to have contracts in writing?

7. Valid, Void, Voidable, or Unenforceable
Valid – binding
Void – not binding (missing an element)
Voidable – able to cancel contract
Minors
Unenforceable – will not be upheld due to a rule of law.

8. Express or Implied express contract implied contract stated in words
oral or written.
implied contract
Actions of the parties.

9. “I’ll sell you my Ipod for $55”
Bilateral Contracts
A Promise for a promise
Example:
“I’ll sell you my Ipod for $55”
I’ll buy It

10. I’ll give you $50 if you mow my lawn by noon today!
Unilateral Contracts
One Sided
A promise for an action
I’ll give you $50 if you mow my lawn by noon today!

11. First 5 people through the door get a free scarf

12. Example
Herb went to a self-service gas station that requires payment before the attendant will turn on the pumps. He handed the attendant $10, returned to his car, pumped $10 worth of gas, and drove off. Neither party spoke a word, yet an implied contract arose from their actions.

13. Example
“Ill sell you my DVD player for $150,” and you say, “I’ll buy it,”
Bilateral
First 5 people through the door get a free scarf
Unilateral

14. Valid Offers

15. Creating a Valid Offer Must intend to create offer
Terms must be definite & complete
Offer must be communicated to offeree.

16. Offer must appear serious
Test of reasonable person
If joking, angry, or in fear, then no offer is created
Angry – My car is junk, you can have it for $1

17. Definite & Certain Usually offers should identify
Price, subject matter, and quantity
Essential terms must be identified clearly for courts to enforce it.
Avoid using terms that are vague

18. Offer must be communicated to the offeree
A person who is not the intended offeree can not accept the offer.
Must have known about the offer to claim.

19. A Reward Offer Can be made to the general public
Accepted by fulfilling the requirements of the offer.
Ring lost. At Zuma beach in from of the
beach house. Lady’s gold band with 12 small
diamonds. $1,000 reward. Call
Several people searched the beach for the
ring. Sam found it and returned it to the
owner. Sam was entitled to the money.

20. Advertisements Generally not offers but invitations to make negotiate.
Why????
Limited stock available
Advertisements that are offers
Clearly worded to address all receiving the ad.

21. Exceptions to the Rule Ads that contain specific promises
First come, first served
Limited Quantity Available
First 5 people to call
10th caller

22. Invitation or Offer? New Bike, $500.00 to first person that calls.
One Day only 50% off of Lawn Mowers.
Invitation
Subject to stock on hand. MP3 players $30.00.
offer

23. What’s you verdict pg106
Darrow offered to trade his digital camera to Monette in exchange for her camcorder. Schorling, who had a camcorder of the same make and model, overheard the offer and said she would make the swap.
Did a contract result from schorlings
statement? No

24. Assignment Find 10 advertisements.
Tell why each ad is an offer or an invitation.
If you cant find any offers be sure to supply your own example of an ad that is an offer

25. Acceptances
Review: Answer 1,5,6,7,& 8
Section 5-2 notes: ACCEPTANCES

26. Acceptance The acceptance must be made by the offeree
Match the terms in the offer
Be communicated to the offeror

27. Acceptances Acceptance Offer Offeree Offeror
Contracts come into existence only after an acceptance.
Acceptance
Offer
Offeree
Offeror

28. Mirror Image Rule
Terms must match

29. Counteroffer
Any change in terms.
Counteroffer
Offer

30. Methods of Acceptance Face to Face: immediate Letter: when sent
Fax: when sent
Telegram: when sent
Exceptions: if otherwise specified by offeror

31. TERMINATION OF AN OFFER
REVOCATION- Taking back of an offer
REJECTION – refusal of an offer
COUNTEROFFER- change in terms
EXPIRATION OF TIME- must answer within a time limit or pay to hold contract open(option contract)
DEATH OR INSANITY- offer ends if death or insanity before acceptance.

32. Which one is Different? A proposal by one party to another
The legal ability to enter a contract
Mentally incompetent or drugged individuals are excused from contractual responsibility because they lack___________
Offer
Capacity
Answer is #1,

33. Which one is Different? The exchange of things of value
The 2nd parties unqualified willingness to go along with the first parties proposal.
Mr. Benes gave nothing to Vik in exchange for his promise to take out the garbage. (Which element is this lacking?)
1. Consideration 2. acceptance 3. consideration Answer is #2

34. Which one is different?
When a valid offer is met by a valid acceptance it is known as.
An agreement involving fraud, misrepresentation, mistake, or undue influence is lacking which element?
Agreement to sell stolen goods is lacking which element?
1.Genuine agreement, 2. genuine agreement, 3. legality ANSWER = #3

35. Which one is different? True or False
If you don’t satisfy the laws requirement for creating an offer, then you usually don’t have a contract.
To be valid, an offer must indicate an intent to create a legal obligation.
If an offer is made it can be accepted by anyone who learns of it.
1. true, 2. true, 3. false. ANSWER #3

36. Which one is different?
An offer that is missing essential information is __________
An objective legal test used by jurors or judges rather than a subjective test based on what you say you were thinking.
You can buy one of the bikes in my shop for $3,500.
1. incomplete, 2. test of the reasonable person, 3. not complete & clear info, which bike, any bike?? ANSWER #2

37. Which one is different? Would you take $200 for that Labrador puppy?
Information that is communicated without an intent to contract.
When two friends agree to go to the movies.
1. Preliminary negotiations, 2. Preliminary negotiations, 3. social agreement

38. Which one is different?
The right to withdraw an offer at anytime before it is accepted.
When the terms of the offer are changed in any way.
Taking back an offer by the offeror
1.revocation, 2. counteroffer, 3. revocation ANSWER #2

39. Which one is different? “I refuse your offer; here is my proposal.”
When the offeror dies before the offer is accepted the agreement is…
3. Serious, communicated to the offeree, & clear & complete are requirements of _______________
1. terminated, 2. terminated 3. a valid offer ANSWER #3

40. Which one is different? True or False
Offers expire at the time stated in the offer
An offeree who rejects an offer can later accept it if the acceptance occurs within a reasonable time after the rejection.
Advertisements like price tags are not treated as offers but rather invitations to negotiate.
1. true, 2. false, 3. true(option, gave something of value) ANSWER #2

41. Which one is Different? True or False
A contract that amounts to nothing and has no legal effect.
A contract that contains a promise by both parties
“I’ll give you a haircut for $10 if you pay me when we are finished.” “I agree to pay you when you have cut my hair.”
1. void 2. bilateral 3. bilateral ANSWER #3

42. Which one is different? True or False?
When an offer changes the offeror’s terms in important ways, the offeror makes an agreement.
If the offeror is admitted to the hospital for medical examining & tests the offer is terminated.
If the offeror dies before the acceptance is made the offer is terminated.
1. false(counteroffer), 2. false, 3. true ANSWER #3

43. Which one is different?
Which parties action ends the deal, offeror or offeree?
Counteroffer
Rejection
Revocation
1. Offeree. 2. offeree. 3. revocation

44. Which One is Different? Invitation or offer?
New Bike, $ to first person that calls.
One Day only 50% off of Lawn Mowers.
First 30 people through the door get $75 gift card if you spend $200.
1. offer, 2. Invitation, 3. Offer ANSWER #2

45. Which one is different? Offer or not?
Nick asks Kim to go to dinner at the Sunset Restaurant at 7 p.m. on Saturday.
Would you think about selling your fishing boat for $2,000.00?
I’ll trade you my 2000 model car for you 2000 model truck.
1. Social agreement, no contract, 2 preliminary negotiations, not an offer, 3. offer ANSWER #3

46. Reviewing What You Learned
What are the elements of a contract?

47. Reviewing What You Learned Answer
Offer, acceptance, genuine agreement, capacity, consideration, and legality.

48. Reviewing What You Learned
What are the differences among valid, void, voidable, and unenforceable contracts?

49. Reviewing What You Learned Answer
A valid contract is legally binding.
An unenforceable contract will not be upheld generally by the court because of some rule of law.

50. Reviewing What You Learned Answer
A contract that is void has no legal effect and a voidable contract is not void in itself, but may be voided by one or more of the parties if the party so chooses.

51. Reviewing What You Learned
What are the differences between express and implied contracts?

52. Reviewing What You Learned Answer
An express contract involves words, while an implied contract does not.

53. Reviewing What You Learned
What are the differences between unilateral and bilateral contracts?

54. Reviewing What You Learned Answer
A unilateral is a one-sided contract, in which one party makes a promise in exchange for an act. In a bilateral contract, a contract legally comes into existence when promises are exchanged.