unit 3 law

contract

enforceable agreements between parties; promise enforceable by law; agreement

agreement

any meeting resulting in a mutual decision to do or not to do something; valid offer

categories of contracts

1. written vs oral

2. bilateral vs unilateral

3. express vs implied vs quasi

4. valid, void, voidable, unenforceable

written vs oral contracts

even if an agreement is still written/oral they can still be enforced; some contracts MUST be written to be enforceable

bilateral vs unilateral

bilateral- majority of contracts; 2 promises and 2 performances

unilateral- 1 promise followed by 1 performance that triggers a 2nd performance from party making the offer

express vs implied vs quasi

express- when parties intentionally agree on promises/performances

implied- agreement is reached by actions rather than words

quasi- no express/implied; 1 party suffers losses as a result of other party’s unjust enrichment

other types of contracts

valid- when contract has required elements

void- when agreement lacks elements / hasn’t been formed properly

voidable- when law gives parties rights to cancel valid contract

unenforceable- valid, but subject to legal defense

state common law

governs contracts for services / real estate

state statutory law

contracts for goods or products

hybrid contracts

contracts involving terms for goods AND services

how to determine law governing hybrid contracts

1. allocation of price in contract

2. uniqueness of services

digital contracts

digital agreement; signed, concluded, transferred via electronic device

elements of contract transactions

formation, enforceability, performance

formation

parties must reach mutual agreement on terms AND all formation elements are met

enforceability

contract meets legal requirements necessary to enforce terms

performace

contract governs parties performance of terms in agreement; provides compensation if one fails to perform

elements of a contract

offer/acceptance, consideration, capacity, legality

what is mutual assent

the offer/acceptance stage of a contract

criteria for contract to be valid

1. clear

2. serious

3. communicated

mutual assent

underlying requirement for a contract; parties must reach an agreement using offer/acceptance and assent must be genuine

offer

promise to do/not to do an activity in exchange for something

meeting of the minds

all parties involved have a clear understanding of the contract and have agreed to certain promises/obligations

assent

conscious approval or confirmation of facts

clear

language must be understandable so each party knows what is being offered

seriousness

must have serious, objective intent when making an offer; terms must be reasonably certain

objective intent

offeror must generally have serious intention to become bound by offer; terms must be reasonably certain

communicated

examine language of offer and actions of parties; determine how a reasonable person would interpret the language

ads as an offer

most appearing in media, windows, or displays are NOT offers; consumer makes an offer to seller to buy at a specified price

2 exceptions allowing for an ad to be considered a unilateral contract offer

1. offers specific number of products at certain price

2. seller prescribes a specific manner that the buyer must use to be accepted

acceptance

offeree’s expression of agreement to the terms of the offer

master of the offer

offeror can terminate, modify, or prescribe method of acceptance up until offer has been accepted by offeree

how to terminate an offer

revocation, rejection, counteroffer

revocation

offeror revokes offer prior to acceptance

rejection

offeree rejects offer

counteroffer

offeree rejects original offer and proposes a new offer with different terms

operation of law

contract can be terminated if certain events happen; lapse of time, death or incapacity of either party, destruction of contracts subject matter, or supervening illegality

In which of the following circumstances would ABC Corporation, a manufacturer of toasters, have made a legal contractual offer through an advertisement?

Question 1 options:

A	ABC runs a television advertisement which features their toasters and makes the claim that ABC has the cheapest products on the market.
B	ABC offers to sell a special toaster design, of which only 1,000 units are available, for $100 each.
C	ABC runs a radio advertisement which states that "ABC toasters can now be purchased for the new low price of $50."
D	All of the situations involve circumstances where ABC has made a legal contractual offer through an advertisement.

B

Bill, the president of Boomer State Bank, call's Mark and offers to hire him to do consulting work for the bank at a rate of $150/hour for six months beginning on May 3. Mark says, " I accept." What type of contract is formed between the parties?

Question 2 options:

A	A unilateral contract
B	An option contract
C	A bilateral contract
D	No contract is formed

C

Which of the following stands for the proposition that a contract must involve both sides receiving and giving up something of legal value?

Question 3 options:

A	Capacity
B	Legality
C	Consideration
D	Offer and acceptance

C

Alexander was dissatisfied with his salary and wanted a bonus based on the massive amount of money he made GiantCo, but they turned down his request and paid him only one dollar more than his base salary because he had signed an employment contract which called for him to give up “all rights to inventions in consideration of $1.” Bill thinks this is unfair and has sued. What will be the likely court result?

Question 4 options:

A	Alexander wins because $1 is inadequate consideration for $10 billion in profits.
B	Alexander wins because there was no mutual assent in the contract.
C	GiantCo wins because the $1 agreement for the rights to inventions was past consideration and thus not enforceable.
D	GiantCo wins because this was a bargained-for exchange and consideration need not be of equal value.

D

Which of the following is an example of the preexisting duty rule?

Question 5 options:

A	Kristi was sitting at a bus stop when she saw Tim absent-mindedly walking into traffic. She warned Tim, and he stepped back just in time. Tim offered Kristi $1,000 in consideration.
B	Aubrey entered into an agreement with Ping in which Aubrey would deliver the computers that Ping made in consideration of $25 per delivery.
C	Deputy Kelly entered into a written agreement with Babe in which Kelly agreed to find the person who stole Babe's skateboard in consideration of $100.
D	All of the hypotheticals are examples of the preexisting duty rule.

D

To be valid, offers must be:

Question 6 options:

A	open, fair and objective.
B	clear, serious, and communicated.
C	definite, unequivocal, and standard.
D	clear, negotiated, and manifested.

B

enforceability

ability of a properly formed contract to be enforceable by law

what must a contract have to be enforceable

mutual assent, genuine assent

genuine assent

knowing, voluntary, and mutual approval of terms of a contract by each party

when does a lack of genuine assent occur

cases of:

1. misrepresentation

2. fraudulent misrepresentation

3. duress

4. undue influence

5. unconscionability

misrepresentation

one party in agreement makes a promise/representation of material fact that is not true; basis for avoiding contract