business 5/9 (contracts)

contract

agreement enforceable by law

• voluntary

• don’t have to be in writing, but important contracts should be ($, complexity)

• sign, read, understand

• a deal is a deal

six elements of a contract

1. offer: a proposal by one party (offeror) to another party (offeree) demonstrating a willingness to enter into a contract, must be a serious offer!

2. acceptance (unconditional): decision by the offeree to take the proposal of the offeror

3. genuine agreement (both parties know what they’re getting and paying): the deal is true, sincere, and both parties have a meeting of the minds

4. consideration (courts don’t care if it’s a “fair deal”): both parties must receive a benefit under the contract

5. legality: the bargain may not involve an illegal act or the courts will determine it is unenforceable

6. capacity: parties to a contract must have mental and maturity development to voluntarily bargain and enter into the contract with another person (competent)

breach of contract

when a party fails to do what she agreed to do, does not honor the agreement

void contract

an agreement that has no legal effect, if the agreement is missing one of the six elements, neither party can sue in court

voidable contract

an agreement that is cancellable by one of the parties at his/her option

unenforceable contract

agreement that is valid, but which a court will not enforce because of a law

express contract

agreement in stated in writing (written contract) or speaking (oral contract)

implied contract

agreement from actions of the parties

promissory estoppel

liability when a person takes action based on the reasonable reliance on a promise of another party even if a contract does not exist (equitable remedy)

quantum meruit

equitable remedy when a contract does not exist, if a party knows and allows someone to do something that will benefit that party then the law may make the party pay for it even if a contract doesn’t exist

elements of an offer

serious intention, definite, communicated to another party or parties, must have all the material or important terms

elements of an acceptance

unconditional agreement to the terms proposed in an offer, can’t change terms or you are making a counter offer (negotiating)

termination of an offer

point in time when an offer can no longer be accepted

reasons for termination

• revocation: offeror withdraws the offer before someone accepts it

• rejection: offeree turns the offer down

• counteroffer: offeree changes the terms of an offer or proposes a new deal

• expiration of time: if offer had a deadline and it passes or by cirumstances it cannot be performed

• death or insanity: if offeror dies or is incapacitated before acceptance

consideration

exchange of benefits between the contracting parties (money, property, services, a future promise, promise not to do something-forbearance e.g. right to sue)

capacity

legal ability to enter into a contract, conditions that prevent a person from knowingly and voluntarily entering into a contract are: mental impairment, minors (unless it regards necessities like food, shelter, clothing), intoxication, duress

capacity

legal ability to enter into a c