Business Law II: Elements of a Contract
Capacity
Ability to enter into a contract
Legality
A contract is NOT valid if
one of its terms breaks the
law
Statute of Fraud
A state law that requires
certain contracts to be in
writing.
Capacity
1. According to the law, several types of people may have the right to disaffirm a contract.
People with Mental
Impairments
Mental impairment
could mean:
1.
2.
3.
Who determines if
someone is mentally
impaired?
What happens to a
contract of a mentally
impaired person who
cannot take care of
themselves?
Minors
Minor:
Minors can get out of
contracts due to:
1.
2.
3.
4.
Age of majority:
Intoxicated Persons
People under the
influence of
___________ and
_____________ can
sometime get out
of contract
Minors who claim to
be adults are
committing:_________
1.
2.
3.
What needs to
have occurred for
an intoxicated
person to get out of
a contract?
Emancipated Minor:
Can a mentally
impaired person have
a valid contract?
Other Limits on
Capacity
This decision is
made by who?
The law makes
exceptions when
contracts involved
necessary things such
as:
1.
2.
3.
4.
5.
Who decided if items
are necessary?
Rights and Duties of Minors
Define DisaffirmReturning Goods
What must a minor do
when they disaffirm a
contract dealing with
goods they purchased?
Disaffirm
Can a minor only disaffirm
part of a contract?
Can minors get out of
contracts with other
minors?
Can an adult get out of a
contract with a minor
simply because the other
party is a minor?
Exceptions to the general
rule
What is something required
by law that a minor cannot
get out of?
Minors as Drivers
Ratification
Define Ratification-
How can a contract be
ratified?
How does a minor ratify a
contract?
Minors as students
Why do minors have
different right at school vs.
outside of school?
The Rights and Duties of Parents and Guardians
1. Parents have the right to…
2. Parents have the right to…
3. Adoptive parent have…
Parens Patriae Doctrine:
If a minor becomes emancipated, what happens to the contract?
Name the two types of guardians that can be appointed by the parents?
Legality
1. Illegality can destroy an otherwise __________________ contract.
2. If a contract cannot be _________________ into separate promises and different acts then
anything __________________ within the contract makes the entire contract
_________________________. The whole contract is then declared _________________.
3. In Pari Delicto-
Agreements that Break Statutes
Civil and Criminal Statutes
Usury Statutes
Gambling Statutes
Sunday Statutes
Licensing Statutes
Agreement Contrary to Public Policy
Agreements That Unreasonable Restraint Trade
Agreements Not to Compete
Agreements for Price Fixing
Agreements to defend Competitive Bidding
Agreements to Obstruct Justice
Agreements Inducing Breach of Duty or Fraud
Agreements to give up the Right to Litigate or
Arbitrate
Agreements Interfering with Marriage
Statute Of Fraud
Statute of Fraud- Law which states certain contracts must be in writing
1. Why do you think certain contracts should be in writing?
Elements of a Written Contract
1.
2.
3.
4.
Letter
Sales slip
An invoice
Several words placed on a
check
Requirements:
-
Must identify: the _______, ___________, ___________, ______________, __________ and __________,
and ____________ of the parties.
-
It should also contain the ______________ of the party who may be charged.
1. Courts will enforce changes to terms that are ______________________________.
2. What do the courts assume about handwritten changes to a contract?
3. Words, phrases, and sentences should be clean and ___________________________.
Contracts that must be in writing
Contract to pay someone else’s debt
Contracts to pay debts of a person who had
died
Contracts requiring more than a year to perform
Contracts in consideration of marriage
Contracts for the sale of goods
Contracts to sell property
Parol Evidence Rule
a. Parolb. Evidence2. Why should a contract contain everything that was agreed upon in writing?
3. Parol Evidence rule says what type of statements cannot be presented in court to change or
add to the terms of the contract?
4. Parol Evidence exceptions:
Best Evidence Rule
5.
The Best Evidence rules states that the ___________________ written agreement be used as
___________________ in court.
6. Why won’t a court accept copies of the agreement?
Real World Rules
*When you are asked to sign an order blank, sales slip, or other printed form, such document may
contain small print on front or reverse side.
7. The words are often ________________ to read and the _________________________ may be hard
to understand.
*Small print is often not written in your favor.
8. Real World Rules Guidelines: