VALID CONTRACT Introduction to Business & Marketing Contract Contract: “legally enforceable agreement between two or more parties.” Contracts can be: Written Verbal Handshake Four Elements Of A Valid Contract Four Elements: 1. Agreement – initial step in forming a contract 2. Consideration – something of value exchanged by each party 3. Capacity- having the legal and mental ability to enter into a binding contract 4. Legality – subject matter of the contract must not be against the law Four Elements Written v. Unwritten Contract Written Contract: Formal, easier to use as evidence Clearly highlights guidelines, conditions, and infractions of contract Must be signed by all parties to become valid Unwritten Contract: Informal, becomes “my word v. your word” Conditions are vague; speculation Only becomes valid through recording or video evidence Examples Of Contracts Lease – Property borrowed in exchange for money. Payments made monthly – failure to pay = fines & loss of property. Credit Card – Agreement between you & the credit card company. Minimum payment will be noted on bill. Employment Agreement – Agreement between employer & employee. Include salary, hours, dress code, and infractions resulting in disciplinary actions. Purchase Agreement (or receipt) – Agreement between company & customer. Proof of a purchase and return policy. Sample Lease Agreement Sample Credit Card Statement Sample Employment Agreement Sample Purchase Agreement Violations of Contracts Lawsuits Eviction Fines or enforcement of payment Removal from company or workplace Jail time Scenarios Nike Employment Agreement states that employees must wear Nike apparel at all times. However, Eric shows up wearing Adidas shoes. What could happen? Part of the Employment Agreement states that all teachers must be at work by 8:45am. However, Mr. T showed up at 9:08am this entire week. What could happen to him? The Wright family signed an apartment Lease that requires $1800 rent due on the 5th every month. Mr. Wright has been late paying his rent for the past 2 months. If he is late for the 3rd month, what could happen? Deena received a Credit Card Statement showing a $50 payment due by April 30th. If it is not paid by then, what is the punishment? Class Activity Complete the Matching Activity Answer the following questions: 1. What is considered a valid contract? 2. What are the requirements of a valid contract? 3. How can a valid contract be enforced?