Chapter 4.1 Study Guide: Agreements and Contracts Name: Introduction Identify a situation in which you would need a contract, list that situation below: Why do you think a contract is necessary? What needs to occur in order for the parties to come to an agreement? Elements of A Contract Term Offer Acceptance Genuine Agreement Capacity Consideration Legality Definition Characteristics of a Contract Valid, void, voidable, or unenforceable Express or implied Bilateral or unilateral Oral or Written Executed or Executory Term Valid Definition Void Voidable Unenforceable Express Implied Bilateral Unilateral Oral Written Executed Executory Chapter 4.2 Study Guide: How a Contract Begins Review: Elements of A Contract ( Page 88) Offer Acceptance Genuine Agreement Capacity Consideration Legality 1. Define Offeror2. Define OffereeAn offer has 3 basic requirements: 1. 2. 3. Serious Intent 1. An offer must be within the ______________ of entering into a ___________ ___________________. 2. Example of an offer that does not have serious intent: Invitations to Negotiate 1. Invitations to _____________, ________________, or _____________ an offer. 2. Invitations to negotiate are often confused with an __________________. 3. Example: 4. Some advertisements can be seen as an invitation to negotiate when they contain what? 5. Examples of Invitations to Negotiate: Definiteness and Certainty 1. An offer must be definite and certain to be ______________________. Example: A landlord of an apartment with faulty plumbing might agree to pay a share of the cost if the tenant fixes the plumbing. 2. Why would the above scenario not be able to be enforceable? Communication to the Offeree 1. Identify ways in which offers can be communicated: Unconditional Acceptance 1. An acceptance must not _______________ the ___________ of the __________________ offer in any way according to the _____________ ________________ rule. 2. Explain the Mirror Image Rule: 3. Define Counteroffer: 4. When a counteroffer occurs... 5. Identify some exceptions to the Mirror Image Rule: Method of Acceptance 1. A method of acceptance occurs when.... 2. Why do special rules apply when people communicate via letter, telegram, or fax? 3. When is an acceptance that has been sent over long distances effective? Termination of An Offer Name the 5 ways in which an offer can be terminated: 1. 2. 3. 4. 5. Revocation 1. Revocation is the taking back of an offer by the offeror due to what 2 circumstances? a. b. 2. Identify the 2 important rules that govern Revocation: a. b. Rejection 1. Define Rejection: Counteroffer: Ends the first offer 1. No contract comes into existence unless... Expiration of Time: If the offeror sets a time limit for the acceptance of the offer, it must be honored. 1. What is an option contract? Death or Insanity: If the offeror dies or becomes insane before the offer is accepted, the offer comes to an end. 1. Death ends an __________ but does not end a _____________ unless the contract is related to ______________ __________________.