Contracts
Chapter 5
• Identifying a contract’s elements will help you manage
your affairs in an intelligent and effective manner
Why you need to know
• Describe any contracts you may have entered in the past
month?
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Between you and friend
Between you and your parents
Between you and sibling
Between you and a store
Between you and a credit card company
Between you and a phone company
Intro to Contracts
• Equity theory
• Will theory
• Formalist theory
Three theories
• Offer
• Acceptance
• Genuine Agreement
• Consideration
• Capacity
• Legality
Six Elements
Figure 5.1
• Valid, void, voidable, or unenforceable
• Legal, missing elements, legal but able to be voided, law
• Express or Implied
• Stated in words, actions of parties
• Bilateral or Unilateral
• Two sided promise, one sided promise
• Oral or Written
• Word of mouth, in writing
Characteristics
• What if all contracts had to be in writing to be
enforceable?
What if?
• Sarah paid Isabel $50 to hack into Mrs. Wojcik’s
computer files for a copy of the upcoming final exam, but
Isabel gave Sarah a copy of the pretest instead. Is this
contract valid, void, voidable, or unenforceable?
POP QUIZ!!! - QUESTION
• Sarah paid Isabel $50 to hack into Mrs. Wojcik’s
computer files for a copy of the upcoming final exam, but
Isabel gave Sarah a copy of the pretest instead. Is this
contract valid, void, voidable, or unenforceable?
POP QUIZ!!! - ANSWER
• Serious intent
• Invitations to negotiate (page 114, example 3)
• Definiteness and certainty
• “fair share”, “reasonable”, “some”
• Communications to the offeree
• Example 5 page 116
Requirements of an Offer
• Unconditional Acceptance
• The mirror image rule
• Counteroffer (change in roles)
• Uniform Commercial Code (UCC)
• Non merchant
• Merchant
• No crucial difference
• No objection
• Limited acceptance in original
Requirements of
Acceptance
• Methods of Acceptance
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Time
Implied by past practice
Stated in offer
By action
• See example 7 on page 119
Requirements of
Acceptance
• Revocation
• Taken back
• Rejection
• Refusal
• Counteroffer
• Ends first offer and puts another on the “table”
• Expiration of Time
• Set in offer
• Death or Insanity
• Only an offer, not an contract
Termination of an Offer
• Pair up
• Write down an offer on a sheet of paper that does not
meet all three requirements.
Write an offer