Acceptance
Benefits
Bilateral
Capacity
Consideration
Counteroffer
Death
Detriments
Duress
Economic Duress
Emancipation
Express
Firm Offer
Forbearance
Fraudulent
Misrepresentation
Genuine Agreement
(Assent)
Illusory Promises
Implied
Insanity
Legality
Mentally Incapacitated
Mirror Image Rule
Mutual Mistake (Bilateral
Mistake)
Nominal Consideration
Offer
Offeree
Offeror
Option
2.01 Key Terms
Unqualified willingness by the offeree to go along with the
offer
Something that a party was not previously entitled to
receive
Contains two promises
Legal ability to enter into a contract
Exchange of benefits and detriments by the parties to an
agreements
Any change in the terms of the offer
Offeror dies
Any loss suffered; anything given up
Overcoming a person’s free will by use of force or by
threat of force or bodily harm
Threats to a person’s business or income
severing of the parent-child relationship
Contract statement that may be written or oral
a written offer for goods that states the period of time
during which the offer will stay open
Not doing something that you have the right to do
Party to a contract deliberately makes an untrue
statement of fact
A valid offer has been made by the offeror, and a valid
acceptance has been exercised by the offeree
Clause or wording that allows party to escape from legal
obligation
Contract that comes about from the actions of the parties
Offeror is declared insane
Illegal Contracts
Lacking the ability to understand the consequences of his
or her contractual acts
Terms of the acceptance must match exactly (mirror) the
terms of the offer
Both parties are mistaken about an important fact
Token amount in a written contract where either the
parties cannot or do not wish to state the amount
Proposal by one party to another with intent to create a
legal binding agreement
Offer made to this person
Makes the offer
the offeree gives the offeror something of value in return
for a promise to keep the offer open for a set period of
time
Oral
Past Performance
Price Fixing
Rejection
Restrictive covenant
Revocation
Statute of Frauds
Unconscionable
Undue Influence
Unenforceable contract
Unilateral
Unilateral Mistake
Usury
Valid contract
Void contract
Voidable contract
Written
Created by two or more people speaking to each other
An act that has already been performed cannot be
consideration in a contract.
competitors agree on certain price ranges within which
they will sell their products
Refusal by the offeree
agreement not to compete in a region for a period of time
Taking back of an offer by offeror
Requires that certain contracts be in writing to be
enforceable
So grossly unfair or oppressive that it would shock the
conscience of the court
Unfair and improper persuasive pressure within a
relationship of trust
Contract that court will not uphold, usually because of
some rule of law
Contains a promise by only one person to do something
if, and when, the other party performs a certain act
An error on the part of one of the parties
charging too high of an interest rate
Includes all elements recognized by the courts
Without legal effect
One or more parties can get out of contract for some
legal reason
contract terms are written so that both parties know the
exact terms
BB30_2.01_Notes_Organizer_Understand_Contract_Law
ELEMENTS OF A CONTRACT
1.
2.
3.
4.
5.
6.
All elements MUST be present to be an enforceable contract.
OFFER Requirements of an Offer
•
•
•
Termination of Offer
•
•
•
•
•
•
•
makes the offer
offer made to this person
Options & Firm Offers
•
– the offeree gives the offeror something of
value in return for a promise to keep the offer open for a set period of time
•
– a written offer for goods that states the
period of time during which the offer will stay open
1. No additional consideration is required
2. Maximum period of time set by the UCC –
3. Offeror must be
related goods on a daily basis
who deals in
ACCEPTANCE Rule
4. Terms of the acceptance must match exactly (mirror) the terms of the offer
5. Any change means there is no acceptance (counteroffer)
Methods of Acceptance
•
Acceptance
1. Offer is accepted by offeree through communication of the promise to the
offeror
2. Only requires giving a promise to perform, not performance itself
3. Most offers are bilateral
•
Acceptance
1. Offeror promises something in return for offeree’s performance and
indicates that performance represents acceptance
•
as Acceptance
1. Does not represent acceptance
2. Offeror cannot word offer in a way that silence would be considered
acceptance
GENUINE AGREEMENT (ASSENT) •
Several causes for genuine agreement to be lacking in a contract
1.
2.
3.
4.
5.
Overcoming a person’s free will by use of force or by
threat of force or bodily harm
•
Threats of Illegal Conduct
•
Threats to Report Crimes
•
Threats to Sue
–
- Threats to a person’s business or
income
Unfair and improper persuasive pressure within a
relationship of trust
•
Must be able to prove:
–
–
An error on the part of one of the parties
– Does not affect validity of the contract
– Cannot get out of contract
Both parties are mistaken about an important
fact
–
•
Contract is impossible to perform
•
Contract is void
•
Either party can void contract
•
Contract is valid
•
Parties are expected to know the law
–
–
Innocent statement of supposed
fact that turns out to be false
– Statement must be one of
– Statement must be
– Statement must be
•
Injured party has the right to rescind (take back) the offer
•
No rights to damages
Party to a contract deliberately makes an
untrue statement of fact
•
Deliberate: Done with or marked by full consciousness of the nature and effects;
intentional
•
Deception: The fact or state of being deceived
•
Gain: To secure as profit or reward
•
In order to prove fraud, you must prove the above 3 definitions
Proving Fraudulent Misrepresentation
–
•
Must be one of fact, not opinion
•
•
Silence – may stay silent about defects except when:
– statement is about material facts
– True statement is made false by subsequent events
– One party knows the other party has made a basic mistaken
assumption
–
•
Statement would cause reasonable person to contract
•
If one party knows the other party would rely on the statement
•
If one party knows the statement is false
•
One party must reasonable rely on statement
•
One party deliberately lies or conceals a material fact
•
One party recklessly makes a false statement of fact, without
knowing whether it is true or false
•
Statement must be intended to induce party to enter into contract
•
Must cause an injury
–
–
–
CAPACITY Minors
•
– not yet reached legal age (age of
majority)
•
NC Age of Majority –
- severing of the parent-child
relationship
–
– court decree
–
– arises from the conduct of the minor and the
parent
•
Parent and minor
•
Minor gets
•
Minor
•
Minor joins
•
Minor
•
Minor takes on
– agreeing to be bound by a contract that could be
avoided
– Contracts made by minors are
disaffirm (or avoid being bound by) contracts
; minors may
Lacking the ability to understand the
consequences of his or her contractual acts
•
•
•
•
Contracts made by mentally incapacitated are usually
involving necessaries.
unless
People under the influence of drugs or
alcohol
•
Intoxication is a voluntary act.
•
Most courts are reluctant to consider contracts entered into by intoxicated
individuals as voidable.
•
Must be so intoxicated that the person did not know they were contracting.
CONSIDERATION •
Requirements of consideration:
– Must involve a
(promise made in return for another promise)
– Must involve
–
must be
legal
Something that a party was not previously entitled to receive
Any loss suffered; anything given up
Not doing something that you have the right to do
Adequacy of Consideration
•
Courts don’t look at adequacy or value of an agreement unless it is
“unconscionable”
•
– So grossly unfair or oppressive that it would shock the conscience of the
court
– So lop-sided that the average person would not agree to terms
•
Token amount in a written contract
where either the parties cannot or do not wish to state the amount
Agreements without Consideration
•
– Gifts have no consideration
– Cannot be enforced
•
– Doesn’t have to be returned
– Donor – Gives the gift
– Donee – Accepts the gift
Clause or wording that allows party to
escape from legal obligation
•
Termination clause
– Illusory – clause to allow termination of contract for any reason
– Not illusory – termination only allowed after a change in defined
circumstances
•
Agreement to purchase all of a specific
producer’s product
•
Agreement to supply all of the needs of a
specific buyer
Output & Requirements contracts are recognized by the courts as having consideration
by implying fair dealing.
Existing Duty
•
Existing Public Duty
–
–
•
Existing Private Duty
–
An act that has already been performed
cannot be consideration in a contract.
Exceptions to Consideration
•
Promises to
– Gift or Pledge for future contribution
•
•
Enforceable as consideration if
Promises covered by the
–
–
•
Promises
•
Promises barred from
•
Rely on what a person said
– Elements:
•
Promise must bring
•
One who gave no consideration must have
on the promise
•
can be avoided only enforcing the
promise
LEGALITY
Illegal Contracts
•
Civil & Criminal
–
•
charging too high of an interest
rate
– State sets a max interest rate
– Interest – fee the borrower pays to the lender for using the money
•
Legal gambling varies from state
to state
•
States require that persons in
certain occupations obtain a license to practice that occupation
•
Doctors, plumbers, barbers, lawyers, funeral directors
•
Agreements that unreasonably
restrain trade
•
Takes away the ability to do business with others
– Agreements
•
- agreement not to
compete in a region for a period of time
•
Only legal for a short period of time and small geographic region
– Agreements for
•
- competitors agree on
certain price ranges within which they will sell their products
– Agreements to eliminate
•
Bid - offer to buy or sell goods or services at a stated price
•
– competitors agree that
one bidder will have low bid for a certain job….low bidder sets bid
higher than would if real competition
– Agreements to
•
Anything that delays or
– Agreements to induce
•
Influencing persons who hold positions of high trust for private gain
– Agreements to
•
Damage, destroy, or discourage good family relationships
Requires that certain contracts be
in writing to be enforceable
– Contracts to buy and sell goods for a price of
– Contracts to buy and sell
– Contracts that require more than
– Promises to
– Promises to give something of value in return for
CHARACTERISTICS OF A CONTRACT
Valid, Void, Voidable, Unenforceable
•
contract - Includes all elements recognized by the
courts
•
•
contract - Without legal effect
Contracts missing one or more elements
•
contract - One or more parties can get out of contract
for some legal reason
•
Contract - Contract that court will not uphold, usually
because of some rule of law
Express or implied
•
- Contract statement that may be written or
oral
•
- Contract that comes about from the actions
of the parties
Bilateral or Unilateral
•
- Contains two promises
– Most contracts are bilateral
•
- Contains a promise by only one person
to do something if, and when, the other party performs a certain act
– Reward offer is most common unilateral contract
Oral or written
•
- Created by two or more people
speaking to each other
•
- contract terms are written so that both
parties know the exact terms
– Provides proof of existence for the contract
– Certain contract are required by the Statute of Frauds to be in writing