Section 4.1
Agreements and
Contracts
Section 4.1 Agreements and Contracts
A contract is any agreement enforceable
by law.
Section 4.1 Agreements and Contracts
A contract requires six elements:
offer
acceptance
capacity
consideration
legality
genuine agreement
Section 4.1 Agreements and Contracts
An offer is a proposal to do something or
pay an amount to another party.
Acceptance is when a party agrees to an
offer made by another party.
Section 4.1 Agreements and Contracts
Capacity is the legal ability to enter into a
contract.
Consideration is something of value
offered or exchanged.
Section 4.1 Agreements and Contracts
Legality means that a contract may not
involve breaking the law.
Genuine agreement means that a legal
offer is met with a legal acceptance.
Section 4.1 Agreements and Contracts
Contracts can be valid, void, voidable, or
unenforceable.
A contract is valid if it is legally good.
A contract is void if it lacks one or more of
the elements of a contract.
Section 4.1 Agreements and Contracts
A contract is voidable if either party can
cancel the contract for a legal reason.
A contract is unenforceable if it will not
hold up in court.
Section 4.1 Agreements and Contracts
A contract can be express or implied.
An express contract is a contract stated in
words and may be either written or oral.
An implied contract comes about from the
actions of the parties.
Section 4.1 Agreements and Contracts
Contracts may be unilateral or bilateral.
A bilateral contract is when both parties
promise to do something.
A unilateral contract is when one party
promises to do something only if the other
party does something.
Section 4.2
How a Contract Begins
Section 4.2 How a Contract Begins
To be valid, an offer must be:
made
seriously
definite and
certain
communicated
to the offeree
Section 4.2 How a Contract Begins
An offer must be made with serious intent
to enter into a legal obligation.
Offering to sell your car to someone for
$5.00 as a joke is not a legally binding offer.
Section 4.2 How a Contract Begins
An offer must be definite and certain.
An offer to buy a friend’s iPod for a
reasonable amount at some time in the
future does not constitute a valid offer.
Section 4.2 How a Contract Begins
An offer must be communicated to the
offeree, the person the offer is made to.
This can be done in person, or by phone,
letter, e-mail, text message, or any other
means of communication.
Section 4.2 How a Contract Begins
Acceptance of an offer by an offeree has
two basic requirements:
it must be unconditional
it must be communicated to the offeror
Section 4.2 How a Contract Begins
To be unconditional, an acceptance must
follow the mirror image rule, which means
it must match the terms of the offer.
Section 4.2 How a Contract Begins
Like an offer, an acceptance must be
communicated to the offeror.
At the time the acceptance takes place, the
contract comes into existence.
Section 4.2 How a Contract Begins
An offer can be terminated, rather than
accepted, in five ways:
revocation
counteroffer
death or insanity
rejection
expiration of time
Section 4.2 How a Contract Begins
Revocation is when the offeror takes back
the offer.
Rejection is when the offeree refuses the
offer.
Section 4.2 How a Contract Begins
A counteroffer is when the offeree
changes the terms of the offer.
The offer is terminated and the offeror can
accept or reject the counteroffer.
Section 4.2 How a Contract Begins
If the offeror sets a time limit on an offer,
such as one week, it must be accepted by
then or the offer is terminated.
An offer is also terminated if the offeror dies
or becomes insane.