Business Law Chapter 9

Mutual Assent

- A "meeting of the minds" or a common understanding about the offer and acceptance

Bilateral Contract

- A contract formed by the exchange of promises - the offeror's promise is exchanged for the offeree's promise - The promises result in an offer and acceptance - No act of performance is necessary - Example: Jane promises to pay Mary $10,000 if Mary promises to repair Jane's broken windshield

Equity

- A doctrine that permits judges to make decisions based on fairness, equality, moral rights, and natural law - There is no right to a jury trial in an equitable action

Elements of a Contract

- Agreement - Consideration - Contractual Capacity - Lawful Object

Implied-in-fact Contract

- Agreement inferred by parties' conduct

Contract

- An agreement voluntarily entered into by parties which creates obligations enforceable by law - Terms of the contract become private law between the parties

Restatement of the Law of Contracts

- Compilation of model contract law principles drafted by legal scholars that is NOT legally binding

Uniform Commercial Code (UCC)

- Comprehensive statutory scheme that includes laws that cover aspects of commercial transactions

Void Contract

- Contract has no legal effect - Neither party is obligated to perform - Neither party can enforce the contract

Common law of contracts

- Contract law developed primarily by state courts

Valid Contract

- Contract that meets all the essential elements to establish a contract - Enforceable by at least 1 of the parties

Sources of law for E-Contracts

- Courts apply traditional contract rules - State and federal statutes also apply

"Private Law"

- Courts respect the "private law" established by the parties and in matters concerning the enforceability of the contract always strive to honor the contract the parties intended to enter into - To do this courts will look to the OBJECTIVE INTENT OF THE PARTIES

Objective Intent

- Determined and judged by the reasonable person standard - Words and conduct - Surrounding circumstances - Subjective intent is irrelevant

Express Contract

- Expressed in writing or verbally

Executed Contract

- Fully performed on both sides - A completed contract

Example of Consideration

- If A promises B movie tickets for B's promise to mow his lawn, the movie tickets would be the consideration for the promise - B's efforts at mowing the lawn would also be consideration

Example of Contractual Capacity

- Jane, a 12 year old and her mentally deranged grandmother Mary, do not have legal capacity because each lacks the ability to understand the nature and consequences of her actions

Unenforceable Contract

- Legal defense to the enforcement of the contract - Parties may voluntarily perform

Consideration "bargained for"

- Means the parties agreed to the exchange BEFORE the exchange occurred - Example: Without asking Mary, Jane repairs Mary's broken windshield window. Jane asks Mary's payment and Mary pays. Afterwards, Mary sues Jane to get her money back. Who wins?

Implied-in-law Contract

- No actual contract - Court imposes agreement to avoid unjust enrichment

Jane has a green 1999 Toyota Prius and a green 2012 Toyota Prius. Jane offers to sell her green 1999 Toyota Prius to Mary for $15,000 and Mary accepts Jane's offer but thinks she is buying the 2012 Prius= Agreement?

- No, because the parties lacked mutual assent, there was no meeting of the minds

Executory Contract

- Not fully performed by either or both sides

Agreement

- Offer by offeror and acceptance by offeree based on their mutual assent about the terms of the offer - Example: Jane offers to sell her green Honda to Mary for $15,000 and Mary accepts Jane's offer by paying Jane $15,000= Agreement

Voidable Contract

- One or both parties can avoid contractual obligations - If a contract is avoided, both parties are released from their contractual obligations

Contractual Capacity

- Parties must have the legal capacity to enter into a contract in order for a contract to be enforceable against them - the ability of an individual to enter into a legally binding contract - Can be affected by age, mental capacity, mental illness - For example: minors or persons adjudged to be insane do not have contractual capacity

Uniform Computer Information Transactions (UCIT)

- Proposed law which seeks to create clear and uniform rules to govern such areas as software licensing, online access, and other transactions in computer information - Intended to bring the same uniformity and certainty to the rules that apply to information technology transaction as the UCC does for the sale of goods

Consideration

- The bargained-for exchange of something of value in return for something of value - Essentially, one party exchanges a promise or service (things of value) for a promise or service of the other party

Unilateral Contract

- The offeror's offer can be accepted only by the performance of an act by the offeree - Example: Jane promises to pay Mary $1,000 if Mary repairs Jane's broken windshield. Jane's offer is not accepted until Mary actually repairs the windshield - An offer to create a unilateral contract can be revoked (cancelled) anytime before the offeree has begun performance BUT usually not after performance has begun

Offeree

- The party to whom an offer is made

Offeror

- The party who makes an offer to enter into a contract

Lawful Object

- The subject matter of a contract must be legal - A contract to accomplish something illegal or against public policy is void - Example: Jane promises Mary $10,000 if Mary promises to kill Jim= No contract

Who are the parties to a contract?

Every contract involves at least 2 parties - Offeror - Offeree

Genuineness of Assent

Lacking if consent is obtained by: - Duress - Undue influence - Fraud