Business Law

describe the formation of contracts

Because a contract arises when an offer is accepted, it is necessary to find that there was an offer and that it was accepted. If either element is missing, there is no contract. An offer does not exist unless the offeror has contrac- tual intent. This intent is lacking if the statement of the person is merely an invitation to negotiate, a statement of intention, or an agreement to agree at a later date. News- paper ads, price quotations, and catalog prices are ordinar- ily merely invitations to negotiate and cannot be accepted. An offer must be definite. If an offer is indefinite, its acceptance will not create a contract because it will be held that the resulting agreement is too vague to enforce. In some cases, an offer that is by itself too indefinite is made definite because some writing or standard is incor- porated by reference and made part of the offer. In some cases the offer is made definite by implying terms that were not stated. In other cases, the indefinite part of the offer is ignored when that part can be divided or separated from the balance of the offer. Assuming that there is in fact an offer that is made with contractual intent and that it is sufficiently definite, it still does not have the legal effect of an offer unless it is communicated to the offeree by or at the direction of the offeror. In some cases, there was an offer but it was termi- nated before it was accepted. By definition, an attempted acceptance made after the offer has been terminated has no effect. The offeror may revoke the ordinary offer at any time. All that is required is the showing of the intent to revoke and the communication of that intent to the offeree. The offeror's power to revoke is barred by the existence of an option contract under common law or a firm offer under the Uniform Commercial Code. An offer is also terminated by the express rejection of the offer or by the making of a counteroffer, by the lapse of the time stated in the offer or of a reasonable time when none is stated, by the death or disability of either party, or by a change of law that makes illegal a contract based on the particular offer. When the offer is accepted, a contract arises. Only the offeree can accept an offer, and the acceptance must be of the offer exactly as made without any qualification or change. Ordinarily, the offeree may accept or reject as the offeree chooses. The acceptance is any manifestation of intent to agree to the terms of the offer. Ordinarily, silence or failure to act does not constitute acceptance. The recipient of unor- dered goods and tickets may dispose of the goods or use the goods without such action constituting an acceptance. An acceptance does not exist until the words or conduct demonstrating assent to the offer is communicated to the offeror. Acceptance by mail takes effect at the time and place when and where the letter is mailed or the fax is transmitted. In an auction sale, the auctioneer asking for bids makes an invitation to negotiate. A person making a bid is making an offer, and the acceptance of the highest bid by the auctioneer is an acceptance of that offer and gives rise to a contract. When the auction sale is without reserve, the auctioneer must accept the highest bid. If the auction is not expressly without reserve, the auctioneer may refuse to accept any of the bids.

unilateral vs bilateral contract

Bilateral=I'll pay you $100 for that dog; one person does something in exchange for something else. Unilateral=I'll pay you $100 if you can find my dog; one person offers something but there is no other side/there is no promise made by the other side to fulfill

What is the difference between common law and statutory law?

Common law is defined as law that has been developed on the basis of preceding rulings by judges. Statutory laws are written laws passed by legislature and government of a country and those which have been accepted by the society.

Define contractual capacity

Contractual capacity is the ability to understand that a contract is being made and to understand its general meaning. However, the fact that a person does not understand the full legal meaning of a contract does not mean that contractual capacity is lacking. Every- one is presumed to have capacity unless it is proven that capacity is lacking or there is status incapacity.1 For Example, Jacqueline, aged 22, entered into a contract with Sunrise Storage Co. but later claimed that it was not binding because she did not understand sev- eral clauses in the printed contract. The contract was binding. No evidence supported her claim that she lacked capacity to contract or to understand its subject. Contractual capac- ity can exist even though a party does not understand every provision of the contract.

Explain how Internet contracts involve the same types of issues as offline contracts

Doing business online for consumers is very similar to doing business through a catalog purchase or by phone. Before placing an order, a buyer is commonly concerned about the reputation of the seller. The basic purchasing principle of caveat emptor still applies: buyer beware! The Internet provides valuable tools to allow a buyer to research the reputation of the seller and its products. Online evaluations of companies and their products can be found at Web sites, such as Consumer Reports (http://www.consumerreports.org), Con- sumers Digest (http://www.consumersdigest.com), or the Better Business Bureau (http:// www.bbb.org). E-consumers may have access to categorized histories of comments by other e-consumers, such as Planet Feedback ratings at http://www.planetfeedback.com. The intellectual property principles set forth in Chapter 9—as well as the contractual principles, the law of sales, and privacy laws you are about to study—all apply to e-commerce transactions. When you are purchasing an item online, you must carefully read all of the terms and conditions set forth on the seller's Web site when assessing whether to make a contemplated purchase. The proposed terms may require that any dis- putes be litigated in a distant state or be resolved through arbitration with restricted rem- edies, or there may be an unsatisfactory return policy, warranty limitations, or limitation of liability. Generally, the Web site terms become the contract of the parties and are legally enforceable. The laws you have studied that prevent deceptive advertising by brick-and-mortar businesses also apply to Internet sites.23 If an in-state site is engaging in false advertising, you may be able to exercise consumer protection rights through your state's attorney gen- eral's office, or you may find some therapeutic relief by reporting the misconduct to the Internet Scambusters site (http://www.scambusters.com). From a seller's perspective, it is exceedingly helpful to have as much information as possible on your potential customers' buying habits. Federal law prohibits the collection of personal information from children without parental consent, and some states restrict the unauthorized collection of personal information. European Union countries have strict laws protecting the privacy of consumers. Sellers intending to collect personal infor- mation should obtain the consent of their customers, make certain that children are excluded, and make sure that the information is stored in a secure environment. Advanced encryption technology has made the use of credit card payments through the Internet very safe. No computer system connected to the Internet is totally secure, however. In the worst-case scenario, credit card issuers will not charge a user for more than the first $50 of unauthorized activity. Internet contracts involve the same types of issues that are addressed in contracts off- line but with certain technology-related nuances. The parties to the e-contracts must still negotiate their obligations in clear and unambiguous language, including such terms as quantity, quality, and price as well as warranties, indemnification responsibilities, limita- tions on liability, and termination procedures. The federal Electronic Signatures in Global and National Commerce Act (E-Sign) and the Uniform Electronic Transactions Act (UETA) mandate parity between paper and electronic contracts. The basic legal rules that govern contracts offline are the very same rules that govern online contracts, and basic civil procedure rules apply. For Example, California buyer Paul Boschetto bought a 1964 Ford Galaxy that had been advertised on eBay to be "in awesome condition" from a Milton, Wisconsin, resident, J. Hansing, for $34,106. On delivery Boschetto discovered that the car had rust, extensive dents, and would not start. His lawsuit against Hansing in U.S. District Court in California was dismissed for lack of personal jurisdiction.24 (The formation of a contract with a nonresident defendant was not, standing alone, sufficient to create personal jurisdiction in California.) Boxes identifying special Internet e-commerce topics are strategically placed through- out these chapters.

True or False: an Advertisement is an example of an offer

False

Explain the federal and state court systems

Federal: The federal district courts are the general trial courts of the federal system. They are courts of original jurisdiction that hear both civil and criminal matters. Criminal cases in federal district courts are those in which the defendant is charged with a violation of federal law (the U.S. Code). In addition to the criminal cases, the types of civil cases that can be brought in federal district courts include (1) civil suits in which the United States is a party, (2) cases between citizens of different states that involve damages of $75,000 or more, and (3) cases that arise under the U.S. Constitution or federal laws and treaties. Federal district courts are organized within each of the states. There are 94 federal districts (each state has at least one federal district and there are 89 federal districts in the United States with the remaining courts found in Puerto Rico, Guam, etc.). Judges and courtrooms are assigned according to the caseload in that geographic area of the state.3 Some states, such as New York and California, have several federal districts because of the population base and the resulting caseload. Figure 2-2 shows the geographic structure of the federal court system, including the appellate circuits. The federal system has additional trial courts with limited jurisdiction, differing from the general jurisdiction of the federal district courts. These courts include, for example, the federal bankruptcy courts, Indian tribal courts, Tax Court, Court of Federal Claims, Court of Veterans Appeals, and the Court of International Trade. The final court in the federal system is the U.S. Supreme Court. The U.S. Supreme Court has appellate jurisdiction over cases that are appealed from the federal courts of appeals as well as from state supreme courts when a constitutional issue is involved in the case or a state court has reversed a federal court ruling. The U.S. Supreme Court does not hear all cases from the federal courts of appeals but has a process called granting a writ of certiorari, which is a preliminary review of those cases appealed to decide whether a case will be heard or allowed to stand as ruled on by the lower courts.5 State: Most states have trial courts of general jurisdiction that may be called superior courts, circuit courts, district courts, or county courts. These courts of general and original jurisdiction usually hear both criminal and civil cases. Cases that do not meet the jurisdic- tional requirements for the federal district courts would be tried in these courts. Figure 2-3 illustrates a sample state court system. Most states also have courts with limited jurisdiction, sometimes referred to as specialty courts. For Example, most states have juvenile courts, or courts with limited jurisdiction over criminal matters that involve defendants who are under the age of 18. Other spe- cialty courts or lesser courts in state systems are probate and family law courts. The highest court in most states is generally known as the state supreme court, but a few states, such as New York, may call their highest court the court of appeals; Maine and Mas- sachusetts, for example, call their highest court the supreme judicial court. State supreme courts primarily have appellate jurisdiction, but some states' courts do have original juris- diction, such as in Arizona, where counties in litigation have their trial at the supreme court level. Most state supreme courts also have a screening process for cases. They are required to hear some cases, such as criminal cases in which the defendant has received the death penalty. A decision of a state supreme court is final except in those circum- stances in which a federal law or treaty or the U.S. Constitution is involved. Cases with these federal subject matter issues can then be appealed to the U.S. Supreme Court.

Distinguish between bilateral and unilateral contracts

If the offeror extends a promise and asks for a promise in return and if the offeree accepts the offer by making the promise, the contract is called a bilateral contract. One promise is given in exchange for another, and each party is bound by the obligation. For Example, when the house painter offers to paint the owner's house for $3,700 and the owner promises to pay $3,700 for the job, there is an exchange of promises, and the agreement gives rise to a bilateral contract. In contrast with a bilateral contract, the offeror may promise to do something or to pay a certain amount of money only when the offeree does an act.13 Examples of where unilateral contracts commonly appear are when a reward is offered, a contest is announced, or changes are made and disseminated in an employee manual. The offeree does not accept the offer by express agreement, but rather by performance.

Explain the reasoning behind quasi-contract recovery

In some cases, a court will impose an obligation even though there is no contract. Such an obligation is called a quasi contract, which is an obligation imposed by law. A quasi contract is not a true contract reflecting all of the elements of a contract set forth previously in this chapter. The court is not seeking to enforce the intentions of the parties contained in an agreement. Rather, when a person or enterprise receives a benefit from another, even in the absence of a promise to pay for the benefit, a court may impose an obligation to pay for the reasonable value of that benefit, to avoid unjust enrichment. The spirit behind the law of unjust enrichment is to apply the law "outside the box" and fill in the cracks where common civil law and statutes fail to achieve justice.15

Explain the difference between intentional mis- representation, negligent misrepresentation, and puffery

Intentional Misrepresentation: Fraud is a generic term embracing all multifarious means that human ingenuity can devise and that are resorted to by one individual to get advantage over another. It is classified in the law as a tort. However, where a party is induced into making a contract by a material misrepresentation of fact, this form of fraudulent activity adversely affects the genuineness of the assent of the innocent party, and this type of fraud is the focus of our discussion in the chapters on contracts. Negligent Misrepresentation: While fraud requires the critical element of a known or recklessly made falsity, a claim of negligent misrepresentation contains similar elements except it is predicated on a negli- gently made false statement. That is, the speaker failed to exercise due care regarding material information communicated to the listener but did not intend to deceive. When the negligent misrepresentation of a material fact that the listener relies on results in harm to the listener, the contract is voidable at the option of the injured party. If fraud is proven, as opposed to misrepresentation, recovery of punitive damages in addition to actual damages can occur. Because it may be difficult to prove the intentional falsity required for fraud, it is common for a lawsuit to allege both a claim of fraud and a claim of negligent misrepresentation. For Example, Marshall Armstrong worked for Fred Collins, owner of Collins Entertainment, Inc., a conglomerate that owns and oper- ates video games. Collins Entertainment's core product, video poker, was hurt by a court ruling that prohibited cash payouts, which adversely affected its business and resulted in a debt of $13 to $20 million to SouthTrust bank. Chief operating officer Armstrong, on his own time, came up with the idea of modifying bingo machines as a new venture. To exploit this idea, Collins agreed to form a corporation called Skillpins Inc., that was unen- cumbered by the SouthTrust debt and to give Armstrong a 10 percent ownership interest. After a period, with some 300 Skillpins machines producing income, Armstrong discov- ered the revenues from the new venture on the debt-laden Collins Entertainment profit and loss statement, not that of Skillpins, Inc. Armstrong's suit for both fraud and inten- tional misrepresentation was successful. In addition to actual damages, he received $1.8 million in punitive damages for fraud.22 Puffery: Fraud is the making of a material misrepresentation (or false statement) of fact with (1) knowledge of its falsity or reckless indifference to its truth, (2) the intent that the listener rely on it, (3) the result that the listener does so rely, and (4) the consequence that the listener is harmed.17 To prove fraud, there must be a material misrepresentation of fact. Such a misrep- resentation is one that is likely to induce a reasonable person to assent to a contract. For Example, Traci Hanson-Suminski purchased a used Honda Civic from Arlington Acura for $10,899. On a test drive with salesperson Mike Dobin, Traci noticed a vibration in the steering wheel and asked if the car had been in an accident. Dobin said, "No, it's fine." The dealer put new tires on the car and Traci bought it. Traci testified that she would not have purchased the car if she had known it had been in an accident. Eight months later when she sought to trade the car for another car, she was shown a Carfax Vehi- cle History Report, which indicated the car had been in an accident. The dealer testified that all its sales associates are trained to respond to questions about vehicle history with "I don't know." It asserted that Dobin's statement was mere puffery. The court found that Dobin's statement was a material misrepresentation of the car's history, inducing the plain- tiff to purchase the car. It rejected outright the dealer's assertion of puffery, which it defined as meaningless superlatives that no reasonable person would take seriously.18

Explain all the ways an offer can be terminated

Offers may be terminated by revocation, coun- teroffer, rejection, lapse of time, death or disability of a party, or subsequent illegality. Ordinarily, an offeror can revoke the offer before it is accepted. If this is done, the offeree cannot create a contract by accepting the revoked offer. For Example, Bank of America (BOA) contended that it had reached a valid settlement agreement on December 17, 2010, with Jonathan Davidoff concerning his lawsuit against BOA seeking damages for slander of credit and breach of contract. At 3:08 P.M. on December 17, 2010, Davidoff revoked his offer to settle the matter. A few minutes later BOA counsel sent by e-mail the settlement agreements signed by the defendants and asked if Mr. Davidoff would "rescind his rejection." Davidoff clearly revoked the settlement offer prior to BOA's delivery of acceptance of the offer and no contract was formed.17 An ordinary offer may be revoked at any time before it is accepted even though the offeror has expressly promised that the offer will be good for a stated period and that period has not yet expired. The fact that the offeror expressly promised to keep the offer open has no effect when no consideration was given for that promise. The offeree rejects the offer when it ignores the original offer and replies with a different offer.20 If the offeree purports to accept an offer but in so doing makes any change to the terms of the offer, such action is a counteroffer that rejects the original offer. An "accep- tance" that changes the terms of the offer or adds new terms is a rejection of the original offer and constitutes a counteroffer.21 Ordinarily, if A makes an offer, such as to sell a used automobile to B for $3,000, and B in reply makes an offer to buy at $2,500, the original offer is terminated. B is in effect indicating refusal of the original offer and in its place is making a different offer. Such an offer by the offeree is known as a counteroffer. No contract arises unless the origi- nal offeror accepts the counteroffer. Counteroffers are not limited to offers that directly contradict the original offers. Any departure from or addition to the original offer is a counteroffer even though the original offer was silent on the point added by the counteroffer. If the offeree rejects the offer and communicates this rejection to the offeror, the offer is terminated. Communication of a rejection terminates an offer even though the period for which the offeror agreed to keep the offer open has not yet expired. It may be that the offeror is willing to renew the offer, but unless this is done, there is no longer any offer for the offeree to accept. 12-2d Lapse of Time When the offer states that it is open until a particular date, the offer terminates on that date if it has not yet been accepted. This is particularly so when the offeror declares that the offer shall be void after the expiration of the specified time. Such limitations are strictly construed. For Example, Landry's Restaurant Minnesota Inc. extended a written, signed offer to Starlite L.P. to lease Starlite's real estate for a period of 20 years. The writ- ten offer stated that if a fully executed acceptance of the lease is not returned to Landry's Minnesota Inc. within six days of the written offer dated April 30, 1998, "the offer to lease ... shall be deemed withdrawn and this lease shall be deemed null and void." Starlite signed and returned the lease agreement on May 11, 1998, five days after the May 6 deadline. Landry's Minnesota occupied the property and built a restaurant on it but vacated the property after nine years. Starlite sued the restaurant's parent corporation, Landry's Restaurants Inc., as guarantor of the lease, seeking payment for past due and ongoing rent. Starlite's lawsuit was not successful as no valid lease agreement existed because no contract could be properly formed when acceptance occurred after the written offer had expired.22 If either the offeror or offeree dies or becomes mentally incompetent before the offer is accepted, the offer is automatically terminated. For Example, Chet Wilson offers to sell his ranch to Interport, Inc., for $2.5 million. Five days later, Chet is killed in an aviation accident. Interport, Inc., subsequently writes to Chet Wilson Jr., an adult, that his father's offer is accepted. No contract is formed because the offer made by Chet died with him. If the performance of the contract becomes illegal after the offer is made, the offer is ter- minated. For Example, if an offer is made to sell six semiautomatic handguns to a com- mercial firing range for $550 per weapon but a new law prohibiting such sales is enacted before the offer is accepted, the offer is terminated.

Bernie and Phil's Great American Surplus store placed an ad in the Sunday Times stating, "Next Saturday at 8:00 A.M. sharp, 3 brand new mink coats worth $5,000 each will be sold for $500 each! First come, first served." Marsha Lufklin was first in line when the store opened and went directly to the coat department, but the coats identified in the ad were not available for sale. She identified herself to the manager and pointed out that she was first in line in conformity with the store's advertised offer and that she was ready to pay the $500 price set forth in the store's offer. The manager responded that a newspa- per ad is just an invitation to negotiate and that the store decided to withdraw "the mink coat promotion." Review the text on unilateral contracts in the section titled "Bilateral and Unilateral Con- tracts" in Chapter 11. Decide.

She does get it because "first come, first serve" is promised (though ads generally aren't offers in other ways though this one it was promised)

Describe the classifications of law

Substantive Law vs. Procedural Law: Substantive law creates, defines, and regulates rights and liabilities. The law that deter- mines when a contract is formed is substantive law. Procedural law specifies the steps that must be followed in enforcing those rights and liabilities. For example, once that con- tract is formed, you have rights to enforce that contract, and the steps you take through the court system to recover your damages for a breach of contract are procedural laws. The laws that prohibit computer theft are substantive laws. The prosecution of someone for computer theft follows procedural law. Criminal Law vs. Civil Law: Criminal laws define wrongs against society. Civil laws define the rights of one person against another. Criminal law violations carry fines and imprisonment as penalties. Civil laws carry damage remedies for the wronged individual. For Example, if you run a red light, you have committed a crime and you will be punished with a fine and points on your license. If you run a red light and strike a pedes- trian, you will also have committed a civil wrong of injury to another through your carelessness. Civil laws provide that in addition to taking care of your wrong to society, you must take care of your wrong to the pedestrian and pay damages for the cost of her injuries (see Chapter 8 for more information about recovery of damages for accidents such as this). Law vs. Equity: Equity is a body of law that provides justice when the law does not offer an adequate remedy or the application of the law would be terribly unfair. Equity courts developed in England as a means of getting to the heart of a dispute and seeing that justice was done. For Example, Christian Louboutin shoes have a distinctive red bottom that is their trademark. Yves Saint Laurent began producing its shoes with a red bottom. Com- mon and statutory law provide for Louboutin to collect damages—the amount the com- pany lost in sales through the copycat efforts of Yves Saint Laurent. However, if the Yves Saint Laurent shoes continue in production, Louboutin is never adequately compensated. Equity provides for an injunction, a court order to stop Yves Saint Laurent from making the red-soled shoes. At one time, the United States had separate law courts and equity courts, but today these courts have been combined so that one court applies principles of both law and equity. A party may ask for both legal and equitable remedies in a single court.7 For Example, suppose a homeowner contracts to sell his home to a buyer. If the homeowner then refuses to go through with the contract, the buyer has the legal remedy of recovering damages. The rules of equity go further and could require the owner to convey title to the house, an equitable remedy known as specific performance. Equitable remedies may also be available in certain contract breaches (see Chapters 2, 11, and 19).

Explain the exceptions the law makes to the requirement of definiteness

The law has come to recognize certain situations in which the practical necessity of doing business makes it desirable to have a contract, yet the situation is such that it is impossible to adopt definite terms in advance. In these cases, the indefinite term is often tied to some independent factor that will be definitely ascertainable at some time in the future. The indefinite term might be tied to market price, production, or sales requirements. Thus, the law recognizes binding contracts in the case of a requirements contract—that is, a contract to buy all requirements of the buyer from the seller.14 The law also recognizes as binding an output contract—that is, the contract of a producer to sell the entire production or output to a given buyer. These are binding contracts even though they do not state the exact quantity of goods that are to be bought or sold.

Explain the meaning and importance of privity of a contract

The person who makes a promise is the promisor, and the person to whom the promise is made is the promisee. If the promise is binding, it imposes on the promisor a duty or obligation, and the promisor may be called the obligor. The promisee who can claim the benefit of the obligation is called the obligee. The parties to a contract are said to stand in privity with each other, and the relationship between them is termed privity of contract. For Example, when the state of North Carolina and the architectural firm of O'Brien/ Atkins Associates executed a contract for the construction of a new building at the University of North Carolina, Chapel Hill, these parties were in privity of contract. How- ever, a building contractor, RPR & Associates, who worked on the project did not have standing to sue on the contract between the architect and the state because the contractor was not in privity of contract.3

Describe court procedures

The plaintiff is the party that initiates the proceedings in a court of original jurisdiction. In a criminal case in which charges are brought, the party initiating the proceedings would be called the prosecutor. The party against whom the civil or criminal proceedings are brought is the defendant. A judge is the primary officer of the court and is either an elected or an appointed official who presides over the matters brought before the court. Attorneys or lawyers are representatives for the plaintiff and the defendant for purposes of presenting their cases. Lawyers and clients have a privilege of confidentiality known as the attorney-client privilege. Lawyers cannot disclose what their clients tell them unless the client is committing, or plans to commit, a crime. A jury is a body of citizens sworn by a court to reach a verdict on the basis of the case presented to them. Jurors are chosen for service based on lists compiled from voter registration and driver's license records. The following steps in a lawsuit generally apply in cases brought in courts of original jurisdiction. Not every step applies in every case, but understanding litigation steps and terms is important for businesspeople. Jurors drawn for service are questioned by the judge and lawyers to determine whether they are biased or have any preformed judgments about the parties in the case. Jury selec- tion is called voir dire examination. For Example, in the trial of Martha Stewart, the multimedia home and garden diva, it took a great deal of time for the lawyers to question the potential jurors about their prior knowledge concerning the case, which had received nationwide attention and much media coverage. Lawyers have the opportunity to remove jurors who know parties in the case or who indicate they have already formed opinions about guilt or innocence. The attorneys question the potential jurors to determine if a juror should be challenged for cause (e.g., when the prospective juror states he is employed by the plaintiff's company). Challenges for cause are unlimited, but each side can also exercise six to eight peremptory challenges.8 A peremptory challenge is a challenge that is used to strike (remove) a juror for any reason except on racial grounds.9 Generally, the prevailing party is awarded costs. Costs include filing fees, service- of-process fees, witness fees, deposition transcript costs, and jury fees. Costs do not include compensation spent by a party for preparing the case or being present at trial, including the time lost from work because of the case and the fee paid to the attorney, although lost wages from an injury are generally part of damages. Attorney fees may be recovered by a party who prevails if a statute permits the recov- ery of attorney fees or if the complaint involves a claim for breach of contract and the contract contains a clause providing for recovery of attorney fees.

Buster Cogdill, a real estate developer, made an offer to the Bank of Benton to have the bank provide construction financing for the development of an outlet mall, with funds to be provided at prime rate plus two percentage points. The bank's president Julio Plunkett thanked Buster for the proposal and said, "I will start the paperwork." Did Cogdill have a contract with the Bank of Benton? [Bank of Benton v. Cogdill, 454 N.E.2d 1120 (Ill. App.)]

They had no contract as he thanked him for the proposal but never formally agreed to it

Explain the implications of failing to read a click- wrap agreement

To determine whether a clickwrap agreement is enforce- able, courts apply traditional principles of contract law and focus on whether the plaintiffs had reasonable notice of and manifested assent to the clickwrap agreement. Failure to read an enforceable clickwrap agreement, as with any binding contract, will not excuse compliance with its terms.

True or False, if you are negotiating with someone you are not in a binding agreement with them, therefore you don't need to disclose anything

True

True or False: "1st come 1st serve" offered in an advertisement is an example of an offer

True

Explain the extent and effect of avoidance of a contract by a minor

With exceptions that will be noted later, a contract made by a minor is voidable at the election of the minor. For Example, Adorian Deck, a minor, created a Twitter feed titled "@OMGFacts." The feed collected and republished interesting and trivial facts from other sources on the Internet. It was subscribed to by over 300,000 Twitter users, including some celebrities. Spatz, Inc., entered into a joint venture with Deck as described in a writ- ten contract signed by both parties, under which Spatz would expand the Twitter feed into a suite of Internet products, including a Web site and a Youtube.com video channel. In an "OMG-moment" prior to his 18th birthday, Deck notified Spatz, Inc., that he wished to disaffirm the parties' agreement. This disaffirmation by a minor rescinded the entire contract, rendering it a nullity.4 The minor may affirm or ratify the contract on attaining majority by performing the contract, by expressly approving the contract, or by allowing a reasonable time to lapse without avoiding the contract. What Constitutes Avoidance? A minor may avoid or disaffirm a contract by any expres- sion CPA of an intention to repudiate the contract. Any act inconsistent with the continuing validity of the contract is also an avoidance. Time for Avoidance. A minor can disaffirm a contract only during minority and for a reasonable CPA time after attaining majority. After the lapse of a reasonable time, the contract is deemed ratified and cannot be avoided by the minor. Minor's Misrepresentation of Age. Generally, the fact that the minor has misrepresented his or CPA her age does not affect the minor's power to disaffirm the contract. Some states hold that such fraud of a minor bars contract avoidance. Some states permit the minorto disaffirm the contract in such a case but require the minor to pay for any damage to the property received under the contract. In any case, the other party to the contract may disaffirm it because of the minor's fraud.

What is a contract?

a binding agreement based on the genuine assent of the parties, made for a lawful object, between competent parties, in the form required by law, and generally supported by consideration.

examples of contracts

a contract can be anything (marrying someone, etc) not just an actual contract, it can even be an agreement to do something for someone like painting their house for $10 (an agreement), pinky promise,

options contract

a contract under which the offeror promises to keep her offer open to the offeree until a specified date

mailbox rule

a properly addressed, postage-paid mailed acceptance takes effect when the acceptance is placed into the control of the U.S. Postal Service32 or, by judicial extension, is placed in the control of a private third-party carrier such as Federal Express or United Parcel Service.33 That is, the acceptance is effective upon dispatch even before it is received by the offeror.

Willis Music Co. advertised a television set at $22.50 in the Sunday newspaper. Ehrlich ordered a set, but the company refused to deliver it on the grounds that the price in the newspaper ad was a mistake. Ehrlich sued the company. Was it liable? Why or why not? [Ehrlich v. Willis Music Co., 113 N.E.2d 252 (Ohio App.)]

advertisements aren't offers and therefore not contracts so the lawsuit was not liable

case problems

answer the case problems at the back of the chapter for each chapter, the answers are on chegg

List the forms of alternative dispute resolution and distinguish among them

arbitration-the settlement of disputed questions, whether of law or fact, by one or more arbitrators by whose decision the parties agree to be bound. mediation-the settlement of a dispute through the use of a messenger who carries to each side of the dispute the issues and offers in the case.\ MedArb - In this new form of alternative dispute resolution (ADR), the arbitrator is also empowered to act as a mediator. Beyond just hearing a case, the arbitrator acts as a messenger for the parties on unresolved issues. Expert Panel -Particularly in the construction industry, one of the tools of alternative dispute resolution is the submission of a case, or perhaps a particular issue, to a panel of experts in the industry. This method has gained popularity in the construction industry where there can be technical questions about breach, including issues related to materials, process, and delays. These experts can focus on these issues and not be caught in the procedural grind of either litigation or arbitration. reference to a third person-settlement that allows a nonparty to resolve the dispute. association tribunal-a court created by a trade association or group for the resolution of disputes among its members. summary jury trial-a mock or dry-run trial for parties to get a feel for how their cases will play to a jury. dispute resolution through private courts with judges paid to be referees for the cases. minitrial-a trial held on portions of the case or certain issues in the case.

7 year olds and below

are forbidden from contracts

officious intermeddler

assertion of authority in an annoying and domineering way: courts typically do not offer remedy when one voluntarily confers something that is not necessary.

A. H. Zehmer discussed selling a farm to Lucy. After a 40-minute discussion of the first draft of a contract, Zehmer and his wife, Ida, signed a second draft stating: "We hereby agree to sell to W. O. Lucy the Ferguson farm complete for $50,000 title satisfactory to buyer." Lucy agreed to purchase the farm on these terms. Thereafter, the Zehmers refused to transfer title to Lucy and claimed they had made the contract for sale as a joke. Lucy brought an action to compel performance of the contract. The Zehmers claimed there was no contract. Were they correct? [Lucy v. Zehmer, 84 S.E.2d 516 (Va. App.)]

contracts are binding if you sign it with clear offers, acceptance, and exchange and you can't translate them into a joke so the Zehmers were incorrect

you have no obligation to disclose true value ex: he sold a car to a guy...

he didnt have to tell the guy about how bad the car really was

Compare an implied contract with a quasi contract.

https://www.chegg.com/homework-help/compare-implied-contract-quasi-contract-chapter-12-problem-3qcp-solution-9781285224916-exc

Thomas Bell, a minor, went to work in the Pitts- burgh beauty parlor of Sam Pankas and agreed that when he left the employment, he would not work in or run a beauty parlor business within a 10-mile radius of downtown Pittsburgh for a period of two years. Contrary to this provision, Bell and another employee of Pankas's opened a beauty shop three blocks from Pankas's shop and advertised themselves as Pankas's former employees. Pankas sued Bell to stop the breach of the noncompetition, or restrictive, covenant. Bell claimed that he was not bound because he was a minor when he had agreed to the covenant. Was he bound by the covenant? [Pankas v. Bell, 198 A.2d 312 (Pa.)]

https://www.chegg.com/homework-help/thomas-bell-minor-went-work-pittsburgh-beauty-parlor-sam-pan-chapter-14-problem-5qcp-solution-9781285224916-exc

Implied Obligations

in almost every contract such as duty of good faith and fair dealing and the duty to cooperate

undue influence

influence that is asserted upon another person by one who dominates that person (no free-will, if you were persuaded there would be a contract, if you were dominated then there would be no contract)

Discuss the nature of law and legal rights

law is needed as it is the order or pattern of rules a society uses to govern A right is a legal capacity to require another person to perform or refrain from performing an act. A duty is an obligation of law imposed on a person to perform or refrain from performing a certain act. Duties and rights coexist. No right exists in one person without a corresponding duty resting on some other person or persons. For example, if the terms of a lease provide that the premises will remain in a condition of good repair so that the tenant can live there comfortably, the landlord has a corresponding duty to provide a dwelling that has hot and cold running water.

if someone makes a contract with a minor and the minor lies about who they are and commits other crimes, should the contract be voided?

no, because it is a minor

If someone brings you a dog unaware of the $100 reward, do you owe them the money?

no, but it is not ethically right

Brown made an offer to purchase Overman's house on a standard printed form. Underneath Brown's signature was the statement: "ACCEPTANCE ON REVERSE SIDE." Overman did not sign the offer on the back but sent Brown a letter accepting the offer. Later, Brown refused to perform the contract, and Overman sued him for breach of contract. Brown claimed there was no contract because the offer had not been accepted in the manner specified by the offer. Decide. [Overman v. Brown, 372 N.W.2d 102 (Neb.)]

not a contract because he didn't sign it (it would be harder to prove it that he is bound because there is no simple signature on the contract as it may make things fuzzy and difficult)

bilateral contracts

offeree can accept offer by giving a promise to the offeror instead of performing the contracted-for act

unilateral contracts

offeror promises something in return for the offeree's performance and indicates that this performance is the way acceptance must be made

course folder

study written notes

Katherine mailed Paul an offer with definite and certain terms and that was legal in all respects stating that it was good for 10 days. Two days later she sent Paul a letter by certified mail (time stamped by the Postal Service at 1:14 P.M.) stating that the original offer was revoked. That evening Paul e-mailed acceptance of the offer to Katherine. She immedi- ately phoned him to tell him that she had revoked the offer that afternoon, and that he would surely receive it in tomorrow's mail. Was the offer revoked by Katherine?

the offer wasn't revoked as until she received the letter in the mail it is not valid (she never got it in the mail according to the mailbox rule)

extortion

the practice of obtaining something, especially money, through force or threats (bribing or blackmailing) (sometimes it is difficult to identify)

valid contracts

they are binding (you would be arrested if you don't do it), pinky promise is not example, a contact must be binding and there must be punishment (being sued of going to jail) in the event of someone breaking the agreement

acceptance by dominion

they are your things

8-11 year olds aren't able to form intent for a contract

though it is rebuttable meaning that if you are mature enough you can pass it anyway

true or false, minors can make voidable contracts meaning that they can be canceled if they don't like them

true

true or false, when you are 18 you must to ratify (to approve of affirm a contract) a contract

true

true or false: someone can take back an offer before it has been accepted

true, offer is not a contract and hasn't been accepted (you need the 3 things for a contract)

Explain the difference between undue influence and duress

undue influence: An aged parent may entrust all business affairs to a trusted child; a disabled person may rely on a nurse; a client may follow implicitly whatever an attorney recommends. The relationship may be such that for practical purposes, one person is helpless in the hands of the other. When such a confidential relationship exists, it is apparent that the parent, the disabled person, or the client is not exercising free will in making a contract suggested by the child, nurse, or attorney but is merely following the will of the other person. Because of the great possibility of unfair advantage, the law presumes that the dominating person exerts undue influence on the other person whenever the dominating person obtains any benefit from a contract made with the dominated person.25 The contract is then voidable. It may be set aside by the dominated person unless the dominating person can prove that, at the time the contract was made, no unfair advantage had been taken. The class of confidential relationships is not well defined. It ordinarily includes the relationships of parent and child, guardian and ward, physician and patient, and attorney and client, and any other relationship of trust and confidence in which one party exercises a control or influence over another. duress:A person makes a contract under duress when there is such violence or threat of violence that the person is deprived of free will and makes the contract to avoid harm. The threat- ened harm may be directed either at a near relative of the contracting party or against the contracting party. If a contract is made under duress, the resulting agreement is voidable at the victim's election. Agreements made to bring an end to mass disorder or violence are ordinarily not binding contracts because they were obtained by duress. One may not void a contract on grounds of duress merely because it was entered into with great reluctance and proves to be very disadvantageous to that individual.26

List the sources of law

• Constitution • Statutory Law • Administrative Regulations • Private Law • Case Law • Common Law

caveat emptor

"let the buyer beware"

revokation

(n) a act of calling or taking back, a cancellation

duress

(n.) compulsion by threat; forcible confinement (ex: someone was forced into a deal unfairly like a physical threats)

Mirror Image Doctrine

-> there must be a clear yes to the terms, they must agree on certain conditions ex: two people make an agreement and if one person asks them to change it the other person has no obligation to change it

3 conditions of a contract

-Clear offer -Clear acceptance -Something to exchange

3 kinds of contracts

-express contracts: agreement is by words (marriage, job contract) -implied contracts: contract bound not by words but by actions (when a building owner gets a professional rooter to make emergency repairs and it is implied he must pay for it), no consent or discussion, (when I park it is implied I will pay the parking meter) -quasi contracts: obligated by law (court imposed compensation) (ex: if an improvement is mistakenly made by a contractor on another's property and the value of the property is increased in value by that improvement, the court could find that the owner of the property is bound to pay the contractor in Quantum merit, which in Latin means "as much as is deserved)(done to prevent unjust enrichment, they pay quantum meruit) --> If somebody took a benefit and they knew or should have known that they were expected to be paid they need to be paid, or if somebody mislead you they ned to be paid, officious intermeddler --> someone trying to force a contract on you (not a valid party, like a guy who holds a door for you expecting a payment) (deminimus "minimal value" if the thing you get is deminimus you can keep it and us it, trade it away for something you want, or maybe throw it away) (you could mislead them by implicaitons or it would be if you never said they couldn't or you didn't want them to do the thing they did)

Lester purchased a used automobile from Mac- Kintosh Motors. He asked the seller if the car had ever been in a wreck. The MacKintosh sales- person had never seen the car before that morning and knew nothing of its history but quickly answered Lester's question by stating: "No. It has never been in a wreck." In fact, the auto had been seriously damaged in a wreck and, although repaired, was worth much less than the value it would have had if there had been no wreck. When Lester learned the truth, he sued MacKintosh Motors and the salesperson for damages for fraud. They raised the defense that the salesperson did not know the statement was false and had not intended to deceive Lester. Did the conduct of the salesperson constitute fraud?

-fraud -Reasonable reliance --> since they are the dealers they should be the experts and I trusted them -they are the car dealership they should know

3 rules of contracts

-freedom of contract --> no restrictions you can do the contract your way -fairness --> they don't care if the contract is fair as long as they agree -intent --> both parties get what they want (one person sells the care for money and the other gets the car)

Office Supply Outlet, Inc., a single-store office equipment and supply retailer, ordered 100 model RVX-414 computers from Compuserve, Inc. A new staff member made a clerical error on the order form and ordered a quantity that was far in excess of what Office Supply could sell in a year. Office Supply realized the mistake when the delivery trucks arrived at its warehouse. Its manager called Compuserve and explained that it had intended to order just 10 computers. Compuserve declined to accept the return of the extra machines. Is the contract enforceable? What additional facts would allow the store to avoid the contract for the additional machines?

-it is a unilateral mistake, it is the company's fault and they don't have to accept the return and aren't held accountable

Blubaugh was a district manager of Schlumberger Well Services. Turner was an executive employee of Schlumberger. Blubaugh was told that he would be fired unless he chose to resign. He was also told that if he would resign and release the company and its employees from all claims for wrongful discharge, he would receive about $5,000 in addition to his regular severance pay of approximately $25,000 and would be given job-relocation counseling. He resigned, signed the release, and received about $40,000 and job counseling. Some time thereafter, he brought an action claiming that he had been wrongfully dis- charged. He claimed that the release did not protect the defendants because the release had been obtained by economic duress. Were the defendants protected by the release? [Blubaugh v. Turner, 842 P.2d 1072 (Wyo.)]

-it isn't duress --> he is fired --> he doesn't have a right to the job --> he also took the counseling, now that he has gotten that he doesn't even have the right to sue

6 elements of fraud

-material misrepresentation: a critical factor to the deal -of a fact (not an opinion): a fact that is legitimate and provable -the person who makes the misrepresentation must make it with knowledge that it is false: there is supposed to be a condition and they ignore it -they made the statement with the intent the other party relied upon it: the party relied very heavily and took the false claim very seriously (they said that and I took it seriously because I know that now) -there is reasonable reliance by the listener: If someone lied, it needs to be reasonable (ex: they know about cars they are the expert I rely on them) -the listener was harmed and sustained damage: there was a problem for the listener

High-Tech Collieries borrowed money from Hol- land. High-Tech later refused to be bound by the loan contract, claiming the contract was not binding because it had been obtained by duress. The evi- dence showed that the offer to make the loan was made on a take-it-or-leave-it basis. Was the defense of duress valid? [Holland v. High-Tech Collieries, Inc., 911 F. Supp. 1021 (N.D. W.Va.)]

-no -it is not duress -not a fair deal

When a college student complained about a partic- ular course, the vice president of the college asked the teacher to prepare a detailed report about the course. The teacher did and then demanded addi- tional compensation for the time spent in preparing the report. He claimed that the college was liable to provide compensation on an implied contract. Was he correct? [Zadrozny v. City Colleges of Chicago, 581 N.E.2d 44 (Ill. App.)]

-no implied contract as the colege isn't liable to provide compensation -if a teacher doesn't do a good job, their extra commitments (reports) it is the teachers resonsibility to deal with it, they don't get paid extra for a bad job

Dozier and his wife, daughter, and grandson lived in the house Dozier owned. At the request of the daughter and grandson, Paschall made some improvements to the house. Dozier did not authorize these, but he knew that the improvements were being made and did not object to them. Paschall sued Dozier for the reasonable value of the improvements, but Dozier argued that he had not made any contract for such improvements. Was he obligated to pay for such improvements?

-since a benefit was received and it was known that there were improvements, it would be unjust if he didn't receive compensation -he didn't have an expressed contact and therefore there was no consent, he also did not have an implied contract -he needs to pay, he has a kitchen

While Clara Novak was sick, her daughter Janie helped her in many ways. Clara died, and Janie then claimed that she was entitled to be paid for the ser- vices she had rendered her mother. This claim was opposed by three brothers and sisters who also ren- dered services to the mother. They claimed that Janie was barred because of the presumption that services rendered between family members are gratuitous. Janie claimed that this presumption was not appli- cable because she had not lived with her mother but had her own house. Was Janie correct? [In re Estate of Novak, 398 N.W.2d 653 (Minn. App.)]

-the gratiutous obligation to wrk for oyur family is valid, unless there is a disproportionate split of services between the family members -if she wanted to be paid she should have said so

When Harriet went away for the summer, Landry, a house painter, painted her house. He had a contract to paint a neighbor's house but painted Harriet's house by mistake. When Harriet returned from vacation, Landry billed her for $3,100, which was a fair price for the work. She refused to pay. Landry claimed that she had a quasi-contractual liability for that amount. Was he correct?

-there was no quasi contract as they didn't do anything to gain the paintjob -there is no consent as they don't know each other (no expressed contract) -no implied contract because they don't know each other

Helen, age 17, wanted to buy a Harley-Davidson "Sportster" motorcycle. She did not have the funds to pay cash but persuaded the dealer to sell the cycle to her on credit. The dealer did so partly because Helen said that she was 22 and showed the dealer an identification card that falsely stated her age as 22. Helen drove the motorcycle away. A few days later, she damaged it and then returned it to the dealer and stated that she disaffirmed the contract because she was a minor. The dealer said that she could not because (1) she had misrepresented her age and (2) the motorcycle was damaged. Can she avoid the contract?

-yes, she is a minor and minors can void contracts

essential terms of a contract

1) identity of the offeree 2) identity of subject matter 3) price to be paid 4) time of the payment, delivery or performance 5) quantity involved 6) nature of the work or performance required

talk about contracts

A contract is a binding agreement between two or more parties. A contract arises when an offer is accepted with contractual intent (the intent to make a binding agreement). Contracts may be classified in a number of ways according to form, the way in which they were created, validity, and obligations. With respect to form, a contract may be either informal or formal, such as those under seal or those appearing on the records of courts. Contracts may be classified by the way they were created as those that are expressed by words—written or oral—and those that are implied or deduced from conduct. The question of valid- ity requires distinguishing between contracts that are valid, those that are voidable, and those that are not contracts at all but are merely void agreements. Contracts can be dis- tinguished on the basis of the obligations created as exe- cuted contracts, in which everything has been performed, and executory contracts, in which something remains to be done. The bilateral contract is formed by exchanging a promise for a promise, so each party has the obligation of thereafter rendering the promised performance. In the uni- lateral contract, which is the doing of an act in exchange for a promise, no further performance is required of the offeree who performed the act. In certain situations, the law regards it as unjust for a person to receive a benefit and not pay for it. In such a case, the law of quasi contracts allows the performing per- son to recover the reasonable value of the benefit conferred on the benefited person even though no contract between them requires any payment. Unjust enrichment, which a quasi contract is designed to prevent, sometimes arises when there was never any contract between the persons involved or when there was a contract, but for some reason it was avoided or held to be merely a void agreement.

Describe the way in which a contract arises

A contract is based on an agreement. An agreement arises when one person, the offeror, makes an offer and the person to whom the offer is made, the offeree, accepts. There must be both an offer and an acceptance. If either is lacking, there is no contract. Because a contract is based on the consent of the parties and is a legally binding agree- ment, it follows that the parties must have an intent to enter into an agreement that is binding. Sometimes the parties are in agreement, but their agreement does not produce a contract. Sometimes there is merely a preliminary agreement, but the parties never actu- ally make a contract, or there is merely an agreement as to future plans or intentions with- out any contractual obligation to carry out those plans or intentions. Contracts can be classified as formal or informal. Formal contracts are enforced because the formality with which they are executed is con- sidered sufficient to signify that the parties intend to be bound by their terms. Formal contracts include (1) contracts under seal where a person's signature or a corporation's name is followed by a scroll, the word seal, or the letters L.S.; 7 (2) contracts of record, which are obligations that have been entered before a court of record, sometimes called a recognizance; and (3) negotiable instruments. All contracts other than formal contracts are called informal (or simple) contracts with- out regard to whether they are oral or written. These contracts are enforceable, not because of the form of the transaction but because they represent agreement of the parties. An implied contract (or, as sometimes stated, a contract implied in fact) is one in which the agreement is shown not by words, written or spoken, but by the acts and conduct of the parties.8 Such a contract arises when (1) a person renders services under circumstances indicating that payment for them is expected and (2) the other person, knowing such cir- cumstances, accepts the benefit of those services. For Example, when a building owner requests a professional roofer to make emergency repairs to the roof of a building, an obli- gation arises to pay the reasonable value of such services, although no agreement has been made about compensation. An express contract is one in which the terms of the agreement of the parties are mani- fested by their words, whether spoken or written. A valid contract is an agreement that is binding and enforceable. A voidable contract is an agreement that is otherwise binding and enforceable, but because of the circumstances surrounding its execution or the lack of capacity of one of the parties, it may be rejected at the option of one of the parties. For Example, a person who has been forced to sign an agreement that that person would not have voluntarily signed may, in some instances, avoid the contract. An executed contract is one that has been completely performed. In other words, an exe- cuted contract is one under which nothing remains to be done by either party.11 A con- tract may be executed immediately, as in the case of a cash sale, or it may be executed or performed in the future. In an executory contract, something remains to be done by one or both parties.12 For Example, on July 10, Mark agreed to sell to Chris his Pearl drum set for $600, the terms being $200 upon delivery on July 14, with $200 to be paid on July 21, and the final $200 being due July 28. Prior to the July 14 delivery of the drums to Chris, the contract was entirely executory. After the delivery by Mark, the contract was executed as to Mark and executory as to Chris until the final payment was received on July 28.

Distinguish unilateral mistakes and mutual mistakes

A unilateral mistake—that is, a mistake by only one of the parties—as to a fact does not affect the contract when the mistake is unknown to the other contracting party.12 When a contract is made on the basis of a quoted price, the validity of the contract is not affected by the fact that the party furnishing the quotation made a mathematical mistake in com- puting the price if there was no reason for the other party to recognize that there had been a mistake.13 The party making the mistake may avoid the contract if the other con- tracting party knew or should have known of the mistake. A contract based on a mutual mistake in judgment is not voidable by the adversely affected party. For Example, if both parties believe that a colt is not fast enough to develop into a competitive race horse and effect a sale accordingly, when the animal later develops into the winner of the Preakness as a three-year-old, the seller cannot rescind the contract based on mutual mistake because the mutual mistake was a mistake in judgment. In contrast, when two parties to a contract believe a cow to be barren at the time they contract for its sale, but before delivery of the animal to the buyer, it is discov- ered that the assumption was mistaken, such is a mutual mistake of fact making the con- tract void.15

LO.4 Explain what constitutes the acceptance of an offer

An acceptance is the assent of the offeree to the terms of the offer. Objective standards determine whether there has been an agreement of the parties. No particular form of words or mode of expression is required, but there must be a clear expression that the offeree agrees to be bound by the terms of the offer. If the offeree reserves the right to reject the offer, such action is not an acceptance.24 The acceptance of an offer creates a binding agreement or contract,25 assuming that all of the other elements of a contract are present. Neither party can subsequently withdraw from or cancel the contract without the consent of the other party. For Example, James Gang refused to honor an oral stock purchase agreement he made with Moshen Sadeghi under terms he assented to and that were announced on the record to a court as a mutual settlement of a dispute. Gang was not allowed subsequently to withdraw from the agree- ment, because it was an enforceable contract.26

Summarize Capacity and Genuine Assent

An agreement that otherwise appears to be a contract may not be binding because one of the parties lacks contractual capacity. In such a case, the contract is ordinarily voidable at the election of the party who lacks contractual capacity. In some cases, the contract is void. Ordinarily, contractual incapacity is the inability, for mental or physical reasons, to understand that a contract is being made and to under- stand its general terms and nature. This is typically the case when it is claimed that incapacity exists because of insanity, intoxication, or drug use. The incapacity of min- ors arises because society discriminates in favor of that class to protect them from unwise contracts. The age of majority is 18. Minors can disaffirm most contracts. If a minor received anything from the other party, the minor, on avoiding the contract, must return what had been received from the other party if the minor still has it. When a minor disaffirms a contract for a necessary, the minor must pay the reasonable value of any benefit received. Minors only are liable for their contracts. Parents of a minor are not liable on the minor's contracts merely because they are the parents. Frequently, an adult enters into the contract as a coparty of the minor and is then liable without regard to whether the minor has avoided the contract. The contract of an insane person is voidable to much the same extent as the contract of a minor. An important distinction is that if a guardian has been appointed for the insane person, a contract made by the insane person is void, not merely voidable. An intoxicated person lacks contractual capacity if the intoxication is such that the person does not understand that a contract is being made. The consent of a party to an agreement is not genuine or voluntary in certain cases of mistake, deception, or pres- sure. When this occurs, what appears to be a contract can be avoided by the victim of such circumstances or conduct. As to mistake, it is necessary to distinguish between uni- lateral mistakes that are unknown to the other contracting party and those that are known. Mistakes that are unknown to the other party usually do not affect the binding character of the agreement. A unilateral mistake of which the other contracting party has knowledge or has reason to know makes the contract avoidable by the victim of the mistake. The deception situation may be one of negligent mis- representation or fraud. The law ordinarily does not attach any significance to nondisclosure. Contrary to this rule, there is a duty to volunteer information when a confiden- tial relationship exists between the possessor of the knowl- edge and the other contracting party. When concealment goes beyond mere silence and consists of actively taking steps to hide the truth, the con- duct may be classified as fraud. A statement of opinion or value cannot ordinarily be the basis for fraud liability. The voluntary character of a contract may be lacking because the agreement had been obtained by pressure. This may range from undue influence through the array of threats of extreme economic loss (called economic duress) to the threat of physical force that would cause serious personal injury or damage to property (called physical duress). When the voluntary character of an agreement has been destroyed by deception, or pressure, the victim may avoid or rescind the contract or may obtain money damages from the wrongdoer.

Decide whether an offer contains definite and certain terms

An offer, and the resulting contract, must be definite and certain so that it is capable of being enforced. An offer and the resulting contract that by themselves may appear "too indefinite" may be made definite by reference to another writing. For Example, a lease agreement that was too vague by itself was made definite because the parties agreed that the lease should fol- low the standard form with which both were familiar. An agreement may also be made definite by reference to the prior dealings of the parties and to trade practices. Although an offer must be definite and certain, not all of its terms need to be expressed. Some omitted terms may be implied by law. For Example, an offer "to pay $400" for a certain Movado timepiece does not state the terms of payment. A court, however, would not condemn this provision as too vague but would hold that it required that cash be paid and that the payment be made on delivery of the watch. When the agreement consists of two or more parts and calls for corresponding perfor- mances of each part by the parties, the agreement is a divisible contract. Thus, in a promise to buy several separate articles at different prices at the same time, the agreement may be regarded as separate or divisible promises for the articles.

Nelson wanted to sell his home. Baker sent him a written offer to purchase the home. Nelson made some changes to Baker's offer and wrote him that he, Nel- son, was accepting the offer as amended. Baker notified Nelson that he was dropping out of the transaction. Nelson sued Baker for breach of contract. Is it valid what nelson did? [Nelson v. Baker, 776 S.W.2d 52 (Mo. App.)]

Baker never accepted the modified offer, so Nelson can't sue