chapter 12 blaw

legally sufficient value consists of

- A promise to do something that one has no prior legal duty to do. -The performance of an action that one is otherwise not obligated to undertake. - The refraining from an action that one has a legal right to undertake (called a forbearance). forbearance The act of refraining from an action that one has a legal right to undertake. An agreement between the lender and the borrower in which the lender agrees to temporarily cease requiring mortgage payments, to delay foreclosure, or to accept smaller payments than previously scheduled.

contracts that have to be written

- Contracts involving interests in land. - Contracts that cannot by their terms be performed within one year from the day after the date of formation. - Collateral, or secondary, contracts, such as promises to answer for the debt or duty of another and promises by the administrator or executor of an estate to pay a debt of the estate personally—that is, out of her or his own pocket. - Promises made in consideration of marriage. - Under the Uniform Commercial Code, contracts for the sale of goods priced at $500 or more

consideration is broken down into two parts:

-something of legally sufficient value must be given in exchange for the promise, and -there must be a bargained-for exchange.

1. shrink-wrap agreement 2. browse wrap terms

1. An agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packaged. Usually, the party who opens the box is told that she or he agrees to the terms by keeping whatever is in the box. Similarly, when a purchaser opens a software package, he or she agrees to abide by the terms of the limited license agreement. a contract 2. A term or condition of use that is presented when an online buyer downloads a product but that does not require the buyer's explicit agreement.

how law terminates an offer

1. Lapse of time. 2. Destruction of the specific subject matter of the offer (such as a smartphone or a house). 3. Death or incompetence of the offeror or the offeree. 4. Supervening illegality of the proposed contract. (A statute or court decision that makes an offer illegal automatically terminates the offer.)

Agreements That Lack Consideration

1. Preexisting Duty a promise to do what one already has a legal duty to do does not constitute legally sufficient consideration. The preexisting legal duty may be imposed by law or may arise out of a previous contract. A sheriff, for instance, has a duty to investigate crime and to arrest criminals. Hence, a sheriff cannot collect a reward for providing information leading to the capture of a criminal. Likewise, if a party is already bound by contract to perform a certain duty, that duty cannot serve as consideration for a second contract. ex: Ajax Contractors begins construction on a seven-story office building and after three months demands an extra $75,000 on its contract. If the extra $75,000 is not paid, the contractor will stop working. The owner of the land, finding no one else to complete the construction, agrees to pay the extra $75,000. The agreement is unenforceable because it is not supported by legally sufficient consideration. Ajax Contractors had a preexisting contractual duty to complete the building. 2. Past Consideration: An act that has already taken place at the time a contract is made and that ordinarily, by itself, cannot be consideration for a later promise to pay for the act. ex: Jamil became friends wit Iverson when Iverson was a student who showed tremendous promise as an athlete. One evening, Blackmon suggested that Iverson use "The Answer" as a nickname in the summer league basketball tournaments. Blackmon said that Iverson would be "The Answer" to all of the National Basketball Association's woes. Later that night, Iverson said that he would give Blackmon 25 percent of any proceeds from the merchandising of products that used "The Answer" as a slogan. Because Iverson's promise was made in return for past consideration, it was unenforceable. In effect, Iverson stated his intention to give Blackmon a gift.

elements of a valid contract

1. agreement: one party offers and one party accepts 2. consideration: any promise made by the parties to the contract must be supported by legally sufficient and bargained for consideration. something of value is received or promised 3. contractual: both parties have to have the contractual capacity to carry through with the promise 4. legality: has to be legal and not against public policy

exculpatory clauses

A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault. Businesses such as health clubs, racetracks, amusement parks, skiing facilities, horserental operations, golf-cart concessions, and skydiving organizations frequently use exculpatory clauses to limit their liability for patrons' injuries. ex: Colleen Holmes participated in the Susan G. Komen Race for the Cure in St. Louis, Missouri. Her signed entry form included an exculpatory clause under which Holmes agreed to release the event sponsors from liability "for any injury or damages I might suffer in connection with my participation in this Event." During the race, Holmes sustained injuries when she tripped and fell over an audiovisual box left on the ground by one of the sponsors. She filed a negligence suit against the sponsor whose employees had placed the box on the ground without barricades or warnings of its presence. The court held that the language used in the exculpatory clause clearly released all sponsors and their agents and employees from liability for future negligence. Holmes could not sue for the injuries she sustained during the race.

mailbox rule

A common law rule that acceptance takes effect, and thus a contract is formed, at the time the offeree sends or delivers the acceptance using the communication mode expressly or impliedly authorized by the offeror. Under this rule, if the authorized mode of communication is the mail, then an acceptance becomes valid when it is dispatched (placed in the control of the U.S. Postal Service)—not when it is received by the offeror. he mailbox rule does not apply to instantaneous forms of communication, such as when the parties are dealing face to face, by telephone, by fax, and usually by e-mail.

void contract

A contract having no legal force or binding effect. None of the parties have any legal obligations if a contract is void. A contract can be void because the purpose of the contract was illegal it was never made a contract: murder for higher

executed contract executory contract

A contract that has been fully performed by both parties A contract that has not yet been fully performed. can be executed on one side and executory on the other but overall it is executory.

agreement

A mutual understanding or meeting of the minds between two or more individuals regarding the terms of a contract. theres an offer and acceptance does not need to be in writing

offer

A promise or commitment to perform or refrain from performing some specified act in the future. Under the common law, three elements are necessary for an offer to be effective: -The offeror must have a serious intention to become bound by the offer. -The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract. - The offer must be communicated to the offeree. 2 different offers: intention and definiteness of terms

contract

A set of promises constituting an agreement between parties, giving each a legal duty to the other and also the right to seek a remedy for the breach of the promises or duties. Common law governs all contracts except when it has been modified or replaced by statutory law, such as the UCC or by administrative agency regulations. Contracts relating to services, real estate, employment, and insurance, for instance, generally are governed by this. common governs real estate, service, employment, insurance

unenforacable contract

A valid contract rendered unenforceable by some statute or law. It is not unenforceable because a party failed to satisfy a legal requirement of the contract ex: certain contracts must be in writing, and if they are not, they will not be enforceable except in certain exceptional circumstances.

provisions to include for an online contract

Acceptance of terms. A clause that clearly indicates what constitutes the buyer's agreement to the terms of the offer, such as a box containing the words "I accept" that the buyer can click. Payment. A provision specifying how payment for the goods (including any applicable taxes) must be made. Return policy. A statement of the seller's refund and return policies. Disclaimer. Disclaimers of liability for certain uses of the goods. For instance, an online seller of business forms may add a disclaimer that the seller does not accept responsibility for the buyer's reliance on the forms rather than on an attorney's advice. Limitation on remedies. A provision specifying the remedies available to the buyer if the goods are found to be defective or if the contract is otherwise breached. Any limitation of remedies should be clearly spelled out. Privacy policy. A statement indicating how the seller will use the information gathered about the buyer. Dispute resolution. Provisions relating to dispute settlement, such as an arbitration clause or a forum-selection clause (discussed next).

Unequivocal Acceptance

An acceptance cannot impose new conditions or change the terms of the original offer. you can't say "I accept the offer, but can you give me a better price?" is an effective acceptance.

mental incompetence

Contracts made by mentally incompetent persons can be void, voidable, or valid. If a court has previously determined that a person is mentally incompetent, any contract made by that person is void—no contract exists. Only a guardian appointed by the court to represent a mentally incompetent person can enter into binding legal obligations on that person's behalf. If a court has not previously judged a person to be mentally incompetent but the person was incompetent at the time the contract was formed, the contract may be voidable.Footnote A contract is voidable in the majority of states if the person did not know he or she was entering into the contract or lacked the mental capacity to comprehend its nature, purpose, and consequences. ex: Larry agrees to sell his stock in Google, Inc., to Sergey for substantially less than its market value. At the time of the deal, Larry is confused about the purpose and details of the transaction, but he has not been declared incompetent. Nonetheless, if a court finds that Larry did not understand the nature and consequences of the contract due to a lack of mental capacity, he can avoid the sale.

bilateral contracts

I promise to pay you if you promise to paint my house: bilateral contract. We both agree to do those things. Contract is established when promises are said from both parties. acceptance is in the form of a promise (not performance). Because bilateral contracts are formed when the promise is made

intoxication

If the person was sufficiently intoxicated to lack mental capacity, then the agreement may be voidable even if the intoxication was purely voluntary. If a contract is voidable because one party was intoxicated, that person has the option of disaffirming it while intoxicated and for a reasonable time after becoming sober. If, despite intoxication, the person understood the legal consequences of the agreement, the contract will be enforceable. It is difficult to prove that a person's judgment was so severely impaired that he or she could not comprehend the legal consequences of entering into a contract. Therefore, courts rarely permit contracts to be avoided due to intoxication.

contractual capacity

In addition to agreement and consideration, for a contract to be deemed valid, the parties to the contract must have contractual capacity—the legal ability to enter into a contractual relationship. Courts generally presume the existence of contractual capacity, but in some situations, as when a person is young or mentally incompetent, capacity may be lacking or questionable. Legal ability to enter into a contractual relationship Minors - age of majority for contractual purposes = 18 years Intoxication - contract entered into by intoxicated person can be voidable or valid Mental Incompetence - contracts can be void, voidable, or valid

Authorized Means of Acceptance

The contract is not formed unless the offeree uses that specified mode of acceptance Motorola Mobility, Inc., offers to sell 144 Atrix 4G smartphones and 72 Lapdocks to Call Me Plus phone stores. The offer states that Call Me Plus must accept the offer via FedEx overnight delivery. The acceptance is effective (and a binding contract is formed) the moment that Call Me Plus gives the overnight envelope containing the acceptance to the FedEx driver.

Bargained-for Exchange

The item of value must be given or promised by the promisor (offeror) in return for the promisee's promise, performance, or promise of performance. This element of bargained-for exchange distinguishes contracts from gifts. ex: Sheng-Li says to his son, "In consideration of the fact that you are not as wealthy as your brothers, I will pay you $5,000." The fact that the word consideration is used does not, by itself, mean that consideration has been given. Indeed, Sheng-Li's promise is not enforceable because the son does not have to do anything in order to receive the $5,000 promised. Because the son does not need to give Sheng-Li something of legal value in return for his promise, there is no bargained-for exchange. Rather, Sheng-Li has simply stated his motive for giving his son a gift.

disaffirmance

The legal avoidance, or setting aside, of a contractual obligation. Fifteen-year-old Morgan Kelly was a cadet in her high school's Navy Junior Reserve Officer Training Corps. As part of the program, she visited a U.S. Marine Corps training facility. To enter the camp, she was required to sign a waiver that exempted the Marines from all liability for any injuries arising from her visit. While participating in activities on the camp's confidence-building course, Kelly fell from the "Slide for Life" and suffered serious injuries. She filed a suit to recover her medical costs. The Marines asserted that she had signed their waiver of liability. Kelly claimed that she had disaffirmed the waiver when she filed suit. The court ruled in Kelly's favor. Liability waivers are generally enforceable contracts, but a minor can avoid a contract by disaffirming it.

ex of offer

Tolson advertises a reward for the return of her lost cat. Dirk, not knowing of the reward, finds the cat and returns it to Tolson. Usually, Dirk cannot recover the reward because an essential element of a reward contract is that the one who claims the reward must have known it was offered.

voidable contract

a valid contract but one that can be avoided at the option of one or both of the parties. The party having the option can elect either to avoid any duty to perform or to ratify (make valid) the contract. If the contract is avoided, both parties are released from it. If it is ratified, both parties must fully perform their respective legal obligations. if you were gonna paint my house, and i was gonna pay but we both say nvm, this contract is voided. we both have to agree and if not, you both have to go through with it. any party can get out of a contract whenever they want. Aka minors signing contracts

consideration in bilateral and unilateral contracts example of consideration

bilateral: promise for a promise unilateral: promise for a performance ex: Anita says to her neighbor, "When you finish painting the garage, I will pay you $800." Anita's neighbor paints the garage. The act of painting the garage is the consideration that creates Anita's contractual obligation to pay her neighbor $800.

primary enforcement of a promise

consideration.

Defenses to the Enforceability of a Contract

even if all four elements are present, the contract may be unenforcable based on a defense: defense #1: voluntary consent: The consent of both parties must be voluntary. For instance, if a contract was formed as a result of fraud, undue influence, mistake, or duress, the contract may not be enforceable defense #2 Form. The contract must be in whatever form the law requires. Some contracts must be in writing to be enforceable

intention

first step of a contract. intention is determined by what a reasonable person in the offeree's position would conclude that the offeror's words and actions meant. Offers made in obvious anger, jest, or undue excitement do not meet the serious-and-objective-intent test because a reasonable person would realize that a serious offer was not being made. Because these offers are not effective, an offeree's acceptance does not create an agreement. "i plan on selling my stock" is not serious intent

Contracts Contrary to Statute

gambling contracts are illegal in all states, you can still gamble but there are no contracts allowed gambling example: Video poker machines are legal in Louisiana, but their use requires the approval of the state video gaming commission. Gaming Venture, Inc., did not obtain this approval before agreeing with Tastee Restaurant Corporation to install poker machines in some of its restaurants. For this reason, when Tastee allegedly reneged on the deal by refusing to install the machines, a state court held that their agreement was an illegal gambling contract and therefore void. licensing: ppl have to get license to practice their profession. if you get into a contract with an unlicensed person, the contract is void

unilateral contracts

ill do this ONLY if you do this. will pay when you find dog: unilateral contract: contract is formed when you perform. contract starts when you find the dog. ex: Reese says to Celia, "If you drive my car from New York to Los Angeles, I'll give you $1,000." Only on Celia's completion of the act—bringing the car to Los Angeles—does she fully accept Reese's offer to pay $1,000. If she chooses not to accept the offer to drive the car to Los Angeles, there are no legal consequences. ex: lottery and competitions

express contract

oral or written promises ex: A signed lease for an apartment or a house is an express written contract. If one classmate calls another on the phone and agrees to buy her textbooks from last semester for $300, an express oral contract has been made.

Definiteness of Terms

requirements: a contract that includes the following terms: -The identification of the parties. -The identification of the object or subject matter of the contract (also the quantity, when appropriate), including the work to be performed, with specific identification of such items as goods, services, and land. -The consideration to be paid. -The time of payment, delivery, or performance.

termination of offers

revocation: The withdrawal of a contract offer by the offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability. as long as its communicated before the oferee accepts. Rejection: If the offeree rejects the offer—by words or by conduct—the offer is terminated. counteroffer: An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer. ex: Burke offers to sell his home to Lang for $270,000. Lang responds, "Your price is too high. I'll offer to purchase your house for $250,000." Lang's response is called a counteroffer because it rejects Burke's offer to sell at $270,000 and creates a new offer by Lang to purchase the home at a price of $250,000.

consideration

usually is defined as the value (such as cash) given in return for a promise (in a bilateral contract) or in return for a performance (in a unilateral contract).

implied contract

what is expected or implied from a promise. requirements must be met to be implied: - The plaintiff furnished some service or property. -The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected. -The defendant had a chance to reject the services or property and did not. ex: mispainted fence, if someone paints your fence, its implied that you owe them money bc society agrees with that.

click on agreements

when you have to click "i agree to the terms and conditions" or type in random letters to say you agree or you're not an alien