Chapter 9 Business law

Five types of contracts must be in writing to be enforced

1. Contract involving an interest in land(includes buildings, houses, apartments, vacant land, buying, selling or renting) 2. Contract that cannot, by its terms, be performed within one year of the date of formation (if no time for completion is provided, the court usually holds that these can be completed in less than one year) 3. Promise to pay the debt of another 4. Promises in consideration of marriage 5. Contract for sale of goods more than $500

Revocation may be accomplished by either of the following

1. Express repudiation of the offer (such as "I withdraw my previous offer of October 17"). 2. Performance of acts that are inconsistent with the existence of the offer and are made known to the offeree (for instance, selling the offered property to another person in the presence of the offeree).

legal obligation can be terminated by operation of law through the occurrence of any of the following events

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.)

Generally, a contract must include the following terms, either expressed in the contract or capable of being reasonably inferred from it:

1. The identification of the parties. 2. 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. 3. The consideration to be paid. 4. The time of payment, delivery, or performance

For an implied contract to arise, certain requirements must be met

1. The plaintiff furnished some service or property. 2. The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected. 3. The defendant had a chance to reject the services or property and did not.

These requirements typically are raised as defenses to the enforceability of an otherwise valid contract.

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 (see Chapter 10). 2. Form. The contract must be in whatever form the law requires. Some contracts must be in writing to be enforceable, as discussed later in this chapter.

Implied contract

A contract formed in whole or in part from the conduct of the parties (as opposed to an express contract). Also known as implied-in-fact contract.

Void contract

A contract having no legal force or binding effect.

Express contract

A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written.

Formal contract

A contract that by law requires a specific form, such as being executed under seal, to be valid.

Informal contract

A contract that does not require a specified form or formality in order to be valid.

Executed contract

A contract that has been completely performed by both parties.

executory contract

A contract that has not as yet been fully performed.

Voidable contract

A contract that may be legally avoided (canceled, or annulled) at the option of one of the parties

Unilateral contract

A contract that results when an offer can only be accepted by the offeree's performance. Formed not at the moment when promises are exchanged but at the moment when the contract is performed.

Valid contract

A contract that results when elements necessary for contract formation (agreement, consideration, legal purpose, and contractual capacity) are present.

Promise

A person's assurance that he or she will or will not do something.

Offer

A promise or commitment to perform or refrain from performing some specified act in the future.

Objective theory of contracts

A theory under which the intent to form a contract will be judged by outward, objective facts (what the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transaction) as interpreted by a reasonable person, rather than by the party's own secret, subjective intentions.

Bilateral contract

A type of contract that arises when a promise is given in exchange for a return promise.

Unenforceable contract

A valid contract rendered unenforceable by some statute or law.

Consideration

Any promises made by the parties to the contract must be supported by legally sufficient and bargained-for consideration (something of value received or promised, such as money, to convince a person to make a deal).

Consideration

Legally sufficient value Given in return for a promise or performance

Termination of an offer

1. Revocation 2.Rejection 3. Counteroffer

Contract

An agreement that can be enforced in court; formed by two or more parties, each of whom agrees to perform or to refrain from performing some act now or in the future.

Agreement

An agreement to form a contract includes an offer and an acceptance. One party must offer to enter into a legal agreement, and another party must accept the terms of the offer.

Contractual capacity

Both parties entering into the contract must have the contractual capacity to do so. The law must recognize them as possessing characteristics that qualify them as competent parties.

E-contracts

Contract entered into electronically (not just over the internet)

Legality

The contract's purpose must be to accomplish some goal that is legal and not against public policy.

Offeror

The party making the offer

Offeree

The party to whom the offer is made

Under the common law, three elements are necessary for an offer to be effective

1. The offeror must have a serious intention to become bound by the offer. 2. 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. 3. The offer must be communicated to the offeree.

The facts are as interpreted by a reasonable person, rather than by the party's own secret, subjective intentions. Objective facts may include

1. What the party said when entering into the contract. 2. How the party acted or appeared (intent may be manifested by conduct as well as by oral or written words). 3. The circumstances surrounding the transaction.

Option contract

A contract under which the offeror cannot revoke his or her offer for a stipulated time period and the offeree can accept or reject the offer during this period without fear that the offer will be made to another person. The offeree must give consideration for the option (the irrevocable offer) to be enforceable.

Agreement

A meeting of two or more minds in regard to the terms of a contract. Agreement is usually broken down into two events—an offer by one party to form a contract, and an acceptance of the offer by the person to whom the offer is made.

The following list briefly describes the four requirements that must be met before a valid contract exists

Agreement, consideration, contractual capacity, and legality.

Duress

Forcing action through fear created by threats - Voidable

Revocation

In contract law, the withdrawal of an offer by an offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability.

These are not offers

Opinions Statements of future intent ("I plan to do .....") Preliminary negotiations Advertisement

Legal offer

Promise to do or refrain from doing some specified thing in the future, with or to or for someone else

Undue Influence

Relationship takes away a party's free will - Voidable

Click on

Requires affirmative action - creates a contract that includes the terms available for user to read

Serious and objective intent

Serious- Not made in anger, jest or undue excitement Objective=How would reasonable offeree interpret offeror's conduct and words in these circumstances. Subjective=offeror's actual intent (not relevant)

Browse wrap

Terms available but no indication those were read

Counteroffer

Who? Offeree When? Offeree rejects original offer Offeree makes new offer to original offeror

Rejection

Who? Offeree When? Upon offeror's receipt of rejection

Revocation

Who? Offeror When? Before the offer is accepted

Mistake

bilateral mistake of fact - Voidable mistake of value - Enforceable

Fraud

misrepresentation of material fact - Voidable