Business Law Unit 3 Business Law Lesson 1

Business Law Unit 3: Business Law Lesson 1: Contracts

Lesson 1: Contracts Objectives: In this lesson, you will learn: – What a contract is – The different types of contracts and how they work – How contracts can help you

What is a Contract? An agreement between two parties that creates an obligation

Elements of a Contract • A legally binding contract has six major components: – Offer – Acceptance – Consideration – Legal purpose – Competent parties – Writing requirement

Offer Promise to do something in exchange for something in return, usually money

Acceptance Agreeing to the terms set forth in an offer

Consideration Something of value provided by both parties in a contract

Legal Purpose • There must be laws that can be used to enforce a contract • Cannot include illegal conduct

Competent Parties All parties must be mentally fit when a contract is signed

Writing Requirement • Not every contract has to be in writing to be valid and binding • Some types of contracts must be in writing to be enforceable • Varies by state

Express Contracts Implied Contracts Terms are explicitly expressed, either verbally or in writing Not the only type of enforceable contract Some terms are not implied in words Two types: • Implied-in-fact • Circumstances imply that both parties have reached an agreement • Implied-in-law • Requirement by law because of a special relationship between parties or one party may benefit unjustly

Lesson 1: Contracts Summary: In this lesson, you learned: – What a contract is – The different types of contracts and how they work – How contracts can help you