Focus Free Write What is a Contract A

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Focus Free Write: What is a “Contract”? A __________________________________________________________ that courts will enforce.

Focus Free Write: What is a “Contract”? A __________________________________________________________ that courts will enforce.

Contracts Contract law has a rich tradition and many complexities. Now- you will be

Contracts Contract law has a rich tradition and many complexities. Now- you will be in a better position to meet the age old challenge of the Latin warning: caveat emptor:

Contract _________contracts Contracts in which the offer implies that it can be accepted by

Contract _________contracts Contracts in which the offer implies that it can be accepted by giving a promise instead of performing the contracted-for act. Paul promises to sell his laptop computer to Pearl if she promises to pay $1, 000 for the equipment. When Pearl makes her promise in response to Paul's, a bilateral contract is formed _______ contract Contracts in which the offeror requires that the offeree indicate acceptance by performing his or her obligations under the contract. Suppose Pat tells Alex, “I am tired of your idle commitments; when you install my new stereo equipment, I will pay you $200. ” Here Pat no longer wants Alex's promise to perform. Pat seeks the actual performance.

Terms Adhesion: when people feel they have no choice but to sign the contract

Terms Adhesion: when people feel they have no choice but to sign the contract presented even though they do not agree with the terms. (one side has all power- sports? ) Termination Clause- part of a contract allows businesses to withdraw if their circumstances change Release  a settlement made by parties when the liability is unliquidated (still exists) because the extent of damages is uncertain. (car accident- INS covers repairs but you agree not to sue the other person) Mirror image rule- The rule that the terms in the acceptance must exactly match the terms contained in the offer. (any changes after acceptance voids contract)

Terms Creditor: person you owe debt to Output contract  A contract in which a

Terms Creditor: person you owe debt to Output contract  A contract in which a buyer agrees to purchase all of a particular producer’s production. Requirements contract  A contract in which a seller agrees to supply all of the needs of a particular buyer. Accord and satisfaction  two parties compromise on the amount of a debt. (settlement- usually receive less than you want)

Terms Counteroffer- A change the offeree makes to the offeror’s terms if agreed in

Terms Counteroffer- A change the offeree makes to the offeror’s terms if agreed in advance. (cancels original offer) Option- A binding contract in which the offeree gives the offeror something of value in return for a promise to keep the offer open. Firm offer- An offer by a merchant for a sale or purchase of goods that states in a signed writing how long the offer is to stay open Ratification is conduct suggesting the intention to be bound by a contract. Revocation- The right to withdraw an offer before it is accepted.

What is Capacity? _________is the ability to understand that a contract is being made

What is Capacity? _________is the ability to understand that a contract is being made & it’s general meaning. Legal ability to enter into a contract. _________  The age at which a person can be legally bound to contracts. (>18) Everyone has contractual capacity except ____________________________________

Why do minors have the right to void their contracts? The rule is designed

Why do minors have the right to void their contracts? The rule is designed to protect minors from being taken advantage of because of their age and lack of experience. The person with whom the minor contracted cannot cancel the contract simply because the other person is a minor. If a minor fails to disaffirm a contract within a reasonable time (a week or so) after reaching age 18, the contract cannot be canceled. Minors are bound for contracts they make for necessities, such as food, clothing, medical attention, and housing. (A car is not a necessity. ) Minors may not void contracts when they have misrepresented their age to the other party or they have operated a business as an adult, and the other party reasonably believed the minor was capable of contracting.

3 parts to a contract 1. 2. 3. _______made by one party(offeror) to another

3 parts to a contract 1. 2. 3. _______made by one party(offeror) to another party (offeree) indicating a willingness to enter into a contract. Can be made to a particular group or to the public _________- The agreement of the offeree to be bound by the terms of the contract. ___________go together to create ________________. Acceptance is the only form of contractual communication that is effective when agreeing to a contract __________- thing of value offered to one party in exchange for something else. ($$, trading something- doesn't need to be = value)

What are the requirements for an offer? The offer must 1. appear to intend

What are the requirements for an offer? The offer must 1. appear to intend to __________. 2. be _________(orally or written) to the offeree. 3. must be _________.

When is acceptance effective? ____________ Letter, e-mail, text, fax, clicking “yes” or “I accept”.

When is acceptance effective? ____________ Letter, e-mail, text, fax, clicking “yes” or “I accept”. EX: A letter becomes an effective acceptance when it is handed to the clerk at the post office ______________ Ex- magazine subscriptions that say: failure to tell us NO means you want to continue service. A _________to accept an offer is ________ an acceptance Oral In person Telephone _____________are effective the moment the words are spoken directly to the offeror. ___________- one party just performs obligations ___________- most common acceptance (promise) Both parties communicate terms/acceptance & perform

Statutes of Frauds Most states have laws (called "Statutes of Frauds") listing the types

Statutes of Frauds Most states have laws (called "Statutes of Frauds") listing the types of contracts that must be written in order to be enforceable. The purpose of the Statutes of Frauds is to prevent fraudulent claims from arising. Although the laws vary from state-to-state, the most common examples of contracts that generally must be in writing are: (1) sales of real property/land; (2) promises to pay someone's debt obligations; (3) a contract that takes longer than one year to complete; (4) real property leases that run for more than a year; (5) contracts for an amount or other consideration that exceeds the state's threshold; (6) a contract that will go beyond the lifetime of the one performing the contract; (7) the transfer of property upon the death of the party performing the contract. (8) Sale agreements of over $50 If you agree verbally to a type of contract listed in your state's Statutes of Frauds without getting the agreement in writing, the contract is not enforceable

Genuine assent (agreement) Both parties agree on all terms If one party uses physical

Genuine assent (agreement) Both parties agree on all terms If one party uses physical threats to obtain an other party’s signature, there is no genuine assent (agreement) between them. If there is no genuine assent (agreement) then the contract is ___________

If both parties don’t agree… ___________- occurs when one party backs out of a

If both parties don’t agree… ___________- occurs when one party backs out of a transaction by asking for the return of what they gave and offering to give back what they have received. ________: occurs when one party uses an _______________ to obtain an expression of agreement. Threats of illegal conduct Threat to report a crime ________is a big part of duress. Economic threats

Influence & Mistakes ____________occurs when one party is in a position of trust and

Influence & Mistakes ____________occurs when one party is in a position of trust and wrongfully dominates the other party. (persuasion) Unilateral mistake exists when one party holds an incorrect belief about the facts related to the contract. Mutual mistakes- both parties have an incorrect belief. Contract is void.

Promissory Note Are they contracts? __________ b/c one party makes an unconditional promise in

Promissory Note Are they contracts? __________ b/c one party makes an unconditional promise in writing to pay a sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms.

IOU’s An IOU is not the same as a formal promissory note or other

IOU’s An IOU is not the same as a formal promissory note or other financial contract. There are rarely any witnesses to the drafting of an IOU, and the repayment obligations may or may not be spelled out directly. Is an IOU a contract? An IOU is actually a _________________ between a borrower and a lender. Once it's signed, the two parties must abide by the terms of the contract or face legal repercussions.