Twomey Jennings Andersons Business Law and the Legal
Twomey Jennings Anderson’s Business Law and the Legal Environment, Comprehensive 20 e Anderson’s Business Law and the Legal Environment, Standard 20 e Business Law: Principles for Today’s Commercial Environment 2 e Chapter 12 Contracts Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning
Definition of Contract • 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) and the acceptance is communicated properly. Offer + Acceptance Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning = CONTRACT 2
Parties to a Contract General: Promisor (Obligor) Promisee (Obligee) Parties may be: individuals, partnerships, corporations, governments Examples: Insurer Insured Parties to an Insurance Policy Landlord (Lessor) Tenant (Lessee) Parties Agreeing Upon Occupation of a Building for Money (a Lease) Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning Carrier Shipper Parties to a Transportation Contract Vendor Vendee Parties to a Sales Contract 3
Classes of Contracts FORMAL contract under seal, contracts of record, negotiable instruments INFORMAL OR EXPRESS spoken or written words Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning all other contracts IMPLIED OR created by law based on acts or conduct of parties 4
Classes of Contracts VALID binding and enforceable VOIDABLE OR Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning circumstances allows cancellation at option of one party VOID OR without legal effect 5
Classes of Contracts EXECUTED completely performed EXECUTORY OR BILATERAL one promise given in exchange for another Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning something remains to be done UNILATERAL OR one party promises to perform after the other party does some designated act 6
Contract Example Parties } } } This contract is executed between the Lookout Alarm system, herein called System, of 276 West Jackson Street, Phoenix, Arizona, and A. J. Armstrong, herein called Homeowner, of 737 Inwood Drive, Phoenix, Arizona Installation System agrees to install a burglar alarm system at the above address of the homeowner, in accordance with the specifications that are attached hereto. Payment Homeowner agrees to pay System for the above installation the sum of $4, 863. 00, $663. 00 being paid upon execution of this contract and the balance of $4, 200. 00 being paid within 90 days following satisfactory completion of the work by System. 1 2 3 4 Lookout Alarm System by S. J. Mc. Rory, President July 1, 2001 Date Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning A. J. Armstrong July 1, 2001 Date 5 7
Other Types of Contracts • Option Contract: gives one party the right to enter into a second contract at a later time. • Right of First Refusal: obligates the offeror to make the offer to the person holding this right first. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 8
Quasi Contracts • 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 person to recover the reasonable value of the benefit conferred on the benefited person even though no contract between them requires any payment. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 9
Contracting on the Internet • Forming electronic contracts involves the same principles as “real space” contracts. • Online contracting involves statutes of fraud issues. • B 2 B contracts (Business to Business). • B 2 C contracts (Business to Consumers). • E-Sign and UETA help enforce electronic signatures. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 10
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