Today Upper division business law courses Finish discussing four parts of a contract Agreement Consideration Capacity Legality Upper Division B Law Courses Commercial Law Employment Law International Business Law Law and Entrepreneurship LSB 4403 T TH 3 30 4 45 Law and innovation creativity Starting and operating your own business IP stock venture capital crowdfunding real estate The Scenario Larry offers to sell car for 10 000 Sally pays 150 for mechanic s inspection Larry decides to sell to Jim Revocation and Acceptance Valid sale to Jim Valid acceptance by Sally Mailbox rule The Law Revocation valid when received by offeree Acceptance valid when sent by offeree Can be risky for both parties Solution Option Contracts What if Larry promises not to revoke Not enforceable because no consideration unenforceable gift Add consideration to create enforceable option contract Option Contract Example Sally pays Larry 200 to hold offer open How much money How long to hold the offer open Must be bargained for exchange without fraud or coercion Option Contracts in Business Mergers Acquisitions M A Facebook considering buying Snapchat Real estate earnest money Option contract buy a due diligence period Equitable Remedies Review Review unjust enrichment when no contract Recall Bob and Jane yard work example Three elements Benefit received Opportunity to reject benefit Detriment suffered expectation of payment Another Equitable Remedy Promissory estoppel when no consideration and thus no contract Court stops you from reneging on promise Promissory Estoppel Three elements Should promisor reasonably expect reliance Did promisee reasonably rely Enforcing promise is only way to avoid injustice Promissory Estoppel Example 1 Harvey v Dow build house on family land Can daughter obtain ownership Court yes three elements of promissory estoppel are met Harvey v Dow Analysis Three elements of promissory estoppel Parents should have expected reliance Daughter did rely on the promise 200 000 Contract claims fail so no other way to avoid injustice Promissory Estoppel Example 2 Church elderly couple promises funds Enforceable promise Court no contract claim unenforceable gift But promissory estoppel can provide justice Common Law Equitable remedies show flexibility of courts Contract claims are more reliable Equity for sophisticated businesses vs disadvantaged parties Four Elements of a Contract Agreement Consideration Capacity Legality Capacity Three areas Contracts with minors Contracts with mentally disabled elderly Contracts with intoxicated people The Risks Know when to ask questions Void contracts automatically unenforceable Voidable contracts one party may choose not to be bound by the contract Capacity Example A 17 year old buys an expensive car May disaffirm the contract Before turning 18 After turning 18 Can t disaffirm for necessaries Can t disaffirm after minor ratifies the contract If disaffirmed court may apply rescission Schedule No class on Thursday 10 8 Fall Break Next Tuesday 10 13 Finish illegality chapter 14 Discuss chapter 15 mistakes fraud consent