Today Finish chapter 12 Apply chapter 13 Recap Offer Acceptance Agreement Agreement definite not vague meeting of minds Unjust enrichment benefit received opportunity to reject expectation of payment Acceptance mirror image rule counteroffers Termination by Operation of Law Offers can terminate automatically before acceptance 1 Lapse of time 2 Destruction of property 3 Death incompetence of either party 4 Illegality Family Video Case Written offer to buy Home Folks restaurant Restaurant burns down Contract Court no contract even if Home Folks didn t know of the fire Mailbox Rule Auto insurance policy renewal March 14 mailed check March 15 expiration date March 16 car crash March 17 22 received and cashed check Court valid renewal if sent before expiration date What if check were lost in the mail Internet Agreements Click wrap agreements Reasonable person not whether you actually read it Legal philosophies Legal realism vs natural law Meeting of the minds Forum selection choice of law provisions E Signatures Valid in most business situations e g PDF Some exceptions e g UCC banking wills This class common law contracts not UCC Preliminary Negotiations Letter of Intent LOI or Term Sheet Framework for future deal Or enforceable contract House Flipping Case Facts Mr Davis and A E TV Flip this House Davis share revenue 50 50 A E no real estate risk A E ok ok I get it and board approval 13 episodes produced 8 million revenue House Flipping Binding Contract In isolation vs in context Would a reasonable person in Davis shoes be justified in believing there s agreement Court yes enough context to show oral contract existed Davis wins 4 million House Flipping Case Analysis NY court oral contracts are just as binding as written contracts under NY law A E s intent to continue negotiating Finalize details after filming the show Counteroffers and Silence McGurn v Bell Microproducts Severance after 12 months or 24 months Court reasonable person would understand acceptance of counteroffer due to silence Four Elements of a Contract Agreement Consideration Capacity Legality Consideration Relevant to modern business Definition Bargained for exchange where each party gives something of legal value not a gift Three Forms of Consideration Three forms of consideration Promise with no prior duty Action with no prior duty Refrain from action with legal right to act forbearance Market Value and Consideration Consideration usually obvious in business Apple gives you an iPhone You pay money Even a peppercorn will suffice Except for fraud undue influence duress Motorcycle for 5 For 50 000 Hamer v Sidway Famous case from 1891 Why relevant Uncle s promise 5 000 for clean living Enforceable contract Court forbearance equals consideration to form binding contract Consideration in Practice Preexisting duty Construction company example 100K becomes 150K Court need bargained for exchange Only valid if you get something in return for price increase Consideration in Practice Past consideration Now that you re a VP we need a noncompete Court continued employment is not enough Need something new in return for noncompete Next Class Finish chapter 13 consideration Discuss chapter 14 capacity and legality