BUL 3310 EXAM 4 Study GuideContracts – A legally enforceable agreement. There must be:1. An agreement – Manifestation of mutual assenta. The objective Theory of Contracts –(Meeting of the minds) – Agreeing to the same thing at the same time on the same terms)EX) Seller of a horse sends a letter to the buyer with an offer to sell his horse for $2200. Buyer agrees and sends the seller a check for $2200. Seller gets the check and says “Wait, I was trying to sell the horse for $2500, not $2200! We don’t have anagreement.” If taken to court, buyer would win 2. Obligation – There must be a legal duty to fulfill itTypes of Contracts1. Express – agreement manifested in words (oral or written) EX) Apartment Lease2. Implied – agreement manifested by conduct (all of the terms must be impledly reasonable) EX) Dentist fills a cavity and then sends the bill for $500. Though you did not agree in writing to pay $500, it is implied that you wanted to get the cavity filled.3. Unilateral – promise for an act.EX) Reward for a lost dog. EX) Commision for real estate agent4. Bilateral – Promise for a promise a. Each person promises something; DOES NOT have to be written.5. Executory – Not yet performed. EX) a futures contract6. Executed – Completely performed*There’s a difference between a social agreement and a business contract**Weddings have both social and legal implications EX) Pre nuptial agreement or post nuptialElements of a Valid Contract 1. Mutual Assent (offer & acceptance) A. Offer – Promise to do something for something in return***Essential Elements:1. A promise to render a stated performance in return for the requested counter performance.a. Promissory language requirementEX) I promise to buy/sell….EX) I will buy/sell….EX)I hereby undertake the obligation to buy/sell…b. Effect of equivocal language: Not an effective way to make a contractEX) I am thinking about buyingEX) I am considering buyingEX) I am contemplating buying2. Essential terms must be certaina. Avoid ambiguous language EX) Avoid the word “SOME” it avoids certainty of amount3. Promise must be communicated under circumstances which manifest present, serious contractual interest. Cannot be joking around, must determine if you’re being seriousEX) Bar advertises that they will pay $5 per year for the period between this year (1980) and the year of an event depicted on a t-shirt. 1980 – 1969 (Woodstock) = 11 years x $5 = $55 for the Woodstock shirt.Guy walks in with a shirt depicting the Magna Carta (1215). 1980 – 1215 = 765 years x $5 = $3825. The manager wouldn’t pay him. - Judge rules that if it was interpreted as a serious offer (which it was) than it is a legitimate contract. FSU student won $5000. Termination of OfferDoes an offer stay open forever?A. Expiration of time specified – A deadline is set1. If no time is specified, offer terminates after a reasonable time based on “totality of circumstances” This depends on what is being sold, the rate of price fluctuation etc. Price is a big factorEX) Borders book store has rebate coupon that’s only valid during store hours for a certain number of days. - Offerror has total control over the offer- Deadlines are set to know whether a person is willing to buy at or before a specific time. B. Rejection 1. Express refusal : “no”2. Counter offer : offeree makes a counter offer to offeror3. Conditional acceptance : accept offer with an added condition*Rejection is effective when received by offeror*C. Revocation – aofferor withdrawals offera. Offer is revocable at any time before acceptance.b. Revocation is effective when received by the offereeOption Contracts – A separate contract between the buyer and seller that designates a time to keep the offer open for the buyer to decide if they want it or not. EX) I will pay you $1000 if you keep the offer open to me until dec 15th if you decide to accept the offer the $1000 gets credited to the purchase priceD. Death/insanity of offeror or offeree E. Supervening Illegality – Law is enacted making the offer illegal EX) President Bush bans exports to SyriaF. Destruction of Subject Matter EX)Boat being sold gets destroyed by a hurricaneAcceptanceA. Who may accept offer?a. Only the party to whom the offer is made.B. Conformity “mirror image rule”– Acceptance must conform to the offer. The acceptance must be exactly what the offer C. Conduct as acceptance a. Cashing/depositing of a check – If you deposit someone’s check, you’ve accepted their payment.b. Acceptance of document implies acceptance of terms on the document EX) The terms on an airline ticket are the holders responsibility EX) Plumber comes to your apartment to fix the toilet and bills you $500. Seeing as this isa ridiculous number you send him back $150 as a compromise of debt. The plumber cashes the check but then informs you that you still owe the remainder. If taken to court the plumber would lose because his cashing of the check represented his acceptance D. Silence does not generally constitute acceptance.Unsolicited merchandise belongs to youReality of Consent A. Central issue - Was acceptance of contract offer real and voluntary, ie. Was their real consentB. Consent may be vitiated (maid void) by:1. Misrepresentation – misstatement or omission of material fact justifiably relied upon causing injury.EX) Someone tells you something that’s not true and you lose money ie. Odometer rollback2. Fraud – Intentional misrepresentation 3. Duress – Wrongful threat or act which forces a person into a contractEX) Person puts gun to your head and tells you to sign the contract4. Undue influence – unfair advantage taken by a superior party in a fiduciary (trustful) relationship EX) A client trust his lawyer and the lawyer takes advantage of that trust5. Mistakea) Mutual mistake of fact – remedy availableb) Unilateral – generally, no remedy. Exception: Mistake is so large that other party knew/should have known mistake.EX) Schoolboard buying milk from dairy factory. They were charged $100,000 but when in fact the amount billed was supposed to be $110,000. In this case the judge would rule no remedy as it is not a substantial differnec. However if the school was billed $10,000 instead of $110,000 on accident, a remedy would be put into effect. C. A contract induced by misrepresentation, fraud, duress, undue influence, or mistake is voidable at the
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