Contracts Business Law Test 4 Guide 1 There will be 33 questions 2 The test is NOT cumulative highlighted portions not be tested on 3 When studying for this test read this guide more than once Pay special attention to the 4 Most of the examples are included only for your general understanding of the concepts and will a I have highlighted the examples that WILL be tested on so you can memorize the details from those cases 5 Pay attention to the legal language used and it s meaning Contracts Definition a legally enforceable agreement Legally enforceable means that when a person fails to live up to the agreement o The injured party can sue the other party for breach of contract K is a symbol for contract in any legal paperwork Contracts are a small subset of agreements NOT all agreements are contracts o Not every agreement is legally enforceable Illegal agreements are NOT enforceable Ex a student was caught cheating in the law school The dean s office was aware of the cheating The student hired a hit man to kill the dean If the hit man had finished the job and the student refused to pay o The hit man would not be able to sue because their agreement is NOT legal Ex gambling contracts are also illegal and are NOT legally enforceable Social agreements are NOT legally enforceable Ex if you make a date with someone and don t show up you cannot sue them This is because we want to prevent an avalanche of legal cases over hurt feelings or breach of etiquette As seen in the following examples sometimes lines are blurred A young girl was asked to prom by a young man o She went out and bought an expensive dress and shoes and had appointments for pedicures hair etc made o He called an canceled the night before o This case went to court and eventually settled o This wasn t just a social agreement because there was Another example would be a canceled wedding with a lot of money spent expenses o In this case this would be considered a business agreement in terms of the relationship with the vendors Prenuptial and postnuptial agreements Nuptial refers to a marriage In blended families o You have The husband s kids from a previous marriage The wife s kids from a previous marriage The husband s and wife s kids from the current marriage o A prenuptial agreement would address the needs of each these different groups Wavered spousal rights surrendered rights o In Florida a pre or postnuptial agreement must be a formal agreement def on the In writing test Signed Two witnesses o Rights can be waved to property shares etc Meaning if you feel like your future spouse is not entitled to your house in the case that you divorce this can be stated in a post or prenuptial agreement o The law does not require you to disclose your full financial situation to your spouse before committing to a prenuptial agreement After you are married you must make a fair disclosure of your assets and financial situation to your spouse before making a postnuptial agreement o Famous prenuptial agreements Prince William and Kate Middleton Prince William is second to the throne of Britain Pre nups are common in the US but not in Britain Most lawyers recommend that William and Kate get a prenup Catherine zeta Jones and Michael Douglas Catherine gets 1 5 million dollars for every year they are together Catherine also gets money if she catches him cheating Michael gets all wedding gifts worth more than 20 000 and his privacy Essentials of a contract Agreement manifestation of mutual assent consent about the relationship o Both parties show that they agree on the same terms on the same issues This agreement can be shown orally or in a written format o The objective theory of contracts Meeting of the Minds This theory basically says that both parties minds must agree to the same terms written However we cannot read minds so the court only interprets what is Ex someone is selling a horse and sends a letter to the buyer The letter states that he will sell the horse for 2 200 The buyer likes the offer and returns a letter accepting terms and attaches a check for 2 200 The buyer wrote 2 200 but meant to write 2 500 The buyer sues seller for breach of contract The seller says the didn t have a meeting of the minds and therefore If this were to go to court the court can only base this on what was don t have a contract objectively manifested In this case what was written in the letter because we cannot read minds or hearts and the 2 200 sale is a contract Obligation legal duty o A contract must have a legal commitment Ex social or illegal provisions do not constitute a legal commitment Types of contracts Express Contract agreement manifested in words oral or written o Ex agreeing verbally to pay your friend 400 month to stay at their apartment Implied Contract agreement manifested by conduct o Ex at a dental appointment The dentist finds a patient s cavity during the appointment The patient agrees to have it filled but did not ask the price The patient was asked to pay 500 The patient refused and argues that he didn t make a contract Therefore according to the patient he is not responsible for payment The dentist argues that there is an implied contract made because even though the fees weren t discussed the patient agreed to have the services Therefore the patient is responsible for payment Rule in an implied contract all the terms of the contract are impliedly performed reasonable This means that the jury would decide what is reasonable Surveys of multiple dentists of what a reasonable fee would be for filling a cavity would help the jury decide if the 500 fee is reasonable Unilateral Contract promise for an act o Ex A reward contract I promise to pay you 100 if you find my dog This is different from a bilateral contract because it is not promising you pay for looking for the dog It is only promising to pay for the act of finding the dog Meaning you can spend days looking for the dog and not receive a penny o Another ex Realtor contracts Realtors only get paid if the sell the house Bilateral Contracts a promise for a promise o Most contacts are bilateral Ex Employee and sales contracts are usually bilateral As an employee you promise to perform work tasks in exchange for the promise to receive cash compensation Executory Contracts not yet performed o Ex if you have a contract to work for 6 months starting next month Right now you have an executory contract because you have not worked yet and have not been paid yet Executed Contracts
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