BUL Test 4 p. 70 Contracts – a legally enforceable agreement - doesn’t have to be written - sound business practice would advise to put it into writing - between two people and requires that both uphold their end of the bargain or you can sue the other party - Ks is an abbreviation standing for contract What makes it not legally enforceable? - if the contract is in regards to something illegal (like hiring a hit man) Pre-Nuptial/ Post-Nuptial Contracts- relating to marital relationships - can do before or after marriage- when married you have inheritance rights, but you can make changes to these rights - both parties must sign in front of 2 witnesses Essentials of a contract1. agreement – manifestation of mutual assent (agree on the same thing and on the same terms, words tell there is an agreement – it can be verbal or written) a. the objective theory of contracts – “Meeting of the minds”i. ex: horse sale: Selling writes a letter to a potential buyer saying he will sell his horse for $2200. The buyer writes back say yes I will buy your horse for $2200. This action shows they have entered into a contract. Upon review the seller notices he made a mistake when writing the letter and was actually hoping to get $2500 for his horse. Because of Objective Theory the court ruled in favor of the buyer. It was a written contract. 2. obligation – legal duty p. 71 6 Types of contracts 1. express – agreement manifested in words (oral or written) ex: buying a car, signing contract 2. implied – agreement manifested by conduct ex: dentist appointment –fills a cavity – now that patient has an obligation to pay 3. unilateral – promise for an act ex: 4. bilateral – promise for a promiseex: selling a car 5. executory – not yet performedex: signed contract for the future 6. executed – completely performed ex: 3 months paid contract, when it is up, no legal obligation p. 72 Elements of a valid contract A. Mutual assent (offer and acceptance) Horse example B. Consideration – bargain for exchange“Ill give you this if you give me that”C. Capacity - all have to do with mental capacity - old enough – 18 years old - sane - sober D. Legality – legal purpose of the contract p. 73 1st part of a contract: Offer: Essential elements A. def: a promise to render a stated performance in return for the requested counter performance I’ll do this for you, if you do this for me. 1. promissory language required a. I promise, I will, I hereby undertake the obligation 2. effect of equivocal language (sitting on the fence) a. I am thinking about, considering or contemplating B. essential terms must be certain (names or parties, subject matter, price, quantity)1. avoid ambiguous language (unclear, can have more than one meaning)a. ex: some or part C. promise must be communicated(tell them youre making an offer) under circumstances which manifest present, serious contractual intent p.74 Example of a contract Bar in Tallahassee back in the day said: We’ll pay $5 per year for the period between this year (1980) and the year of the event depicted on a t-shirt. T- shirt one: 1980- 1969 (Woodstock)= 11 years X $5 = $55T-shirt two: 1980 - 1215 (magna carta)= 765 years X $5 = $3825Well the kid who wore the magna carta shirt said the bar needed to pay up because that is what they promised in the their advertisement. This case went to court and the bar claimed, “they were just kidding.” There statement was communicated and serious which made it a contract. The student won 5k which covered court fees and the amount he was owed by the bar. p.75 Termination of an offer a. Expiration of time specified - if you don’t include a date of expiration that’s different - if no time pecified, offer terminates after a reasonable time based on “totality of cirsumstances” ex: land or stock b. rejection: express refusal , counter offer, conditional acceptance - rejection is effective when received by offeror (making the offer) - offeree – to who offer is bing made - express refusal – no!! or counter offer for a lower $- offeree doingc. revocation – offeror doing 1. offer is revocable at any time before acceptance2. revocation is effective when received by offereep. 76 Option Contracts – K – gives buyer a choice Sell wants to sell Greenacre for 25K to the buyer and the offer ends on 6-1-13. Buyer has the choice to accept or decline. If he accepts then 1K will be used as a down payment. p. 77Termination of offer continued Additional ways to terminate:d. Death/ insanity of offeror or offereee. supervening illegality – a law is enacted making the offer illegal ex: you sell computers and our tying to sell to Iran. You find out that the president say no business with them other than food and medicine. Your practice would be illegal. f. destruction of subject matter ex: selling someone a boat but a hurricane destroys the boat. The offer is terminated. Do you have to notify of termination? No, but its common curtacy. p. 78 AcceptanceMutual accent “agreement” a. who may accept an offer? - party to whom offer is made – offereeb. conformity – acceptance must conform to offer (“Mirror Image” rule)power of the offerorc. conduct as acceptance ex: going to the convinent store 1. cashing/ deopositiing a check2. acceptance of document implies acceptance of terms on the document d. silence does not generally constitute acceptanceplumber does services for a customer and the bill comes in at $500. The customer sends a check to the plumber for $150 in compromise of debt. Who’s obligation is it to find out how much is being charged? p. 79 Reality of ConsentA. Central Issue – was acceptance of K offer real and voluntary. Was there real consent? B. Consent may be vitiated (rendered null and void) by: if any one of these happens there was not mutual consent 1. misrepresentation – misstatement or omission of material (important) fact justifiably relied upon causing injury 2. fraud – intentional misrepresentation ex: 5K for a car with 60K miles. Goes to find out the car’s odometer has been set back. You can definitely get out of this contract. 3.Duress – wrongful threat or act which forces a person into a contractex: when cops beat someone into signing a confessionex: husband and wife sign divorce papers because if she doesn’t he threatened to take custody of the children4. undue influence – unfair advantage taken by superior party in a fiduciary
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