Legal Environment of Business Mondays 6 35 9 20pm Professor Ludick notes by Tyler Moses based on audio recordings of lectures March 2 2015 Contract Law Only going to test on the stuff talked about in this lecture hall Contract binding agreement legal binding where two parties voluntarily agreed to do something concept of promise many times there are two promises but at least one promise is necessary but not every promise is a contract I ll respect you in the morning Contract is an agreement between two parties where by one party promisor or offeror for consideration agrees to do something or refrain from doing something for the other party promisee or offeree professors definition We all enter into contracts to be where we are all at today Most contracts are agreed to and performed and never see litigation 99 9 of the time 5 Elements of a contract that must exist for there to be a legal contract 2 Agreement offer and acceptance 3 Consideration what each party is giving up to the other sometimes trade or services usually a value or monetary component of a contract s consideration 4 Consent assent voluntarily doing something sometimes when it s not voluntary there is not a contract 5 Capacity whether or not a person has the legal ability to enter into a contract some have 6 none or some has limited contract law protects these people Legality even though a promise is the foundation not all promises are legally enforceable activity that is illegal the courts will not enforce those contracts Writing Statute of Frauds sometimes also required for there to be a contract real estate 4 Ways of classifying contracts 1 Form of promise foundation of contracts is that there are one or more promises a Unilateral one promise offeror is making one promise and asking for offeree to not make a promise but a performance b Bilateral two promises offeror is making a promise in return for offeree to make a promise back and promisee i Presumption that there is one party that is dominant in contract law promisor 2 Type of communication ii New house construction build me a house and I will pay you x amount build a house unilateral will you build me a house for x amount say yes bilateral every contract is one or the other iii Attempt to make contract law uniform in all 50 states UCC attempt to make some of the laws similar in other states 1 In unilateral situations parties have to give notice in performance iv Mow my yard and I ll pay you x amount form binding contract by mowing the yard Will you mow my yard Form contract by saying yes a Express contract is actual communication between two parties i Oral express or written express b Implied in Fact conduct no express communication between parties but by how we do things i Go to see doctor never talked about what services doc would provide or how much is costs just want doc to address medical concern beyond argument that when leave doctor s office you will pay for their services or insurance will c Implied in Law Quasi contract no express or conduct sometimes courts will imply in law that there is a contract because it is unfair to allow one party to accept benefits or services of another without paying for them i Painters agreed to paint a house but instead painted a different house The painters painted to the wrong house without a contract but they provided a benefit to the wrong house and because of their services the value of the house increased and even though there was no contract the painters are still required to be paid If the homeowner of the wrong house was not home and was unaware of the painters painting their house the painters may not be required to be paid by the wrong homeowner If the house was painted a very different or ugly color the house may not have received that high of a value increase The courts have some room to decide the amount of value increase 3 Legality or Enforceability of contract a Valid all elements of contract are there each party has rights and responsibilities in a contract b Void at least one of the elements are missing there is no contract c A voidable a contract this is avoidable i Some individuals that have recognizable legal disabilities they can avoid promises that they make 1 Minors individual that is less than 18 even a little time after 18 can avoid promises that they make 4 Extent of performance a Executed fully performed contract i If a contractor has built a house for x amount and was paid it is executed b Executory not fully performed contract 5 or 6 Elements of a contract 1 Agreement a Offer offeror has control there has to be an intentional offer parties are participating in an action that is voluntary i Playing golf bought new expensive driver 500 but wasn t playing well at all with it Said anybody with 50 can have this club but he wasn t being serious so it could not be a legal contract ii Something mismarked in a store 6 of an item on the shelf 5 are marked 10 and 1 is marked 8 go to register and they say that it should be 10 the law says that the price tags are invitations to make an offer and when you take it to the register you are making the offer to pay whatever the price tag says iii Essential terms that have to be present in every offer 1 Parties participants in an transaction offeror has the ability to choose who they want to do the contract with offeror can legally discriminate to who they offer to can choose based on what shirt they are wearing or something of that nature 2 Price 3 Performance when 4 Quantity one or two houses built 5 Once these terms are present the offeree can either accept or deny the offer 6 Mirror image rule when an offer has been made by offeror the offeree must mirror image the acceptance if the offeree accepts with different terms it is rejection and the offer has been terminated will you build a house for x amount yes I will build you a house but it will be different house than you want that is rejection and it terminates the business relationship or if you reply with a counteroffer of a smaller price it is a rejection and if the counteroffer is not accepted the offer is terminated 7 The offer itself is accepted a Mailbox rule when the offeree accepts the offer by the means that were solicited acceptance is deemed to occur when the offeree puts the acceptance in the mail box to be delivered b The offeror can modify the mailbox rule and say that the offer isn t accepted until the offeror receives the acceptance in person or something of that nature if an offeree
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