Exam 2 Chapter 4 6 Chapter 4 Contract Law and the Hospitality Industry The Elements of a Contract Contract an agreement between two or more parties that is enforceable in court Breach of contract failure to perform the terms of a contract constitutes which in turn results in liability A contract can be in writing signed oral implied or made on the internet The elements of a contract Contractual capacity the ability to both understand the terms of the contract and to appreciate that failure to perform its terms can lead to legal liability including a lawsuit o Voidable minors mentally incompetent intoxicated Voidable contract tion of one party when sober up certain amount of time doesn t apply to necessities one that may be canceled at the op Mutuality means that all parties to the contract are interested in its terms and intend to enter an agreement to which they will be legally bound meeting of the minds o Offer a o Offeror o Offeree for something else proposal to do or give something of value in exchange person making the offer to whom the offer is made Offer must be definite Acceptance If not invitation to negotiate open discussions the offer if rejected no contract exists expression of agreement to the terms of interested but wants to change a few terms new contract to accept Counteroffer to be enforceable a contract must have legal objective Legality o Void contract o Antitrust laws one that is unenforceable in court laws that restrict limitations on competition something of value exchanged for something else of Consideration value o THREE FORMS Tangible item food money promise to give such an Performance pool cleaning waiting tables or promise agreeing to refrain from doing something Forbearance item to perform you have a legal right to do if you are injured at a restaurant you might promise not to sue sue the restaurant if the owner agrees to pay you a sum of money o Illusory an apparent commitment is so indefinite that the party has not in face promised to do anything no firm com mitment o Oral is enforceable but often difficult to prove Statute of frauds to only be enforceable if in writing the law that requires certain contracts Proper form Written Oral Must be in writing Purchase and sale of real property build ings and land Easement the right of one person to use another persons land for a limited purpose Contracts that cannot be completed within one year from when they are made a two year employee contract that person fails to pay 500 Two exceptions Contracts to pay another persons debt if Contracts for the sale of goods in excess of o The seller has delivered the goods and o The buyer paid for the goods and the the buyer has accepted them seller accepted the payment Identity of parties subject matter of the agree ment and its essential terms signed Nature of writing Can be a note letter or memorandum Parole evidence rule ing a written contract using evidence of oral agree ments made prior the signing the writing prevents the parties from modify Genuine assent Does not apply after a contract is signed meaning that the parties must genuinely agree to the contract terms If one party enters a contract not because he truly consents to its terms but because he was subjected to duress the contract is voidable and can be disaffirmed by the party who was threatened o Duress o Fraud o Innocent misrepresentation threats of harm if he does not sign contract voidable intentionally untruthful statement made for the pur pose of misleading someone usually for the fraudulent party s gain if you are a victim of this you can camel the contract without liability untruthful statement that the speaker believes to be accurate can also cancel if this oc curs an error made by only one party to the contract as to the terms or performance expected usually cannot avoid a contact if one mistake is made the contract without liability one shared by both parties either can cancel o Unilateral mistake o Mutual mistake Ambiguous Terms Trade Usage When contact terms are ambiguous the court will use trade usage to clarify the ambiguity Trade usage means practices or modes of dealing generally ad hered to in a particular industry from which an exception arises that they will be honored in a given transaction Ex the cheap chicken In most contracts the promises of the parties to perform their obligations are absolute meaning they must be performed or the promising party Absolute will be in breach of contract If a contract is not absolute but rather depends upon the occurrence or nonoccurence of a specified event that event is called a condition If the condition occurs the contract remains if the condition does not occur the contract is discharged and the parties are not obligated to perform if a re pair man promises to fix a pool only if the pump comes in in 2 days and it does he must repair if it does not he doesn t have to Contracts Formed on the Internet Contracts made online are as enforceable as their land based counterparts a provision that identifies a specific location at which any lawsuit arising out of a contract must be brought re quires the suit must be commenced in FL Forum selection clause Breach of Contract Breach of contract is a civil wrong not criminal A non breaching party may be entitled to a remedy of either The breaching party may be required to pay Compensatory damages Damages Specific performance performance of the contract terms Ex paint money to compensate for resulting loss ing cover loss incurred by the non breaching party as a result of the breach stress only recoverable in cases involving negligence and other torts refers to the sum of money necessary to compensation for physical pain mental anguish Pain and suffering The non breaching party is generally not entitles to Mitigate o A plaintiff seeking to collect damages for breach of contact must prove that the damages were foreseeable to the breach ing party The plaintiff must also prove that a loss was suf fered as a result of the breach reduce or lessen the damages o ex Motel snow plower plaintiff must make an effort to lessen Punitive damages sum of money awarded to plaintiff in excess of o actions must be deliberate or malicious not breach of con compensatory damages to punish the defendant tract cases Contracting for a Room Contracting for a room between an innkeeper and a guest must have these elements contractual capacity mutuality legality consideration proper form and genuine consent Contracts in writing avoid