I II III IV Exam 2 Contracts an agreement enforceable by the law a All contracts are agreements But not all agreements are contracts b Freedom of contract can enter into a contract with the terms that you decide Free will and free choice you and I have the right to be stupid sometimes we make bad choices c 4 elements must have all 4 i mutual assent two people have agreed on something agreement part of the contract ii capacity your ability to enter into a contract iii consideration negotiating iv legality must be for a lawful purpose d valid contract has all of the 4 required elements and it will be enforced e a void contract is not a contract at all results from a defect making it not a contract f in between valid and void there is voidable and unenforceable g a voidable contract appears to be valid but has a defect that gives one party an option to cancel if you are underage this could cause voidable h an unenforceable contract is an otherwise valid contract that will not be enforced because of a legal reason MUTUAL ASSENT is better known as the agreement way to test this was an offer made and was an acceptance given when you have an offer you have an offeror and an offeree Offeror makes the offer The offeree receives the offer Each has a power under the law offeror controls the terms and conditions of his offer Offeree has the power to say yes no nothing or make a counter offer The Offer Has To Have 3 Parts a the offer must show serious intent by the offeror i The reasonable person looks down at what the offeror was saying and if he decides the offeror is serious then its serious b The offer has to be definite c have to communicate the offer from the offeror to the offeree face to face phone text 3rd party I How An Offer Can Be Terminated a rejection by the offeree b revocation by the offeror pulls back cancels revokes offer can revoke offer anytime prior to acceptance can revoke even if you say the offeree has a certain amount of time to respond c counter offer it terminates the preceding offer parties switch places Offeror becomes offeree and offeree becomes offeror d lapse of time the offer will die of old age if not accepted it will lapse or die after a reasonable period of time e the death of the offeror or the offeree the offer dies with the offeror or offeree II Acceptance To An Offer a the acceptance must accept agree to all the terms and conditions of the offer this is called the mirror image rule b your acceptance must be unconditional and absolute yes means yes no maybe or thinking about it answers c the acceptance must be communicated from the offeree to the offeror silence is not an acceptance III Situations That Affect Mutual Assent the agreement a duress a threat of any kind that takes away one party s free will you have an offeree and an offeror but the offeree says yes under a threat pressure didn t say yes under free will can be physical gunpoint and non physical blackmail the contract entered into under duress is void b IV Undue influence one party to the contract takes advantage of the other party in a fiduciary relationship relationship of trust someone in the superior position is supposed to look out for someone in the inferior position Trustee is the dominant party the inferior party is the beneficiary The contract is voidable The victim has the option to cancel and walk away c Fraud one party misrepresents a material fact deceives lies tricks Stating an opinion does not constitute fraud Misrepresenting a fact constitutes as fraud End result void or voidable depending on your state Id your silence fraud No if you re not asked the direct question you re not required to volunteer facts Silence without a question is not fraud i Fact can either be proven to be true or false ii Opinion What we believe but cant be proven to be true or false d Mistake 2 types i As to the subject matter both parties don t know contract is void ii As to the value of the subject matter there is no effect on the contract It s valid and enforced CAPACITY do you have the legal power to enter into a binding contract a Minors age every state has a minimum age that you must reach to order to have capacity into a contract Alabama age of majority 19 A contract maid by a minor is voidable at the option of the minor except for necessities Meaning the minor has the option to walk away and the other party has no say If it is a necessity the minor must pay the value of the goods or services not the contract price i Necessities food shelter medical care clothing ii Minor can affirm chooses to stay in the contract by continuing to pay or disaffirm the minor chooses to cancel and walk away by stop making the payments Minor can affirm only after he turns 19 Minor can disaffirm at any time while he is a minor and within a reasonable period of time after he turns 19 2 3 months iii Upon disaffirming the minor must return what he bought in whatever condition it is in if he still has it iv Adult deals with minors at their own risk They cannot be forced to enter into a contract with a minor Usually get a cosigner v If the minor misrepresents his age he looses his right to disaffirm b Intoxication one party to the contract is under the influence of some mind altering substance i Its not limited to alcohol legal or illegal ii Were not talking about criminal law iii Intoxication level you do not understand what you re doing when you enter into the contract iv Very hard to prove at that level Very few contracts are set aside because of intoxication c Mental defect what if you have some mental defect 3 Consideration the negotiating or bargaining process when two people negotiate they exchange something exchange a promise for another promise whatever you exchange it does not have to have any actual money value you can not promise to do something that you are already obligated to do have to promise something new 4 Lawful Purpose Legality a contract must be for a legal or lawful purpose if it is illegal the law will not enforce the contract both parties or left as is 1 violation of a statute law violating a criminal civil law usury law sets maximum rate of interest that can be charged on a loan Sunday blue laws a contract made on sunday was illegal not like that now the sunday blue law for alcohol is still in place Revenue Licenserequires you to have a license in order to do business violation contract will be enforced Regulatory License these statutes protect the public by setting minimum …