B LAW 210 1st Edition Exam 3 Study Guide Lectures 9 11 Lecture 9 October 10 Contracts A legally binding agreement between 2 or more parties What defines a Contract 1 Agreement Offer Acceptance Consideration 2 Capacity 3 Consent 4 Legality lawful subject matter Types of Contracts o Bilateral 2 promises o Unilateral 1 promise can only be accepted by actual performance o Express Terms are understood by written or oral words o Implied Contract is implied by actions o Valid Enforceable Lawful o Voidable One party may cancel the contract o Void No legal effect unable to sue for recourse Offer Promise conditioned upon an act promise or forbearance promise to NOT do something Elements of an Offer 1 Intent to be bound 2 Definiteness terms must be reasonably certain 3 Communicated Not an Offer 1 Expression of Opinion 2 Statement of Future Intent 3 Advertisement Invitation to make an offer 4 Auction Invitation to make an offer Termination of an Offer o Revocation An offer can be revoked by the Offeror any time prior to acceptance by the Offeree in most cases except 1 Option Contract when consideration has been paid 2 Unilateral Contract with substantial performance 3 Promissory Estoppel where Offeree relies to his or her detriment 4 Firm offer for the sale of goods UCC o Rejection I would never pay 10 000 for that car o Counter offer A counter offer by the Offeree revokes the original offer o An automatic revocation occurs 1 Lapse in time expiration 2 Destruction of Subject Matter 3 Death or disability of either party 4 Subsequent illegality Acceptance Voluntary action by Offeree that shows agreement to the offer Elements of Acceptance o Unequivocal o Unconditional o Properly communicated o Only an intended Offeree may accept an Offer The Acceptance must be in the form indicated o Remember Acceptance can be in the form of an act or promise o Offeror can require Acceptance in writing or other conditions o Silence Acceptance ONLY when the Offeree takes the benefit of the offer and had a reasonable time to reject or prior business relationship Old Rule Acceptance must be of the exact offer made New rule All material terms must be the same Mailbox Rule An offer is accepted upon dispatch when dropped in the mailbox this is true even if the contract is lost in the mail and never received REMEMBER Think of examples to help with concepts Lecture 10 October 15 Who does not have Capacity Minors under 18 Mentally incompetent can t understand what they are agreeing to Intoxicated people courts don t like this one If a person lacking capacity signs a contract it is generally voidable at any time up to the removal of the disability o A reasonable period after the removal o After turning 18 in the case of a minor o If someone is adjudicated mentally incompetent the contract is void Disaffirmance The legal avoidance or setting aside of a contractual obligation o If there is a disaffirmance the disaffirming party must return the goods or money or pay for the value of the use Ratification The act of accepting and giving legal force to an obligation that previously was not enforceable o Can be shown by conduct EX Eighteen year old keeps a car a year after birthday he can t disaffirm Minors cannot disaffirm o A marriage contract o Student loan o Insurance o Necessaries Legal Contracts You cannot enter into a contract in violation of public policy o Against a statute can t charge interest at a rate higher than allowed by law o To commit a crime dump waste in the river o To act without a required license repair car without license Non compete clause can be against public policy unless o Legitimate business purpose not punishment o Reasonable in time and scope Unconscionable when you shift risk unreasonably uneven bargaining power o Contract can be unconscionable on either procedural or substantive grounds Exculpatory clauses can be against public policy o Circumstance if you owe a public duty like an airlines o Relationship Doctor Patient o Language Some statutes do not allow exculpatory clauses T cannot be forced to waive a LL s grossly negligent or intentional conduct Lecture 11 October 17 The absence of consent makes a contract voidable Rescind reject Ratify accept Examples of an absence of Consent 1 Mistake Mutual Bi lateral Mistake Mutual misunderstanding concerning a basic assumption on which the contract was made Unilateral Mistake Occurring when only one of the contracting parties is mistaken about a material fact Mistaken party is bound unless other party knew or should have known of the mistake 2 Fraud Misrepresentation that is consciously false and is intended to mislead another Elements A misrepresentation of a material fact must occur There must be intent to deceive The innocent party must justifiably rely on the misrepresentation Remedy Rescission AND damages including possible punitive damages 3 Undue Influence Unreasonable persuasion arises from a special relationship You look at the relationship to the party elderly person with little contact besides housekeeper 4 Duress Forced into an agreement not voluntary use of threats No real alternative to signing the contract coercion Contracts DO NOT have to be in writing UNLESS they fall under the Statute of Frauds The Statute of Frauds applies to these contracts 1 2 3 4 5 Collateral Agreements i e guarantees Interests in Real Estate Contract which cannot be performed within one year Sale of goods over 500 Marriage Executor Prenuptial Agreement Agreement to personally cover a decedent s debts Statute of Frauds The writing to be sufficient must contain 1 Identity of the Parties 2 Subject Matter 3 Consideration 4 Quantity 5 Signature of party to be charged Signed by the party against whom it is to be enforced E Signature Act Allows electronic signatures to meet the writing requirement Parol Evidence Rule Courts will not look outside the written words of a contract unless o To explain ambiguity o To prove fraud or duress o If there is no merger clause to show supplemental info Even if it s not enforceable under the Statue of Frauds look at Quasi Contract Promissory Estoppel