B_LAW 210 1st EditionExam # 3 Study Guide Lectures: 9-11Lecture 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. Consent4. 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 Offer1. Intent to be bound2. 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 offer4. 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 paid2. Unilateral Contract – with substantial performance3. Promissory Estoppel – where Offeree relies to his or her detriment4. Firm offer for the sale of goods - UCCo Rejection: I would never pay $10,000 for that caro Counter-offer: A counter-offer by the Offeree revokes the original offer.o An automatic revocation occurs:1. Lapse in time/expiration2. Destruction of Subject Matter3. Death or disability of either party4. Subsequent illegalityAcceptance: Voluntary action by Offeree that shows agreement to the offer.- Elements of Acceptanceo Unequivocalo Unconditionalo Properly communicatedo ~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 promiseo 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 minoro 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 contracto Student loano Insuranceo NecessariesLegal Contracts:- You cannot enter into a contract in violation of public policyo 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 unlesso 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 policyo 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 conductLecture 11 (October 17):The absence of consent makes a contract voidable:~Rescind = reject ~Ratify = accept - Examples of an absence of Consent1. Mistake: Mutual (Bi-lateral) Mistake: “Mutual misunderstanding concerning a basicassumption 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 littlecontact 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. Collateral Agreements (i.e., guarantees).2. Interests in Real Estate.3. Contract which cannot be performed within one year.4. Sale of goods over $500.5. 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 Parties2. Subject Matter3. Consideration4. 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