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CONTRACTS
Negotiation and Drafting
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What is a Contract
An agreement between two or more persons to exchange something of value
A legally binding promise
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Examples
Credit Card Agreement Signed agreement related to a job Online agreement when starting a
Facebook or email account An agreement to buy something
from a friend Eating at a restaurant
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Elements of contracting
Offer
Acceptance
Consideration
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Offer
Offer: an invitation to make a contract
Examples? Displaying a take it or leave it
contract online Bidding on ebay Putting a price tag on an item in a
store
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Acceptance
Acceptance: the point at which one party agrees to the other party’s offer
Examples Clicking that you accept the online
contract Winning an ebay auction Buying the item from the store
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Consideration
Consideration: What each side gives the other
Generally, courts will only enforce a contract if both sides are getting something.
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Minors and Contracts
Minors can make contracts but usually are not bound to them Must return any consideration they have
when breaching contract Exceptions: food, clothing, shelter,
medical aid
Many places require cosigners for minors
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Always Get it in WRITING!
Must have written contracts for: Real estate Goods over $500 Agreement to pay another’s debt Services scheduled >1year in advance
Oral contracts are 2nd best, and often not enforceable
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Fraud
Fraud: false statement about an important fact to persuade someone to enter into a contract Cannot lie about certain features, but
don’t have to tell the whole truth
Fraud invalidates a contract
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Is this a contract?
You order a book of Amazon.com. Your credit card is charged, but no book ever shows up.
Was there a legally enforceable contract?
Yes, you agreed to pay Amazon.com money and they agreed to send you a book.
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Is this a contract?
Last year, your uncle promised you an iPhone for your 18th birthday. When you turned 18, he gave you his old broken basic cell phone.
Was there a legally enforceable contract?
No, while your uncle made a promise, he did not receive any consideration in return. Consideration has to be more than good feelings.
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Is this a contract?
You signed up for a week long summer basketball camp which cost $100. You paid and went to the camp. When you got to the camp, they just had you watch football movies all day.
Was there a legally enforceable contract?
Yes. You agreed to pay money to the camp and they were supposed to give you basketball training.
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Drafting a Contract
Include all the terms (“At issues”) Don’t be afraid of creative solutions Use specific binding language:
“Shall” not “Will” X shall pay Y $10. Y shall wash X’s car.
Not: X will pay Y $10. Y will wash X’s car.