Section 4.1

Agreements and Contracts

Section 4.1 Agreements and Contracts

A contract is any agreement enforceable by law.

Section 4.1 Agreements and Contracts

A contract requires six elements:

offer

capacity

legality

acceptance

consideration

genuine agreement

Section 4.1 Agreements and Contracts

An offer is a proposal to do something or pay an amount to another party.

Acceptance is when a party agrees to an offer made by another party.

Section 4.1 Agreements and Contracts

Capacity is the legal ability to enter into a contract.

Consideration is something of value offered or exchanged.

Section 4.1 Agreements and Contracts

Legality means that a contract may not involve breaking the law.

Genuine agreement means that a legal offer is met with a legal acceptance.

Section 4.1 Agreements and Contracts

Contracts can be valid, void, voidable, or unenforceable.

A contract is valid if it is legally good.

A contract is void if it lacks one or more of the elements of a contract.

Section 4.1 Agreements and Contracts

A contract is voidable if either party can cancel the contract for a legal reason.

A contract is unenforceable if it will not hold up in court.

Section 4.1 Agreements and Contracts

A contract can be express or implied.

An express contract is a contract stated in words and may be either written or oral.

An implied contract comes about from the actions of the parties.

Section 4.1 Agreements and Contracts

Contracts may be unilateral or bilateral.

A bilateral contract is when both parties promise to do something.

A unilateral contract is when one party promises to do something only if the other party does something.

Section 4.2

How a Contract Begins

Section 4.2 How a Contract Begins

To be valid, an offer must be:

made seriously

definite and certain

communicatedto the offeree

Section 4.2 How a Contract Begins

An offer must be made with serious intent to enter into a legal obligation.

Offering to sell your car to someone for $5.00 as a joke is not a legally binding offer.

Section 4.2 How a Contract Begins

An offer must be definite and certain.

An offer to buy a friend’s iPod for a reasonable amount at some time in the future does not constitute a valid offer.

Section 4.2 How a Contract Begins

An offer must be communicated to the offeree, the person the offer is made to.

This can be done in person, or by phone, letter, e-mail, text message, or any other means of communication.

Section 4.2 How a Contract Begins

Acceptance of an offer by an offeree has two basic requirements:

it must be unconditional

it must be communicated to the offeror

Section 4.2 How a Contract Begins

To be unconditional, an acceptance must follow the mirror image rule, which means it must match the terms of the offer.

Section 4.2 How a Contract Begins

Like an offer, an acceptance must be communicated to the offeror.

At the time the acceptance takes place, the contract comes into existence.

Section 4.2 How a Contract Begins

An offer can be terminated, rather than accepted, in five ways:

revocation

counteroffer

death or insanity

rejection

expiration of time

Section 4.2 How a Contract Begins

Revocation is when the offeror takes back the offer.

Rejection is when the offeree refuses the offer.

Section 4.2 How a Contract Begins

A counteroffer is when the offeree changes the terms of the offer.

The offer is terminated and the offeror can accept or reject the counteroffer.

Section 4.2 How a Contract Begins

If the offeror sets a time limit on an offer, such as one week, it must be accepted by then or the offer is terminated.

An offer is also terminated if the offeror dies or becomes insane.