requires a + = WHAT IS IN A CONTRACT? by to another to create.

UNIT 3 CONTRACTS NBEA STANDARD II: Analyze the relationships between contract law, law of sales, and consumer law. OBJECTIVE: Develop an understanding of contracts: distinguish between express and implied contracts, unilateral and bilateral contracts, and oral and written contracts. Distinguish between a valid, void, voidable and unenforceable contract, and contracting with minors. CONTRACT OFFER agreement that requires a + = WHAT IS IN A CONTRACT? by to another to create. to go along ACCEPTANCE with ( ). CONSIDERATION Whatever is for something else. Did everyone give up? ***Developer and Graphic Designer questions? IS THERE AN OFFER? IS THERE ACCEPTANCE? IS THERE CONSIDERATION? IS THERE A BINDING CONTRACT? ***What are the two parts to an agreement? ***Exchange of something from both parties CAPACITY. Capacity has to do with being Did both parties when they entered into the contract? INFANCY Under the age of, can an agreement if not for. WHY UNDER 18?. NECESSITIES OF,,, LIFE ***Sean and snowboarder can he void contract? Explain. 1

MENTAL INCAPACITY DISAFFIRM TWO TESTS: 1) TEST *still used today used in Ohio Did you the nature and consequences of the transaction a the time it was entered into? (2) or TEST Because of the, a person was unable to act in a manner with respect to the transaction. Did the other party or of the condition? ***SMALLEY Can Smalley contract? Explain. Under what age can you disaffirm a contract? TYPES OF CONTRACTS EXPRESS CONTRACT. 2 TYPES: ORAL CONTRACT 1.. WRITTEN CONTRACT 2. What is the general rule of contracts? ENFORCEMENT OF CONTRACTS: ORAL: years; WRITTEN: years after being made. IMPLIED CONTRACT 1.Look at the 2. Can result without What are the facts you look at? QUASI CONTRACT There would be a contract except for (ex: trolley). Determined by two things: and ***What type of contract is created through actions of parties? ***What type of contract is created through clearly stated terms each party understands? ***What type of contract is created through unforeseen circumstances -- contract would have been created under normal circumstances? VALID CONTRACT SIX ELEMENTS OF GOOD CONTRACT Defined as: contract. 1. 2. 3. 4. 5. 6. 2

VOID CONTRACT A contract that is good. element missing that contract. VOIDABLE CONTRACT in contract BUT can OR contract. Example: contract between minor and adults will void contract for but not. Why voidable for minor? BILATERAL CONTRACT sides = promises (promise for a promise) UNILATERAL CONTRACT Uni means. Promise for an. One person promises to do something and the other person. EXECUTED CONTRACT contract when both parties their part of the bargain. EXECUTORY CONTRACT contracts. One party completed their part but other party has completed their part of the bargain. COMMON LAW CONTRACTS All contracts but not all agreements are. PROMISSORY trends of contracts. ESTOPPEL ex: someone makes an agreement with you that you accept in and, can you sue for damages? YES OR NO ***What is the difference between and Void and Voidable contract? ***I offer to pay you $5 if you wash my car. Unilateral or Bilateral? ***I will sell you my candybar for $.50; I will buy your candybar for $.50 Unilateral or Bilateral? ***Third party offers to buy my candybar for $.50. Unilateral or Bilateral? OFFER OFFEROR OFFEREE Proposal by party to another to a contract... BASIC OFFER 1. Offer made to you must be and. REQUIREMENTS ex: Newspaper ad, catalogs, price lists, circular --- 3

NOT IF AD SAYS: Price is good for certain period indicated --can company to that price. 2. Offer must be to. 3. Offer must be made and intent to be obligation. I will see you my stapler for $5; I will buy your stapler for $5 Offers done in or under are not considered real offers MAILBOX When offer mailed, faxed, or phoned by offeror, acceptance RULE takes place when,, or E-mail Acceptance takes place when It does have to be opened. EX: If offer made by mail, offeree accepts and mails--take effect. Why? If offer made by e-mail, offeree accepts by when? Does it have to be opened? If withdrawing an offer, withdrawal does not take affect until offer. e-mail e-mail e-mail e-mail received in designated inbox Exception to mailbox rule: If told to respond by certain method ex (mail) and you respond another way (phone); offer not effective until. ex: offeree receives offer by mail, responds by fax acceptance when? 4

ex: if offeree told to respond by mail and faxes, acceptance when? If offer good for 10 days from date of letter, offer is not good if sent after 10th day no matter when received offer. If offer good for 10 days with no reference to date of letter, offer is good from date you received the offer for 10 days REVIEW OF MAILBOX EXAMPLE: ***If states: good for 10 days and you receive on April 10 and letter was dated April, 1, offer good until. WHY? ***If states: good for 10 days from date of letter and letter dated April 1, you received letter April 10, is offer still good?. ***A & B Pop Quiz #1 When was a contract formed? Can the offer be revoked? ***A&B Pop Quiz #2 Is the offer rejected or accepted by A? REQUIREMENTS FOR ACCEPTANCE Acceptance cannot of original offer in any way. EX: I will see you my stapler for $1,000 yes or no MIRROR IMAGE mirrors. RULE EX: I will you see you stapler for $1,000. I will buy your stapler for $1,000 COUNTEROFFER Any change in of means the has not accepted the offer but made a. Counteroffer ends the first offer. EX: Offer my house for $30,000. Offeree says that is too much but I will offer you $25,000 for your house. COUNTEROFFER If counteroffer made by offeree, who is now the offeror? Who can now accept/reject offer? EXCEPTIONS TO MIRROR IMAGE RULE FOR MERCHANTS 1. can make minor changes as long as it does not change basic terms of the contract. FIRM OFFER 2.Good for days and must be in 5

OFFER AND ACCEPTANCE - OFFER TERMINATION 1. stated in the offer is most common way for END offer 2. No stated = time frame. 3. of subject matter. 4. or of party. If offer made and you accept, offeror dies or declared insane at time offer made, there is contract. If offer made and offeror dies/becomes insane offer accepted, must deal with of estate. SUPERVENING 5. Making an offer and it is to perform it ILLEGALITY KEY ELEMENT: Death or insanity ends an offer if offeror. HOW DO MOST OFFERS END? By actions of. REVOCATION OF OFFER IRREVOCABLE OFFER FIRM OFFER REJECTION COUNTER- OFFER of offer How long do you have to withdraw an offer?. someone to keep an offer open. Ex: I will give you $500 to hold this car until 6:00 tomorrow. Good for months if nothing stated. Must be in. Ex: This is a firm offer until tomorrow at 6:00 ends an offer immediately. Ex: Would you buy my stapler for $5. NO Ends offer. Ex: I will sell you my stapler for $5. I accept buy would you take $4. It is now up to the original to accept/reject new offer. Does the original offer stay on the table? INQUIRY As long as you don t say, original offer still on the table. Ex: I will sell you my stapler for $5. Would you be willing to take $4?. No, price is $5. **** In 2003, several class actions were brought against bottled-water maker Poland Spring. Plaintiff's lawyers claimed the bottled water did not, in fact, come from a spring and was unsafe to drink. The class included some 10 million Poland Spring customers. When a Kane County (Ill.) judge signed off on a settlement, who fared best? A. Poland Spring B. Consumers C. The lawyers D. All of the above Select your answer and explain choice. Choice 6 Explanation:.

DEFECTIVE AGREEMENT FRAUD Genuine agreement disrupted by,,,,. misrepresentation, deception. MISREPRESENTATION (1) Can be. parties believed information provided was true but it was not true. ***Ryan puts his summer cottage up for sale. Mary, interested in buying it, asks if it had termites. Ryan, unaware of the termite problem, answers NO. Mary buys the cottage and discovers termites. Can Mary get her money back? YES OR NO Explain: (2) Cheat someone. ***Andrew s basement floods every time it rains. When Stephanie, a potential buyer, asks about water in the basement, Andrew says the basement is dry. After the first heavy rain, Stephanie s new home basement is flooded. Is Andrew guilty of a crime? YES NO Can Stephanie sue for damages? YES NO Explain: MISTAKE (1) mistake. One of the parties makes a mistake on a fact or in,, or out of. (2) mistake which deals with of subject matter. Contract can be by either party because parties mistaken. Nature of the mistake determines whether courts will help you out. ***Michael agreed to sell his car to Jon for $1,000. Unknown to both of them, the car had been totaled the night before by a tree that fell on the car as it sat on the side of the street. Unilateral or Bilateral Mistake? ***Kierra sent a letter to Melissa offering her a babysitting job at $15/hr. The letter was delivered to another Melissa instead. The other Melissa accepted the offer. Unilateral or bilateral mistake? ***Irmen v. Wrzesinski. How would you decide this case? Find in favor of: Rationale: ***Bank One v. Beckey Find in favor of: Rationale: 7

DURESS UNDUE INFLUENCE MINOR RIGHTS RATIFICATION a person s will by use of ; of force, or threat of harm. Can you use duress as a defense for killing someone? ***Hall v. Ochs. Was Hall legally bound by the contact of release? Rationale: One party in a relationship takes advantage (stronger will substitutes their will for the will of the weaker, thus causing a contract to be voidable. ex: doctor/patient; teacher/student; lawyer/client ***What does voidable mean? INFANCY IS A SHIELD--NOT A SWORD ***What does this mean?. If you take out a contract at 17 and continue making payments after you turn 18, are you liable? Why?. If you lie about your age, are you held to the contract? What crime have you committed? Upon reaching the age of majority, you can ratify a contract made during your minority three ways. 1) 2) 3) IMPACT OF PARENTS If you bought an item with your parents around, who will be held to the contract? If you bought an item without your parents around, can you return the item and ask for your money back? LIMITATIONS (1)Minors can disaffirm contracts even if items or. (2) After disaffirmed, minor must return. (3) Minor cannot disaffirm parts of contract and affirm parts of contract. ***Will Gina be allowed to disaffirm one, both, or neither of the contracts? Explain. 8

TORT RESPONSIBILITY Minors are responsible for all torts. 1) responsible for actions of minors 2) can be sued up to $ for damages or damages such as theft, malicious assault, AND UP TO $ for desecration, vandalism if reckless action. 3) can be sued as well as parent. 4) can be held equally liable for actions of kids. EMANCIPATION Emancipation means protections as a minor. --free from control, care, and custody upon reaching age of or graduation from. In Ohio, emancipation also can occur before 18 if the child gets or joins. In the event of divorce or annulment, or discharge from the Armed Forces before the age of 18, custody of the minor will automatically revert to the parent who previously had custody over the minor. MENTALLY IMPAIRED CONTRACTING INTOXICATED AND CONTRACTING ALIENS (1) If mentally impaired or declared incompetent, if no guardian has been appointed, any contract entered is. (2) If guardian appointed, any contract entered is. Role of a guardian: Look after mentally impaired person s. If intoxicated, must prove was impaired. (1) Must be unable to understand (2) unable to nature or effect of transaction (3) must have been at time of contracting (4) responsible for of necessities ***How did the Supreme Court rule was the agreement void or binding? Did Thackrah have capacity to contract? Explain? People living in this country but owe their allegiance to country (illegals, green cards, etc.) ***If you don t speak English, are you still bound to contracts you enter into?. CARDINAL RULE FOR ALL CONTRACTS: DON T SIGN ANYTHING YOU DON T FULLY UNDERSTAND (A Hungry Drooling Wolf In Sheep s Clothing, symbolizing fraud, evil, and deceit, may be waiting for YOU!! 9