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Chapter 7: Contract Law

CONTRACT

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A legally enforceableagreement to do (or notto do) a particular thing.

-Legally Enforceable Agreement

CONTRACT

Expressed - declareImplied - created by actionBilateral - promise exchanged for a

promiseUnilateral - promise exchanged for

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Bilateral Contract

Promise for Promise

Unilateral Contract

Promise for Performance

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Legal Effect of Contracts

Valid - meets all requirements of law.Void - no legal effect & not a contract.Voidable - one party bound but not the

other.Unenforceable – may have been valid at

an earlier time but now enforcement is barred. © OnCourse Learning

Contract Essentials

Competent parties Mutual assentLawful objectiveConsiderationWritten

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MEETING OF THE MINDS

Offer

Acceptance Counteroffer

OfferAcceptance

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COUNTEROFFER

• Any change in the terms.

• Upon receiving the offer, the offeree has three options: to agree to it, to reject it, or to make a counteroffer.

• An offer can be revoked by the offeror at any time prior to the offeror hearing of its acceptance

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DURESS

Duress (use of force), menace (threat of violence), or undue influence (unfair advantage) cannot be used to obtain agreement.

An act intended to deceive for the purpose of inducing another to part with something of value

Mutual agreement requires that there be no fraud, misrepresentation, or mistake in the contract if it is to be valid

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FRAUD

• In each state there is a law that is commonly known as a statute of frauds.

• Its purpose is to prevent frauds by requiring that all contracts for the sale of land, or an interest in land, be in writing and signed to be enforceable in a court of law.

Statute of Frauds

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Effect as of March 1, 2001Authorizes electronic agreementsAllows for electronic signaturesState may supercede this legislation

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ESIGN ACT

Performance

• Most contracts are discharged by being fully performed or executed by the contracting parties in accordance with the contract terms.

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NOVATION

• the substitution of a new contract between the same or new parties.

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DECEASED PARTY

• If one of the contracting parties dies, a contract is considered discharged if it calls for some specific act that only the deceased person could have performed.

Breach of Contract

Partial performanceUnilateral RescissionMoney damagesSpecific performanceLiquidated damagesMutual RescissionStatute of limitations

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Key Terms

Breach of contract Competent party Consideration Contract Counteroffer Duress

Fraud Liquidated damages Power of attorney Specific performance Void contract Voidable contract

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