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ES 2.00 UNDERSTAND CONTRACT LAW ES 2.00 UNDERSTAND CONTRACT LAW

ES 2.00 UNDERSTAND CONTRACT LAW - PowerPoint Presentation

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ES 2.00 UNDERSTAND CONTRACT LAW - PPT Presentation

Obj 201 Understand the elements and characteristics of a contract https wwwyoutubecomwatchvHi4fOXfqJJw Notes Understand Contract Law BL 201 Notes Organizer Understand Contract Law ID: 753051

offer contract contracts party contract offer party contracts consideration activity person statement offeror unilateral promise law agreement legal notes

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Slide1

ES 2.00 UNDERSTAND CONTRACT LAW

Obj. 2.01 Understand the elements and characteristics of a contract

https://

www.youtube.com/watch?v=Hi4fOXfqJJw

Slide2

Notes: Understand Contract Law

BL 2.01 Notes Organizer

Understand

Contract Law

Handout/Open from the teacher/class webpage

https://www.youtube.com/watch?v=Hi4fOXfqJJw

Slide3

Elements of a Contract

OfferAcceptanceGenuine Agreement/Assent

Consideration

Capacity

LegalityAll elements MUST be present to be an enforceable contract.Slide4

OFFER

Proposal by one party to another with intent to create a legal binding agreement

Offeror

Makes the offer

OffereeOffer made to this personSlide5

Requirements of an Offer

Serious IntentMust intend to make the offer

Advertisements?

No serious intent

Known as an invitation to negotiate Definite and CertainMust use definite wordsCommunicated to the OffereePhone, fax, Internet, letter, etc Slide6

Termination of Offer

Revocation – Taking back of an offer by offeror Rejection – Refusal by the offeree Counteroffer – Any change in the terms of

the offer

Death

– Offeror dies Insanity – Offeror is declared insane Expiration of Time – If the offeror puts a time limit on the offer and it has passed Destruction of the subject matter Slide7

Options & Firm Offers

Option – the offeree gives the offeror something of value in return for a promise to keep the offer open for a set period of timeFirm Offer – a written offer for goods that states the period of time during which the offer will stay open

No additional consideration is required

Maximum period of time set by the UCC – 3 months

Offeror must be a merchant who deals in related goods on a daily basisSlide8

Activity 1: Contract Law--Offers

BL 2.01 Activity 1-Use the following scenario to answer the questions at the bottom.

(Use PPT Notes)Slide9

Activity 1: Contract Law--Offers

Bob called Kevin and told him he would sell 10 of his baseball cards for $50

.

 

Who is the offeror? Who is the offeree? Is this an offer? Why or why not?

Bob

Kevin

No

Not definite and certainSlide10

Activity 1: Contract Law--Offers

Marsha’s car broke down. She yells out I should sell this car for $50 right now. Her friend, Ashley, says “ok, I’ll buy it” and gives her $50

.

Who is the

offeror? Who is the offeree? Is this an offer? Why or why not?

Marsha

Ashley

No

No serious intentSlide11

Activity 1: Contract Law--Offers

While at home alone, Carla decides to sell her computer to Mike for $500, so that she can buy a new one.

Who is the

offeror

? Who is the offeree? Is this an offer? Why or why not?

Carla

Mike

No

Not communicated to

offereeSlide12

Activity 2: Contract Law--Offers

BL 2.01 Activity Read the scenarios and answer the questions.

(Use PPT Notes)

Handout.Slide13

ACCEPTANCE

Unqualified willingness by the offeree

to go along with the

offer

Mirror Image RuleTerms of the acceptance must match exactly (mirror) the terms of the offerAny change means there is no acceptance (counteroffer)Slide14

Methods of Acceptance

Bilateral Acceptance

Offer is accepted by offeree through communication of the promise to the offeror

Only requires giving a promise to perform, not performance itself

Most offers are bilateralUnilateral AcceptanceOfferor promises something in return for offeree’s performance and indicates that performance represents acceptanceSilence as AcceptanceDoes not represent acceptanceOfferor cannot word offer in a way that silence would be considered acceptancehttps://www.youtube.com/watch?v=oMNQHZgO-xQ Slide15

Bilateral Acceptance

Examples of bilateral contracts are present in everyday life. You're entering this type of agreement every time you make a purchase at your favorite store, order a meal at a restaurant, receive treatment from your doctor or even checkout a book at your library. In each circumstance, you've promised a certain action to another person or party in response to that person or party's action.Slide16

Unilateral Acceptance

You might see examples of unilateral contracts every day, too; one of the most common instances is a reward contract. Pretend you've lost your dog. You place an advertisement in the newspaper or online offering a $100 reward to the person who returns your missing pooch. By offering the reward, you're offering a unilateral contract. You promise to pay should anyone fulfill the obligation of returning your dog. You're the only person who has taken any action in this contract, as no one is specifically responsible or obligated to finding your dog passed on this interaction.

Another

common example of a unilateral contract is with insurance contracts. The insurance company promises it will pay the insured person a specific amount of money in case a certain event happens. If the event doesn't happen, the company won't have to pay.Slide17

Activity

3: Contract Law—Offers & Acceptances

BL

2.01 Fill in the blanks with the correct termination of offer term.

(Use PPT Notes)

Handout/

www.quia.com

Slide18

GENUINE AGREEMENT (ASSENT)

A valid offer has been made by the offeror, and a valid acceptance has been exercised by the offeree

Several causes for genuine agreement to be lacking in a contract

Duress

Undue Influence Unilateral or Mutual Mistakehttps://www.youtube.com/watch?v=AsZn_BJ5bWk

Innocent Misrepresentation

Fraudulent MisrepresentationSlide19

Duress

Overcoming a person’s free will by use of force or by threat of force or bodily harm

Threats of Illegal Conduct

Threats to Report Crimes

Threats to SueThreats to sue made for purpose unrelated to the suitEconomic DuressThreats to a person’s business or income Slide20

Undue Influence

Unfair and improper persuasive pressure within a relationship of trust Must be able to prove:Relationship of trust, confidence or authority

Unfair persuasionSlide21

Unilateral Mistake

An

error on the part of one of the parties

Does not affect validity of the contract

Cannot get out of contractNature of the AgreementSigning a contract you don’t understand or have not readSigning a contract in a language you don’t understandSlide22

Mutual Mistake (Bilateral Mistake)

Both parties are

mistaken about an important fact

Impossibility

of Performance Contract is impossible to perform Contract is voidSubject MatterEither party can void contract Existing LawContract is validParties are expected to know the lawSlide23

Innocent Misrepresentation

Innocent statement of supposed fact that turns out to be false

Statement must be one of fact

Statement must be material

Statement must be relied uponInjured party has the right to rescind (take back) the offerNo rights to damages Slide24

Fraudulent Misrepresentation

Party to a contract deliberately makes an untrue statement of fact

Deliberate

: Done with or marked by full consciousness of the nature and effects; intentional

Deception: The fact or state of being deceivedGain: To secure as profit or rewardIn order to prove fraud, you must prove the above 3 definitions Slide25

Proving Fraudulent Misrepresentation

Untrue statement of fact

Must be one of fact, not opinion

Active concealment

Silence – may stay silent about defects except when:statement is about material factsTrue statement is made false by subsequent eventsOne party knows the other party has made a basic mistaken assumptionMaterialityStatement would cause reasonable person to contractIf one party knows the other party would rely on the statement If one party knows the statement is falseSlide26

Proving Fraudulent Misrepresentation

Reasonable RelianceOne party must reasonable rely on statement

Intentional or reckless

One party deliberately lies or conceals a material fact

One party recklessly makes a false statement of fact, without knowing whether it is true or falseStatement must be intended to induce party to enter into contractResulting LossMust cause an injurySlide27

Activity 4: Contract Law—Genuine Agreement

BL

2.01 Directions: Label each scenario with the genuine agreement issue being addressed.

(Use PPT Notes)

Handout/

www.quia.com

Slide28

CAPACITY

Legal ability to enter into a contract

Minors

Mentally Incapacitated

IntoxicatedA person serving a prison sentence lacks capacity.Slide29

Minors

Minor

– not yet reached legal

age (age of majority)

NC Age of Majority – 18 years oldEmancipation - severing of the parent-child relationshipFormal – court decreeInformal – arises from the conduct of the minor and the parentParent and minor agree that parent will end supportMinor gets marriedMinor moves out of family home

Minor joins armed forces

Minor gives birth

Minor takes on full-time employment

Ratification – agreeing to be bound by a contract that could be avoided

Contracts made by minors are voidable; minors may disaffirm (or avoid being bound by) contractsSlide30

Mentally Incapacitated

Lacking the ability to understand the consequences of his or her contractual actsSevere mental illness

Severe mental retardation

Severe senility

Contracts made by mentally incapacitated are usually void unless involving necessaries. Slide31

Intoxicated

People under the influence of drugs or alcoholIntoxication is a voluntary act.Most courts are reluctant to consider contracts entered into by intoxicated individuals as voidable.

Must be so intoxicated that the person did not know they were contracting.Slide32

CONSIDERATION

Exchange of benefits and detriments by the parties to an

agreements

Requirements of consideration:

Must involve a bargained-for exchange (promise made in return for another promise)Must involve something of valueBenefits and detriments must be legalBenefitsSomething that a party was not previously entitled to receiveDetrimentsAny loss suffered; anything given upForbearanceNot doing something that you have the right to do Slide33

Activity

5: Contract Law—Genuine Agreement

BL 2.01 Directions

: Match the terms to their examples.

(Use PPT Notes)Handout/www.quia.com

Word Bank:

Unilateral Mistake

Bilateral Mistake

Fraud

Innocent Misrepresentation

Duress

Undue Influence

Emancipation

Ratification

Capacity

Mentally Incapacitated

Intoxicated

NecessariesSlide34

Adequacy of Consideration

Courts don’t look at adequacy or value of an agreement unless it is “unconscionable”Unconscionable

So grossly unfair or oppressive that it would shock the conscience of the court

So

lop-sided that the average person would not agree to termsSlide35

Nominal Consideration

Token amount in a written contract where either the parties cannot or do not wish to state the amountSlide36

Agreements without Consideration

Promise to make a giftGifts have no considerationCannot be enforced

Gift that has been

given

Doesn’t have to be returnedDonor – Gives the giftDonee – Accepts the giftSlide37

Illusory Promises

Clause or wording that allows party to escape from legal obligation

Termination clause

Illusory – clause to allow termination of contract for any reason

Not illusory – termination only allowed after a change in defined circumstancesOutput ContractsAgreement to purchase all of a specific producer’s productRequirements ContractsAgreement to supply all of the needs of a specific buyerOutput & Requirements contracts are recognized by the courts as having consideration by implying fair dealing.Slide38

Existing Duty

Existing Public DutyNo detriment

Obligation

to obey the law

Existing Private DutyIf a person is already under legal duty to do something, another promise to do that same thing does not furnish consideration for a new contract.Slide39

Past Performance

An act that has already been performed cannot be consideration in a contract.Slide40

Exceptions to Consideration

Promises to charitable organizationsGift or Pledge for future contribution

Enforceable as consideration if organization identifies the pledge for a specific use and acts in reliance on the pledge

Promises covered by the UCC

Firm offers Good faith modification of contractPromises discharged in bankruptcySlide41

Exceptions to Consideration

Promises barred from collectionPromissory

Estoppel

Rely on what a person said

Elements:Promise must bring action or forbearanceOne who gave no consideration must have relied on the promiseInjustice can be avoided only enforcing the promise Slide42

LEGALITYSlide43

Illegal Contracts

Civil & Criminal

Agreements to commit a crime/tort are illegal

Usury

State sets a max interest rateInterest – fee the borrower pays to the lender for using the money Usury - charging too high of an interest rateGamblingLegal gambling varies from state to stateLicensingStates require that persons in certain occupations obtain a license to practice that occupationDoctors, plumbers, barbers, lawyers, funeral directorsSlide44

Illegal Contracts

Public policy

Agreements that unreasonably restrain trade

Takes away the ability to do business with others

Agreements not to competeRestrictive covenant - agreement not to compete in a region for a period of time Only legal for a short period of time and small geographic region Agreements for price fixingPrice Fixing - competitors agree on certain price ranges within which they will sell their productsSlide45

Illegal Contracts

Public policy (continued)

Agreements

to eliminate competitive bidding (or bid rigging

)Bid - offer to buy or sell goods or services at a stated price Bid rigging – competitors agree that one bidder will have low bid for a certain job….low bidder sets bid higher than would if real competitionAgreements to obstruct justiceAnything that delays or prevents justiceAgreements to induce breach of duty or fraudInfluencing persons who hold positions of high trust for private gainAgreements to interfere with marriageDamage, destroy, or discourage good family relationshipsSlide46

Statute of Frauds

Requires that certain contracts be in writing to be enforceableContracts to buy and sell goods for a price of $500 or more

Contracts to buy and sell real property

Contracts that require more than one year to complete

Promises to pay the debt of anotherPromises to give something of value in return for marriageSlide47

CHARACTERISTICS OF A CONTRACT

Valid, void, voidable, unenforceableExpress or implied

Bilateral or unilateral

Oral or writtenSlide48

Valid, Void, Voidable, Unenforceable

Valid contract

Includes all elements recognized by the courts

Legally binding

Void contractWithout legal effectContracts missing one or more elements Voidable contractOne or more parties can get out of contract for some legal reasonContract lacks genuine assent, contracts with minorsUnenforceable contractContract that court will not uphold, usually because of some rule of lawStatute of limitations has expiredSlide49

Express or implied

Express Contract statement that may be written or oralImplied

Contract that comes about from the actions of the partiesSlide50

Bilateral or Unilateral

Bilateral Contains two promises

Most contracts are bilateral

Unilateral

Contains a promise by only one person to do something if, and when, the other party performs a certain actReward offer is most common unilateral contractSlide51

Oral or written

OralCreated by two or more people speaking to each other

Written

contract terms are written so that both parties know the exact terms

Provides proof of existence for the contractCertain contract are required by the Statute of Frauds to be in writingSlide52

Activity

7: Contract Debate

Process

:

Group students into teams and assign topic for debate. You should have a team debating for and a team debating against the topic.Teams research and plan three questions for the other team. Allow 10 minutes or this could be a homework assignment for students.Introduction of issue (3 minutes per team)Teacher asks each team questions. Teams have two minutes to answer, with each team getting a one minute rebuttal.Conclusion (3 minutes per team)Class Discussion (5 minutes)Slide53

Activity 8: Contract Law—Legality

BL 2.01 Directions

:

Summarize the legal issues in each scenario. List the 5 types of agreements that have to be in writing and give an example of each.

PartnerSlide54

Activity 9: Contract Law—Characteristics of a

Cotnract

BL 2.01 Directions

: Match the terms to their examples.

(Use PPT Notes)Handout/www.quia.com

Slide55

Activity 10: Contract Law—Characteristics of a

Cotnract

BL 2.01 Directions

: Identify which characteristic is being presented in the scenario.

(Use PPT Notes)Handout