2 Capacity Must be able to contract for yourself Can not Minors Mentally Impaired Sometimes Intoxicated 3 Social Agreements I promise to take you to lunch Legally binding or not Which elements are present amp which are missing ID: 778210
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Slide1
1
Chapter 5
FORMS OF CONTRACTS
Slide22
Capacity
Must be able to contract for yourself
Can not
Minors
Mentally Impaired
Sometimes “ Intoxicated”
Slide33
Social Agreements
I promise to take you to lunch!
Legally binding or not?
Which elements are present & which are missing?
Slide44
CHARACTERISTICS OF
A Contract PG 110
Valid, Void, Voidable, or Unenforceable
Express or Implied
Bilateral or Unilateral
Oral or Written
Slide55
Offeror & Offerees
Offeror
- communicates serious proposal
Offeree
– Person to whom the offer is made
Slide66
Oral or Written
WRITTEN
Some agreements must be in writing to be enforceable.
ORAL
By mouth
Why is it desirable to have contracts in writing?
Slide77
Valid, Void, Voidable, or Unenforceable
Valid
– binding
Void
– not binding (missing an element)
Voidable
– able to
cancel
contract
Minors
Unenforceable
– will not be upheld due to a rule of law.
Slide88
Express or Implied
express contract
stated in words
oral or written.
implied contract
Actions of the parties.
Slide99
Bilateral Contracts
A Promise for a promise
Example:
“I’ll sell you my Ipod for $55”
I’ll buy It
Slide1010
Unilateral Contracts
One Sided
A promise for an action
I’ll give you $50 if you mow my lawn by noon today!
Slide11First 5 people through the door get a free scarf
11
Slide1212
Example
Herb went to a self-service gas station that requires payment before the attendant will turn on the pumps. He handed the attendant $10, returned to his car, pumped $10 worth of gas, and drove off. Neither party spoke a word, yet an implied contract arose from their actions.
Slide1313
Example
“Ill sell you my DVD player for $150,” and you say, “I’ll buy it,”
Bilateral
First 5 people through the door get a free scarf
Unilateral
Slide14Valid Offers
14
Slide1515
Creating a Valid Offer
Must
intend
to create offer
Terms must be
definite & complete
Offer must be
communicated
to
offeree
.
Slide1616
Offer must appear serious
Test of reasonable person
If joking
, angry, or in
fear, then no offer is created
Angry – My car is junk, you can have it for $1
Slide1717
Definite & Certain
Usually
offers should identify
Price, subject matter, and quantity
Essential
terms must be identified clearly for courts to enforce it.
Avoid using terms that are vague
Slide1818
Offer must be
communicated to the offeree
A person who is not the intended
offeree
can not accept the offer.
Must have known about the offer to claim.
Slide1919
A Reward Offer
Can be made to the general public
Accepted by fulfilling the requirements of the offer.
Ring lost. At Zuma beach in from of the
beach house. Lady’s gold band with 12 small
diamonds. $1,000 reward. Call 555-2342
Several people searched the beach for the
ring. Sam found it and returned it to the
owner.
Sam was entitled to the money.
Slide20Advertisements
Generally not offers but invitations to make negotiate.Why????Limited stock available
Advertisements that are offersClearly worded to address all receiving the ad.
20
Slide21Exceptions to the Rule
Ads that contain specific promises
First come, first servedLimited Quantity AvailableFirst 5 people to call
10
th
caller
21
Slide2222
Invitation or Offer?
New Bike, $500.00 to first person that calls.
Offer
One Day only 50% off of Lawn Mowers.
Invitation
Subject to stock on hand. MP3 players $30.00.
offer
Slide2323
What’s you verdict
pg106
Darrow offered to trade his digital camera to Monette in exchange for her camcorder. Schorling, who had a camcorder of the same make and model, overheard the offer and said she would make the swap.
Did a contract result from schorlings
statement?
No
Slide2424
Assignment
Find 10 advertisements.
Tell why each ad is an offer or an invitation.
If you cant find any offers be sure to supply your own example of an ad that is an offer
Slide2525
Acceptances
Review: Answer 1,5,6,7,& 8
Section 5-2 notes:
ACCEPTANCES
Slide2626
Acceptance
The acceptance must
be
made by the
offeree
Match the terms
in the offer
Be
communicated to the
offeror
Slide2727
Acceptances
Contracts come into existence only after an acceptance.
Offer
Acceptance
Offeror
Offeree
Slide2828
Mirror Image Rule
Terms must match
Slide2929
Counteroffer
Any change in terms.
Offer
Counteroffer
Slide3030
Methods of Acceptance
Face to Face: immediate
Letter: when
sent
Fax: when
sent
Telegram: when
sent
Exceptions: if otherwise specified by
offeror
Slide31TERMINATION OF
AN OFFER
REVOCATION- Taking back of an offerREJECTION
– refusal of an offer
COUNTEROFFER-
change in terms
EXPIRATION OF
TIME-
must
answer within a time limit or pay to hold contract open(option contract)
DEATH OR
INSANITY-
offer
ends if death or insanity before acceptance.
31
Slide3232
Which one is Different?
A proposal by one party to another
The legal ability to enter a contract
Mentally incompetent or drugged individuals are excused from contractual responsibility because they lack___________
Slide3333
Which one is Different?
The exchange of things of value
The 2
nd
parties unqualified willingness to go along with the first parties proposal.
Mr. Benes gave nothing to Vik in exchange for his promise to take out the garbage. (
Which element is this lacking?)
Slide3434
Which one is different?
When a valid offer is met by a valid acceptance it is known as.
An agreement involving fraud, misrepresentation, mistake, or undue influence is lacking which element?
Agreement to sell stolen goods is lacking which element?
Slide3535
Which one is different?
True or False
If you don’t satisfy the laws requirement for creating an offer, then you usually don’t have a contract.
To be valid, an offer must indicate an intent to create a legal obligation.
If an offer is made it can be accepted by anyone who learns of it.
Slide3636
Which one is different?
An offer that is missing essential information is __________
An objective legal test used by jurors or judges rather than a subjective test based on what you say you were thinking.
You can buy one of the bikes in my shop for $3,500.
Slide3737
Which one is different?
Would you take $200 for that Labrador puppy?
Information that is communicated without an intent to contract.
When two friends agree to go to the movies.
Slide3838
Which one is different?
The right to withdraw an offer at anytime before it is accepted.
When the terms of the offer are changed in any way.
Taking back an offer by the offeror
Slide3939
Which one is different?
“I refuse your offer; here is my proposal.”
When the offeror dies before the offer is accepted the agreement is…
3. Serious, communicated to the offeree, & clear & complete are requirements of _______________
Slide4040
Which one is different?
True or False
Offers expire at the time stated in the offer
An offeree who rejects an offer can later accept it if the acceptance occurs within a reasonable time after the rejection.
Advertisements like price tags are not treated as offers but rather invitations to negotiate.
Slide4141
Which one is Different?
True or False
A contract that amounts to nothing and has no legal effect.
A contract that contains a promise by both parties
“I’ll give you a haircut for $10 if you pay me when we are finished.” “I agree to pay you when you have cut my hair.”
Slide4242
Which one is different?
True or False?
When an offer changes the offeror’s terms in important ways, the offeror makes an agreement.
If the offeror is admitted to the hospital for medical examining & tests the offer is terminated.
If the offeror dies before the acceptance is made the offer is terminated.
Slide4343
Which one is different?
Which parties action ends the deal, offeror or offeree?
Counteroffer
Rejection
Revocation
Slide4444
Which One is Different?
Invitation or offer?
New Bike, $500.00 to first person that calls.
One Day only 50% off of Lawn Mowers.
First 30 people through the door get $75 gift card if you spend $200.
Slide4545
Which one is different?
Offer or not?
Nick asks Kim to go to dinner at the Sunset Restaurant at 7 p.m. on Saturday.
Would you think about selling your fishing boat for $2,000.00?
I’ll trade you my 2000 model car for you 2000 model truck.
Slide4646
Reviewing What You Learned
What are the elements of a contract?
Slide4747
Reviewing What You Learned
Offer, acceptance, genuine agreement, capacity, consideration, and legality.
Answer
Slide4848
Reviewing What You Learned
What are the differences among valid, void, voidable, and unenforceable contracts?
Slide4949
Reviewing What You Learned
A valid contract is legally binding.
An unenforceable contract will not be upheld generally by the court because of some rule of law.
Answer
Slide5050
Reviewing What You Learned
A contract that is void has no legal effect and a voidable contract is not void in itself, but may be voided by one or more of the parties if the party so chooses.
Answer
Slide5151
Reviewing What You Learned
What are the differences between express and implied contracts?
Slide5252
Reviewing What You Learned
An express contract involves words, while an implied contract does not.
Answer
Slide5353
Reviewing What You Learned
What are the differences between unilateral and bilateral contracts?
Slide5454
Reviewing What You Learned
A unilateral is a one-sided contract, in which one party makes a promise in exchange for an act. In a bilateral contract, a contract legally comes into existence when promises are exchanged.
Answer