Business Law Contracts Flashcards
What is a contract?
A contract is any agreement enforceable by law
-Not all agreements are contracts.
The Formalist Theory
Courts study the parties actions/ words to see if there was a “meeting of the minds”
-Relies on the form of agreement and certain fixed elements
6 Elements of a Contract
- Offer
- Acceptance
- Genuine agreement
- Capacity
- Consideration
- Legality
6 Elements of a Contract: Offer
-A proposal by one party to another intended to create a legally binding agreement
The person who makes an offer
Offeror
The person who receives the offer
Offeree
3 basic requirements to an offer
- Made Seriously
- Definite and Certain
- Communicated to the offeree
Invitations to Negotiate/Bargain
-Ads in newspapers, magazines, etc.
-Invitation to MAKE an offer
6 Elements of a Contract: Acceptance
The second party’s unqualified willingness to go along with the first party’s proposal
2 Requirements of Acceptance
- Unconditional Acceptance
- Methods of Acceptance
Unconditional Acceptance
“Mirror Image Rule” states that the terms of the original offer must not be changed in any way
Methods of Acceptance
-The time when an acceptance takes place is important- that’s when it comes into existence
Mail Box Rule
-An acceptance that is sent over long distances is effective when it is sent
6 Elements of a Contract: Genuine Agreement
A valid offer that is met by valid acceptance
6 Elements of a Contract: Capacity
The legal ability to enter a contract
-Must be adults of sound mind
6 Elements of a Contract: Consideration
-The exchange of things of value
-Both sides receive some benefit
6 Elements of a Contract: Legality
-People can only enter contracts for legal purposes; not for legal acts
Two types of contracts
Bilateral and unilateral
Bilateral Contract
-BOTH parties make a promise
Unilateral contract
-One person promises to do something; the other party can accept only by doing what is stated
Valid contract
-Legally binding; satisfies all of the laws requirements
Void contract
-No legal effect
-Purpose is illegal/no legal authority to form a contract
Voidable contract
-The law permits one party to terminate the agreement because of some defect
Ex: A minor
Unenforceable contract
-One the court will not uphold
-Some rule of law prevents enforcing it
Express contract
-Stated in words: oral or written
-All terms are explicitly stated
Implied contract
-Formed in whole or in part from the actions/conduct of the parties
5 Ways of Termination of an Offer
- Revocation
- Rejection
- Counteroffer
- Expiration of time
- Death or insanity
Termination of an Offer: Revocation
The taking back of an offer by the offeror
Termination of an Offer: Rejection
Refusal of an offer by the offeree; brings the offer to an end
Termination of an Offer: Counteroffer
Ends the first offer: offeree creates a new one where the offeror can accept/reject again
Termination of an Offer: Expiration of Time
-The offeror sets a time limit for the acceptance of the offer: MUST BE HONORED!
Termination of an Offer: Death or Insanity
-If the offeror dies/becomes insane before the offer is accepted, the offer comes to an end
E contracts
-Must meet all elements of a paper contract
-Equivalent to paper signed signatures
-Replying “YES” is legally binding
Uniform Electronic Transfer Act
-Takes place of mailbox rule
-Acceptance becomes effective when sent
E sign Act
-an electronic signature is valid as a signature on paper
-E doc can be enforceable as a paper contract
E sign Act EXCEPTIONS
-Court papers, divorce papers, evictions, wills, etc.
