Chapter 7 section1-3

Business Law Unit 2/Chapter 7/Contracts

Section 7.1 Goals List the elements required to form a contract Describe the requirements of an offer Standards PCCG OUTCOME: 7 PCCG STANDARDS: C: 1.1c, 1.1d, 1.1e, 1.1d, 1.2a, 1.3a, 1.4d, 1.6a, 1.6c, 1.6d, 1.6e, 1.7c, 1.8b, 1.8c, 2.2b, 5.1a, 5.1j, 5.1l, 5.2a, 5.3a, 5.3g, 5.4a,, 13.1e, 13.2b, 13.3b

What’s Your Verdict? Pedro and Seamus were chatting during the break between classes. “Remember, ‘Great Moments in Sports,’ the video that I showed you last week?” asked Pedro. “You thought it was great and said you wished it was your. I’ll let you have it for fifteen bucks. Want it? “Sure!” Seamus answered. “Bring it to school tomorrow, okay?” Did the two friends create a contract?

What is a Contract? Contract An agreement that courts will enforce. Basis of all economic activity 6 Requirements Offer and Acceptance Genuine Assent Legality Consideration Capacity Writing

Offer and Acceptance There must be serious, definite offer to contract. The terms of the offer must be accepted by the party to whom it was communicated

Genuine Assent The agreement must not be based on one party’s deceiving another, on an important mistake, or on the use of unfair pressure exerted to obtain the offer or acceptance.

Legality What the parties agree to must be legal. So an agreement to pay someone to commit a crime or tort cannot be a contract.

Consideration The agreement must involve both sides receiving something of legal value as a result of the transaction.

Capacity To have a completely enforceable agreement, the parties must be able to contract for themselves rather than being obligated to use parents, or legal representatives

Writing Some agreements must be placed in writing to be fully enforceable in court.

What or Who Are Contracts? Contracts Result from exchange of valuable promises Offeror Party who makes an offer to form a contract Offeree Party to whom and offer is made Offer Proposal by an offeror to do something provided the offeree does something in return Without Offer or Acceptance there is no contract.

What’s Your Verdict? Anchor’s Aweigh, a boat retailer, placed an ad in a local newspaper announcing a one-day sale of cabin cruisers for the “bargain price” of $22,500 each. The dealer had five cruisers in stock, and they all were sold within one hour. During the rest of the day, seven other would-be buyers came in to purchase a bargain cruiser. Did the Anchors Aweigh advertisement make offers to the would-be buyers?

Requirements of a Valid Offer The offeror must appear to intend to create a legal obligation The terms must be definite and complete The offer must be communicated to the offeree

Expression of Intent to Create a Legal Obligation Test of the Reasonable Person Objective legal test used by jurors or judges to determine whether the offeror has shown an intent to contract Facts and Circumstances To actually know when the offer is valid aside from examples and things. Preliminary Negotiations Information presented without the intent to contract Social Agreements Do not require legal obligations (Going on a date)

Offer Must Be Complete and Clear Complete Follows all the guidelines of the contract Clear Specific way to which it is handled Implied Terms Example: Current Market Price Advertisements Invitations not offers Keeping business relations most places will provide a rain check.

Offers Must Be Communicated of the Offeree A person not the intended offeree cannot accept the offer. Nor can you accept an offer without knowing that it was made. Example Reward

End of Section 7.1 Questions Think About Legal Concepts Think Critically About Evidence

Section 7.2 Goals Describe how an offeror can end an offer Tell how an offeree can end an offer Explain how the parties can create offers that cannot be ended by the offeror Standards Reading and Writing 1.1.11 CDEFG, 1.2.11 AB, 1.3.11 C, 1.4.11 BCD, 1.5.11 ACE, 1.6.11 ACDF, 1.7.11 AC, 1.8.11 ABC Civics and Government 5.1.12 ABCDEFHIJM, 5.2.12 ABCDEFG, 5.3.12 AB

What’s Your Verdict? Melissa offered her collection of baseball cards for sale for $3,000 to her friend and fellow collector, Raoul. Raoul asked if he could think it over and Melissa agreed. While Raoul was trying to raise the money, Melissa has second thoughts. So she called Raoul and said I’ve changed my mind. I’m not interested in selling the cards. Raoul responded, “it’s too late, you promised to sell them to me and I’ve got the money, so I accept. Was Melissa’s offer terminated before Raoul tried to accept?

How Can Offers Be Ended? Revocation by the Offeror Decided not to do it Time stated in the offer One Week Reasonable Length of Time Within Reason Rejection by the Offeree Does not accept offer Counteroffer Changing the offer terms in any way Death or Insanity of either the offeror or offeree

How Can An Offer Be Kept Open? What’s Your Verdict? Pg. 104 Options Giving the Offeror something in order for them to give you a promise that cannot be completed at the time of the contract Firm Offers Binding offer stating in writing how long it is to be held open.

End of Section 7.2 Questions Think About Legal Concepts Think Critically About Evidence

Section 7.3 Goals Discuss the requirements of an effective acceptance Determine at what point in time an acceptance is effective Standards Reading and Writing 1.1.11 CDEFG, 1.2.11 AB, 1.3.11 C, 1.4.11 BCD, 1.5.11 ACE, 1.6.11 ACDF, 1.7.11 AC, 1.8.11 ABC Civics and Government 5.1.12 ABCDEFHIJM, 5.2.12 ABCDEFG, 5.3.12 AB

What’s Your Verdict? 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 Schorling’s statement?

How Are Acceptances Created? Acceptance Occurs when a party to whom an offer has been mde agrees to the proposal. Acceptance Must: Be made by the person to whom the offer was made Match the terms in the offer Be communicated to the offeror

Who Can Accept An Offer? Reward Offer to the general public, anyone that knows about it can accept it. Offeree Person/Individual who the offer is presented. No one can accept an offer unless it is directed to them

Acceptance Must Match Offer Due to specific terms stated in the contract, Acceptance must fall within the guidelines of the contract Mirror Image Rule Requires that the terms in the acceptance must exactly match the terms contained in the offer. If varied, it is a counteroffer.

Acceptance Must Match the Offer Goods Sale of Goods Read on page 106 (Blue Box)

Acceptance Must Be Communicated to the Offeror Silence as Acceptance Signal that its okay unless someone rejects it is considered acceptance Unilateral Acceptance Indicating acceptance by performing something, promise from offeror to give something for performance Bilateral Acceptance Giving a promise instead of performance Acceptance Effective Orally, written, sent by mail, email, fax only effective when received

End of Section 7.3 Questions Think About Legal Concepts Think Critically About Evidence Chapter In Review

Chapter 7 section1-3

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Chapter 7 section1-3