• A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.• We will focus on 4 topics: Offer and acceptance Consideration Duties and enforcement Defenses
Offer: Showing a willingness to enter into a bargain in such a way that another person would interpret that they could accept and it would conclude the negotiations. Can be through words or actions. Advertisements can be offers. Negotiations are not offers. Buyers have to be able to walk away from estimates or price quotes.
Acceptance- once an offer has been made, the other party can accept the offer in any reasonable way, including starting performance. The party who accepts can back out up until performance begins. Factors include: Were terms finalized? Did performance begin?
Consideration: A contract must include a promise and a return promise. It cannot only go in one direction. Both parties have to get something valuable (a good or service). A promise of a gift is not enforceable because one party gets nothing. The exchange doesn’t have to be equal- one person may value something more than someone else.
Substantial Performance- Doing exactly what is in the contract is not always possible, but the parties have to reasonably live up to the terms. If one party does not materially perform, the other party no longer has to perform. Failure to perform is called “breach.”
What happens when one party breaches? Damages- The party who is harmed can request money from the other party equal to the loss from the breach. Specific performance- If it is still possible to perform the contract, the court can require the party to perform.
Read Scenario 1 on the worksheet, then post your new negotiated contract in the Contract Blog.
Certain things can make contracts void even though both parties agreed on the terms and there was valuable consideration. Unconscionability- If one party tricked another party into agreeing to an unfair contract, the court may not enforce it. Often comes up when businesses try to trick poor or uneducated clients.
Fraud or Duress- Lying or misrepresenting something in negotiations can make a contract void. Also, taking advantage of someone in a bad situation can make a contract void. If a company knows about a flaw in a product and covers it up, the contract to buy it is void.
Legality - If the terms of a contract require illegal behavior, or if they go against Congress’ stated goals, it will be declared void.
Read Scenario 2 of the worksheet, and post your response in the Contract Blog
See the instructions on the Safe Driver Contract