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Law 206   Ch. 1 - Overview of Contracts
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  • 1. Chapter 1 OVERVIEW OF CONTRACTSIn this chapter you will: Define a legally binding contract Identify the six basic requirements to forming a valid contract Explain the concept of offer and acceptance Define and exemplify consideration Classify contracts into bilateral or unilateral agreements Understand how a contract is created Explain the difference between executory and executed contracts Differentiate between valid, void, voidable and unenforceable contracts Discuss various contractual provisions Know what is meant by the term contractual capacity
  • 2. Contract DefinedA contract is a legally enforceable agreement that meets certain specified legal requirements between two or more parties in which each party agrees to give and receive something of legal value.
  • 3. Elements of a Valid Contract Offer Acceptance Consideration Legality of subject matter Contractual capacity Contractual intent
  • 4. Type of Obligation Bilateral: a bilateral contract is a promise for a promise. Unilateral: a unilateral contract is a promise for an act.
  • 5. Method of Creation Express contract: mutual assent of the parties is manifested in words, either orally or in writing. Implied-in-fact contract: promises of the parties are inferred from their actions or conduct as opposed to specific words being used. Implied in Law contract (also known as quasi- contract): situations that look like a contract but are not because one of the requisite elements is missing.
  • 6. Type of Form Formal: limited group of contracts that different states have declared valid and enforceable if certain statutory requirements are met. Informal: all non-formal contracts; agreements that meet all the requirements of valid contracts.
  • 7. Timing Executory contract: a contract in which one or both of the parties still have obligations to perform. Executed contract: a contract that is complete and final with respect to all of its terms and conditions.
  • 8. Enforceability Valid: an enforceable contract that meets all of the six requirements Void: a situation where there is no contract and the law therefore does not entitle the parties to any legal remedy. Voidable: a contract where a party to the agreement has the option of avoiding his legal obligation without any negative consequences, but who could, if he wished, affirm his obligation and thereby be contractually bound.
  • 9. SummaryType of Method Form Timing EnforceabilityObligation of CreationBilateral Express Formal Execut- ValidUnilateral Implied in Informal ory Void fact Execut- Voidable Implied in ed Unenforceable law (quasi)