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Contract Formation
 

Contract Formation

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Introduction to contract law. What is a contract?

Introduction to contract law. What is a contract?

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  • brilliant Presentation!.. Great share!.. thanks a lot
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  • Hi. Today we'll be looking at contract formation. First, we have to understand what a contract is. 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. Once we understand that a contract is a promise, we need to figure how to tell which promises the law will enforce as contracts and which it will not. For example, I have a niece named Helen, and she just turned 10, or maybe 11, I'm not really sure. Helen loves ponies. In fact, she loves ponies so much, that at her birthday party, she even had a pony birthday cake. Well, when I went to her party, I forgot to bring a present. When it came time to open the present, things got a little awkward. My mom was scowling at me, and my sister was giving me the stink eye, so I said to Helen, I know I didn't bring you a present today, but what I thought I would do is buy you a pony for your birthday and for Christmas. Would you like a pony for Christmas? Of course, Helen was really excited and said A pony? Yay! So Christmas rolls around, and Christmas morning Helen is up before the crack of dawn because she know that Uncle Ted brought her a pony. She runs to the living room and looks out the front window into the yard, and what does she see? Nothing. It must be in the back yard, so she runs to the den and looks out, and what does she see? Nothing. It must be in the driveway, so she runs and looks. Nothing. Well, it's pretty cold out, so maybe the pony is in the garage, so she runs down to the basement to look, but still nothing. The harsh reality starts to set in, and Helen realizes that no pony is forthcoming. She's heartbroken, and breaks into tears. And that's when my problems start. You see, Helen's dad Frank is a notorious plaintiff's attorney who can't stand the thought of someone breaking his little girl's heart. Now he's suing me for breach of contract. What I've got to figure out now is, do Helen and I have an enforceable contract? To figure that out, we'll need to look at the elements of a contract. If a promise contains all of the elements of a contract, it is a legally enforceable contract. If it does not contain all of the elements of a contract, it's just an ordinary promise and isn't legally enforceable. First, we have to show that there was an agreement in the form of an offer and acceptance. Was there an offer? Yes: ' Would you like a pony for Christmas?' Was there accepance? Yes: 'Yay! A pony!' In addition to acceptance, all parties have to have contractual capacity, which means that they are legally capable of entering into a contract. Basically, anyone who is an adult is presumed to have contractual capacity, but minors do not. Wait! Helen's not an adult? Does that mean that the agreement isn't enforceable? Not so fast: when there is a contract between and adult and a minor, the minor can disaffirm the contract, but the adult is bound to his or her promise. Contractual capacity won't get me off the hook here. To be enforceable, a contract must have a legal subject matter. Aha! Helen and her family live in one of those fancy suburbs with strict zoning regulations. Since they are within city limits, they can't have livestock. Does that mean that my promise to give her a pony is illegal? Nope. Just because I give her a pony does mean she'll have to keep it in her yard, even though she really wants to. But my promise wasn't in writing? Don't contracts have to be in writing? Nope. A contract is a promise, and the general rule is that oral contracts are enforceable. There are a set of exceptions called the Statute of Frauds that have to be in writing, so if my promise is one of those special cases, then it has to be in writing to be enforced. The statute of frauds requires that contracts for an interest in land, contracts that cannot by their terms be performed in one year, promises to pay someone else's debts (called guaranty or suretyship agreements), promises made in consideration of marriage, and contracts for the sale of goods for $500 or more must be in writing. Do any of these cover my promise to Helen? What if a pony costs more than $500, will that get me off the hook? No--I promised to give her a pony, not sell her one. There's one element of a contract left: consideration. What is consideration? Well, what are the first two letters of contract? What are the first two letters of consideration? What is our favorite barnyard animal that starts with 'CO'? COW! What does a cow say? MOO! What does MOO have to do with contracts and consideration? MOO stands for Mutuality of Obligation. In order for a promise to have consideration, there must be mutuality of obligation; both parties must be obligated to do something. In my case, what does my promise obligate me to do? Give Helen a pony. What is Helen obligated to do? Nothing! That means there is no consideration, which means that there is no contract, and I am not legally bound to buy her a pony. Sorry, Frank. But what if instead of saying 'Would you like a pony,' I had said if you will be a good girl and go to bed early every night and clean up your room every day from now until Christmas'? Would that change the outcome? Yes! Then there would be mutuality of obligation, so the promise would have consideration. That means verdict for the plaintiff, and I'd have to buy Helen a pony.
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  • Statute of Frauds
  • Interests in land
  • Guaranty or surety agreements
  • Promises made in consideration of marriage
  • Sale of goods for $500 or more

Contract Formation Contract Formation Presentation Transcript

  • Contract Formation
    • 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
    Contract:
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  • Do Helen and I have an enforceable contract?
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  • Elements of a contract
    • Agreement (promise)
      • Offer
      • Acceptance
    • Capacity
      • Not a minor
      • But: between minor & adult, only minor can disaffirm
    • Legal subject
      • Livestock (pony) within city limits?
  • Elements of a contract, cont’d
    • Proper form
      • General rule: oral contracts enforceable
      • Exceptions: Statute of Frauds (must be in writing to enforce)
        • Interest in land
        • Suretyship (pay debt of another)
        • In consideration of marriage
        • Cannot be performed within 1 year
        • Sale of goods >$500
  • consideration
  • consideration
    • CO ntract
    • CO nsideration
    • What barnyard animal starts with “ CO ”?
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  • What does a cow say?
  • MOO!
    • M utuality
    • O f
    • O bligation
  • What If?
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  • Photo credits
    • Girl with pony: http://www.flickr.com/photos/pinksherbet/
    • Pony collection: http://www.flickr.com/photos/dreamcicle/
    • My sixth birthday party: http://www.flickr.com/photos/rachelfordjames/
    • Pony stable cake: http://www.flickr.com/photos/26316310@N05/
    • Tiffany gift box: http://www.flickr.com/photos/jillclardy/
    • Charley the Shetland pony: http://www.flickr.com/photos/deepfrozen/
    • Merry HDR Christmas: http://www.flickr.com/photos/stuckincustoms/
    • Smiling lawyer: http://www.flickr.com/photos/lobraumeister/
    • Periodic table: http://www.flickr.com/photos/7969902@N07/
    • Handshake II: http://www.flickr.com/photos/ooohoooh/
    • Adults only: http://www.flickr.com/photos/_dennis/
    • Legal stuff: http://www.flickr.com/photos/scraplab/
    • Kirkby indenture: http://www.flickr.com/photos/daikiki/
    • Belle Mina: http://www.flickr.com/photos/whitneygh/
    • First birthday cake: http://www.flickr.com/photos/monroesdragonfly/
    • Guaranty: http://www.flickr.com/photos/nutmegdesigns/
    • Sara Jonsen: http://www.flickr.com/photos/nantuckethistoricalassociation/
    • The big money: http://www.flickr.com/photos/daviddmuir/
    • Cow Lomo no. 5: http://www.flickr.com/photos/skinnyde/
    • Judge CoCo:http://www.flickr.com/photos/contusion/