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Contracts Classification, Agreements, and Consideration
 

Contracts Classification, Agreements, and Consideration

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    Contracts Classification, Agreements, and Consideration Contracts Classification, Agreements, and Consideration Presentation Transcript

    • Contracts - Classification, Agreements, and Consideration Wali Memon1 Wali Memon
    • Introduction Contracts are the basis of many of our daily activities They provide the means for individuals and businesses to sell and otherwise transfer property, services, and other rights Without enforceable contracts, commerce would collapse2 Wali Memon
    • Definition of a Contract A contract is an agreement that is enforceable by a court of law or equity If one party fails to perform as promised, the other party can use the court system to enforce the contract and recover damages or other remedy3 Wali Memon
    • Parties to a Contract Offeror – The party who makes an offer to enter into a contract Offeree – The party to whom an offer to enter into a contract is made Offer Offeror Offeree Acceptance Offeror makes an Offeree has the power offer to the offeree to accept the offer and create a contract
    • Elements of a Contract 1. Agreement 2. Consideration 3. Contractual 4. Lawful Object Capacity5 Wali Memon
    • Sources of Contract Law 1. The Common Law of Contracts 2. The Uniform Commercial Code 3. The Restatement of the Law of Contracts 4. Uniform Computer Information Transactions Act (UCITA)6 Wali Memon
    • Classifications of Contracts: Formation (1 of 2) 1. Bilateral contract – a promise for a promise 2. Unilateral contract – A promise for an act 3. Express contract – A contract expressed in oral or written words 4. Implied-in-fact contract – A contract inferred from the conduct of the parties7 Wali Memon
    • Classifications of Contracts: Formation (2 of 2) 5. Quasi-contract – A contract implied by law to prevent unjust enrichment 6. Formal contract – A contract that requires a special form or method of creation 7. Informal contract – A contract that requires no special form or mode of creation8 Wali Memon
    • Classifications of Contracts: Enforceability 1. Valid contract – A contract that meets all of the essential elements to establish a contract 2. Void contract – No contract exists 3. Voidable contract – A party has the option of voiding or enforcing the contract 4. Unenforceable contract – A contract that cannot be enforced because of a legal defense9 Wali Memon
    • Classifications of Contracts: Performance 1. Executed contract – A contract that is fully performed on both sides 2. Executory contract – A contract that is not fully performed by one or both parties10 Wali Memon
    • Agreement Agreement – the manifestation by two or more persons of the substance of a contract It requires an offer and an acceptance11 Wali Memon
    • Offer The manifestation of willingness to enter into a bargain, so as to justify another person in understanding that his assent to that bargain is invited and will conclude it [Section 24 of the Restatement (Second) of Contracts]12 Wali Memon
    • Termination of an Offer 1. Revocation of the offer by the offeror 2. Rejection of the offer by the offeree 3. Counteroffer by the offeree 4. Destruction of the subject matter 5. Death or incompetence of the offeror or offeree 6. Supervening illegality 7. Lapse of time13 Wali Memon
    • Option Contracts An offeree can prevent the offeror from revoking his or her offer by paying the offeror compensation to keep the offer open for an agreed-upon period of time This payment is called an option contract The offeror agrees not to sell the property to anyone but the offeree during the option period14 Wali Memon
    • Acceptance A manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the objective theory of contracts [Section 50 of the Restatement (Second) of Contracts] The oferee’s acceptance must be unequivocal The mirror image rule15 Wali Memon
    • Time and Mode of Acceptance (1 of 2) Mailbox Rule (Acceptance-Upon-Dispatch Rule) An acceptance is effective when it is dispatched Proper Dispatch An acceptance must be properly addressed, packaged, and posted to fall within the mailbox rule16 Wali Memon
    • Time and Mode of Acceptance (2 of 2) Express Authorization A stipulation in the offer that says the acceptance must be by a specified means of communication e.g., registered mail, telegram17 Wali Memon
    • Offer and Acceptance - SummaryCommunication by Offeror Effective WhenOffer Received by offereeRevocation of offer Received by offereeCommunication by Offeree Effective WhenRejection of offer Received by offerorCounteroffer Received by offerorAcceptance of offer Sent by offeree
    • Consideration Consideration – something of legal value given in exchange for a promise Consideration must be given before a contract can exist Most common types of consideration: Tangible payment (e.g., money or property) Performance of an act (e.g., providing legal services)19 Wali Memon
    • Gift Promise Gift promises (gratuitous promises) are unenforceable because they lack consideration A “completed gift promise” becomes a true gift, which by definition is irrevocable20 Wali Memon
    • Contracts Lacking Consideration (1 of 2) Illegal Consideration A contract cannot be supported by a promise to refrain from doing an illegal act because that is illegal consideration Contracts based on illegal consideration are void Moral Obligations Promises made out of a sense of moral obligation or honor are generally not enforceable on the ground that they lack consideration21 Wali Memon
    • Contracts Lacking Consideration (2 of 2) Preexisting Duty A promise lacks consideration if a person promises to perform an act or do something he or she is already under an obligation to do The promise is unenforceable because no new consideration has been given Past Consideration Past consideration (e.g., prior acts) will not support a new contract New consideration must be given22 Wali Memon
    • The United Nations Convention on Contracts for the International Sale of Goods (CISG) Applies to contracts for the international sale of goods i.e., the buyer and seller must have their places of business in different countries Additionally, either both of the nations must be parties to the convention, or the contract specifies that the CISG controls23 Wali Memon