Contract formation

1. CONTRACTS
Negotiation and Drafting

2. What is a Contract
 a: a binding agreement between two or more
persons or parties ; especially one legally
enforceable
 b: a business arrangement for the supply of
goods or services at a fixed price
-Merriam-Webster

3. Have you agreed to a contract?
How many people think they are party to a
contract?

4. Examples

5. Examples
 Credit Card Agreement

6. Examples
 Credit Card Agreement
 Signed agreement related to a job

7. Examples
 Credit Card Agreement
 Signed agreement related to a job
 Online agreement when starting a Facebook
or email account

8. Examples
 Credit Card Agreement
 Signed agreement related to a job
 Online agreement when starting a Facebook
or email account
 An agreement to buy something from a friend

9. Examples
 Credit Card Agreement
 Signed agreement related to a job
 Online agreement when starting a Facebook
or email account
 An agreement to buy something from a friend
 Buying something from a store

10. Facebook terms and conditions
 Switch to Firefox

11. Civil Legal Duties
Groups of people, generally
everyone.
The specific individuals who
willfully enter into the
agreement.
Laws of society bind
everyone in it.
Specific agreements in
which the parties mutually
bind themselves.

12. What does it mean to Contract?
Contracts are about:

13. What does it mean to Contract?
Contracts are about:
 Bargaining

14. What does it mean to Contract?
Contracts are about:
 Bargaining
 Coming to an agreement

15. What does it mean to Contract?
Contracts are about:
 Bargaining
 Coming to an agreement
 Being willing to be legally bound to your side
of that agreement, as long as the other party is
bound to theirs

16. Elements of contracting
 Offer
 Acceptance
 Consideration

17. Elements of contracting
 Offer
 Acceptance
 Consideration
 These are the basic elements, but contract law
can get a lot more complicated

18. Offer
 An offer is an invitation to make a contract

19. Offer
 An offer is an invitation to make a contract
 Examples?

20. Offer
 An offer is an invitation to make a contract
 Examples?
 Displaying a take it or leave it contract online
 Bidding on ebay
 Putting a price tag on an item in a store

21. Offer
 An offer is an invitation to make a contract
 Examples?
 Displaying a take it or leave it contract online
 Bidding on ebay
 Putting a price tag on an item in a store
 Offers can go back and forth (but don’t have
to) until…

22. Acceptance
 The point at which one party agrees to the
other parties offer
 Examples
 Clicking that you accept the online contract
 Winning an ebay auction
 Buying the item from the store

23. Consideration
 Generally, courts will only enforce a contract if
both sides are getting something.
 What each side gives the other is called
consideration.

24. Is this a contract?
In each of the following examples, ask yourself
if there is mutual consideration?

25. Is this a contract?
 You order a book of Amazon.com. Your credit
card is charged, but no book ever shows up.
 Was there a legally enforceable contract?

26. Is this a contract?
 You order a book of Amazon.com. Your credit
card is charged, but no book ever shows up.
 Was there a legally enforceable contract?
 Yes, you agreed to pay Amazon.com money
and they agreed to send you a book.

27. Is this a contract?
 Last year, your uncle promised you an iPhone
for your 18th birthday. When you turned 18, he
gave you his old broken basic cell phone.
 Was there a legally enforceable contract?

28. Is this a contract?
 Last year, your uncle promised you an iPhone
for your 18th birthday. When you turned 18, he
gave you his old broken basic cell phone.
 Was there a legally enforceable contract?
 No, while your uncle made a promise, he did
not receive any consideration in return.
Consideration has to be more than good
feelings.

29. Is this a contract?
 You signed up for a week long summer
basketball camp which cost $100. You paid
and went to the camp. When you got to the
camp, they just had you watch football movies
all day.
 Was there a legally enforceable contract?

30. Is this a contract?
 You signed up for a week long summer
basketball camp which cost $100. You paid
and went to the camp. When you got to the
camp, they just had you watch football movies
all day.
 Was there a legally enforceable contract?
 Yes. You agreed to pay money to the camp
and they were supposed to give you
basketball training.

31. Negotiation and drafting activity
 We are going to negotiate and draft a contract
 Negotiating and drafting contracts is
something that a lot of lawyers do—including
hopefully me.
 The goal is to come to an agreement.
 This requires each side to compromise, so that
they can get what they really want—to make a
deal.

32. When drafting be sure to
 Include all the terms
 Don’t be afraid of creative solutions
 Use specific binding language:
 “Shall” not “Will”
 X shall pay Y $10.
 Y shall wash X’s car.
 Not:
 X will pay Y $10.
 Y will wash X’s car.

33. Chris Brown’s new record deal
 Following the recent news reports of his arrest for
Domestic Violence, Chris Brown’s record label
decides not to renew his record deal.
 Chris Brown has found a new record company—
Song & Dance Records—interested in signing him
to a new recording deal.
 Chris Brown’s agent, who is trained as a lawyer, is
negotiating the terms of the deal with a lawyer for
Song & Dance.
 After agreeing on the terms, they will draft a
contract to bring to their respective clients—Chris
Brown and Song & Dance executives.

34. Record deal terms
 Royalties of music sales
 Duration of deal (number of albums)
 Termination
 Optional (if you have time):
 Cash advance (upfront money taken away from
future royalties)
 Exclusive agreement (can Chris Brown record an
album with a different label)
 When the next album will released
 Money for production