Download Pittman, Chapter 6 Supplement

CHAPTER 6
MATERIALS TO SUPPLEMENT TEXTBOOK
J. Pittman, Instructor
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OVERVIEW
• The textbook presents contract law in a summary
fashion that may be difficult to follow
• The following slides add some details missing from
the textbook presentation
J. Pittman, Instructor
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CONTRACT DEFINITION
• A contract is an agreement between two or more
parties that can be enforced in a court of law
• Contract law protects promises that have been
made, allowing commerce to function
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SOURCES OF AMERICAN CONTRACT
LAW
Court created “common law”
regulates contracts involving:
• The sale of real property (land)
• The sale of services, and
• The sale of intangible, personal
property
• Personal property is everything that is
not land
• Intangible property does not have a
physical existence, for example,
patent and copyright ownership
The Uniform Commercial
Code (UCC) regulates
contracts involving:
• The sale of tangible,
personal property (called
“goods”)
• Tangible property has a
physical existence
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ELEMENTS OF A CONTRACT
• Offer - Proposal to enter into a binding agreement
• Acceptance – Definite, clear agreement to the
proposal terms
• The offer and acceptance create an agreement
• The genuineness of the agreement can be challenged by
arguing the presence of fraud, duress, and so forth
• The offer and acceptance together provide an
agreement
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REQUIREMENTS OF AN OFFER
To legally constitute an offer, the following elements
must be present:
• Intent - offeror is serious, not joking, and intends to be bound
by the offer (note the advertising rules, textbook pgs.104-05)
• Definite – the offer has reasonably certain and definite terms
• Communication – the offer is communicated to the offeree,
either actually or constructively
• Constructive communication is a reasonable attempt at
communicating the offer terms, e.g., a sign on a parking garage
wall that the parking garage owners are not responsible for
damage to parked cars
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TERMINATION OF THE OFFER
• By action of the
parties
• Revocation
• Rejection
• Counter-offer
• By operation of law
• Lapse of time
• Destruction of subject
matter
• Death or incompetence
of either party
• Illegality of offer
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REQUIREMENTS OF AN ACCEPTANCE
• An acceptance is a voluntary agreement to be
bound by the terms of the offer
• Acceptance issues
• The mirror image rule
• Silence as acceptance – generally your silence is not
construed as an acceptance of an offer
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ELEMENTS OF A CONTRACT
In addition to an agreement, the following elements
must be present to turn an agreement into a
contract:
• Consideration (next slide)
• Capacity (18 years old and of sound mind)
• Legality
• Writing (required by the Statute of Frauds)
J. Pittman, Instructor
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CONSIDERATION
• Contracts usually involve promises exchanged
between the parties
• Using a simplified method, the requirement of
“consideration” means that each party must suffer
a “detriment” with his/her promise
• A detriment occurs with a promise to do something
the promisor had no duty to do, or a promise to
give up a legal right
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CONSIDERATION EXAMPLE
car
Tom promises to sell
his car to Cindy,
a promise that he had no prior
legal duty to perform
Cindy promises to pay $
for the car, a promise
she had no prior legal
duty to perform
$$
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