Contract Contracts are agreements between two or

more parties that create obligations.Characteristics of Contracts

Valid, void, voidable or unenforceableExpress or impliedBilateral or UnilateralOral or written

Valid, Void, Voidable, Unenforceable Contracts

Valid contract is legally binding Voided contract has no force behind it Voidable contract is one that can be cancelled. Unenforceable means it cannot be enforced in a

court of law.

Express or ImpliedExpress contract is a written contract or one

that is orally executed.Real estate agreements Work contract

Implied contract is one that comes about through the actions of other parties.Ex: Buying gas without talking to the attendant

simply because it is self service. Customer pays for gas and attendant turns on the pumps.

Bilateral or UnilateralBilateral Contracts

A promise is made by both parties I promise to sell you my house if you promise you

will buy it.

Unilateral ContractsA promise is only made on one side

I’ll sell you my computer for $150.00 if you give me the money tomorrow by 5:00. If the money is delivered on time, the contract takes effect.

Oral and WrittenOral Contracts

Created by word or mouthWritten Contracts

These have the terms spelled out in a specific manner.

These are easily enforceable.

Contracts RequireTo be legally enforceable contracts require a valid offer and acceptance, genuine agreement, legality, consideration, and capacity. Some contracts must be placed in writing.

PartiesThe party making the offer is the offeror.

The party accepting the offer is the offeree.

An offer must…Be made with the offeror’s apparent intention to be bound by it.

Be complete and definite.

Be communicated to the offeree

Offer is ended by…By revocation of the offerorAt the time stated in the offerAt the end of a reasonable time if no time is

statedBy rejection of the offereeBy counterofferBy death or insanity of either of the partiesBy destruction of the specific matter.

Open OffersIn general, an offeror is not obliged to keep an offer open for a specific time even if the offeror has promised to do so.

OptionThe offeree may give the offeror something of value in return for a promise to keep the offer open. This is called an option.

Firm OfferA firm offer, made between two merchants, is an offer that contains a term stating how long the offer is to stay open.

Contracts used for saleIn contracts for the sale of services or realty, the offeree must accept the offer unconditionally and in the exact form and manner indicated by the offeror.

In contracts for the sale of goods, acceptances can vary the terms of offer.

Contractual CommunicationContractual communication is effected by a constantly increasing variety of means to include phone, fax, e-mail, face-to-face negotiations, ground mail, and hand signals.

Although most contractual communications are effective when received, acceptances are generally effective when sent.

Never sign a contract unless you have thoroughly read it. If you do not understand the legal terminology, ask for assistance. Contracts are very hard to void if you have already signed them. You must prove duress or the inability to understand.