Basic contracts

1. CONTRACTS

2. Michael:I need a truck to get my business going.
3. Michael:I need a truck to get my business going.Pete, Ill pay you $1000 today and another $500 at the end of the month for truck.
Pete:Sure, sounds good to me.
5. Michael: I need a truck to get my business going.Pete, Ill pay you $1000 today and another $500 at the end of the month for truck.
Michael gives Pete $1000.Pete gives Michael the keys and signs the trucks papers (title) over to Michael.
At the end of the month, Michael doesnt pay.
He gives excuses, not money.
He gives excuses, not money.
Can Pete sue Michael for the remaining $500?
Do they have a contract?
9. CONTRACT:
Agreement between two parties that creates an obligation to perform (or not perform) a particular duty.
10. Elements of a Contract
Offer
Acceptance
Lawful consideration
Genuine agreement (not fraud, duress, etc.)
Capacity of parties
Legality
11. CONTRACT
A legally enforceable contract requires:
1.An Offer(Ill sell you my watch for $10)
2.An Acceptance(Youve got a deal)
3.Consideration(Each side must get something for example, one side gets money, the other side gets the watch)
12. Offer
Must be:
A serious offer (intent)
Definite and certain
Communicated to the offeree
13. Offer
Must be:
14. Intent
Both parties must exhibit a contractual intent (words spoken in jest or frustration lack legal intent).
15. Intent
Im so thirsty Id give $100 for a Pepsi right now!
16. Intent
Im so thirsty Id give $100 for a Pepsi right now!
If you quickly hand him a Pepsi, does he have to give you $100?
17. Offer
Must be:
18. Offer:definite and certain
Offers cannot be vague
Example:If you lend me $10 today, Ill pay you back later.
Example:If you lend me $10 today, Ill pay you back when I get a job.
Example:If you lend me $10 today, Ill pay you back when I get my income tax refund.
21. Offer
Must be:
22. Offer:communicated
Offeree has to know about the offer to have a contract.
Example:Angie, a travel agent, sells a travel package to Hawaii for $900 to Nancy even though the travel agency has a poster on the window advertizing the exact same package for $500.Nancy buys the package for $900.Later Zoe tells Nancy about the poster.If Nancy sues Angie for the $400 difference, will she win?
Example:Tony finds his neighbors dog wandering the street several blocks from his home.He takes the dog to its owner.The owner thanks Tony.Tony goes home.The next day Tony sees a sign on a lightpole advertizing a $50 reward for the return of his neighbors dog.If Tony sues for the reward, he will not win.
26. Offer
Must be:
27. 5 ways to end an offer:
Offeree makes a counteroffer
Offereerejects the offer
Offerorrevokes his offer
Offerordies or becomes insane
Too much time goes by before acceptance
28. Counteroffer
If an offeree changes the offer in any way, they have really refused the offer and become a new offeror.
29. Counteroffer
Offeree
Offeror
Offer:Ill sell the building for $350,000
30. Counteroffer
Offeror
Offeree
Offer:Ill buy the building for $275,000
31. Reject an offer:
Linda:Im moving on Saturday.Ill sell you my washing machine for $25.
Debra:No thanks, mine is working fine.
Linda:Im moving on Saturday.Ill sell you my washing machine for $25.
Debra:No thanks, mine is working fine.
2 hours later, Debras washing machine breaks
Debra:Um, Ill buy your washing machine for $25.
Linda:Im selling it for $50 now.
Debra:But you offered to sell it for $25.
Linda:That was then, this is now.
Lets watch a 10-minute video of an offer that is rejected
34. http://www.youtube.com/watch?v=ffyLAU4nYlY
35. Revoke an offer:
An offeror can take back (revoke) an offer before it is accepted.
36. Revoke an offer:
Lets watch a 9-minute video where business people revoke their offer before it is accepted
37. http://www.youtube.com/watch?v=eQjR1io90Sw
38. End an offer:
An offer goes away when the offeror dies (or becomes insane).
39. End an offer:
If too much time goes by before acceptance, the offer has ended.
John:Ill sell you my one-ounce gold coin for $500.
Paul:Ill think about it.
5 months later the price of gold has gone up to $1500 an ounce
Paul:Um, I accept your offer to sell me your one-ounce gold coin for $500
Offer
Acceptance
Capacity of parties
Legality
41. Acceptance
42. Acceptance
Must be unconditional
43. Acceptance
Must accept the offer without any changes to it.
44. Acceptance
Jay:Ill sell you this dog for $20
Will:Ill buy this dog for $20
45. Acceptance
Jay:Ill sell you this dog for $20
Will:Ill buy this dog for $20
Unconditional acceptance:mirror image rule.
Offer
Acceptance
Capacity of parties
Legality
47. Consideration
48. Consideration
Consideration must be mutual. Both parties must receive something of value.
Involvement of money is not required.
49. Consideration
Consideration must be mutual. Both parties must receive something of value.
Involvement of money is not required.
Ill give you my snowmobile if youll give me your boat.
50. Is this a contract?
Teacher Offer:Ill give you $50 if you come to class on time tomorrow.
Student Acceptance:Youve got a deal.
51. Is this a contract?
Teacher Offer:Ill give you $50 if you come to class on time tomorrow.
Student Acceptance:Youve got a deal.
No, both sides did not get something.
Coming to class on time is a responsibility.
No consideration.
Offer
Acceptance
Genuineagreement (not fraud, duress, etc.)
Capacity of parties
Legality
53. Meeting of the Minds
54. Meeting of the Minds
A legally recognized offer and an acceptance creates a meeting of the minds, or mutual assent, between the parties.
Your book calls this Genuine Agreement
55. Things that can get in the way of a meeting of the minds:
Duress
Undue Influence
Fraud
Innocent Misrepresentation
Mistake
56. Duress:
57. Undue Influence:
58. Fraud:
59. 5 elements of fraud:
False representation of a material (important) fact
Representation known to be false
False representation intended to be relied upon
False representation actually relied upon
Suffer some monetary loss
60. Innocent Misrepresentation:
I thought it was a real antique when I sold it!
61. Mistake:
Ann:Oops!I thought I was selling a diamond ring.
Zoe:Oops!I thought I was buying a diamond ring.
Cubic Zirconium ring
62. Mistake:
Unilateral Mistake
Bilateral Mistake
63. Unilateral Mistake:
If you sell a Winslow Homer painting that your great grandmother gave you for $50 and later find out it is worth $15 million, you made a mistakea unilateral mistake.You cannot rescind your deal.
64. Bilateral Mistake:
Both sides agree to a contract that neither of them knows is not what they intended.
Jim sells his mountain cabin to Teresa on Monday.
Neither of them knew that the cabin burned down the day before.
Either Jim or Teresa can rescind their contract because ofneither of them meant to buy or sell a burned cabinbilateral mistake.
Offer
Acceptance
Capacity of parties
Legality
69. Capacity
Not everyone is legally able to enter into a contract.
70. Capacity
Not everyone is legally able to enter into a contract.
Offer:Ill give you this shiny necklace for that laptop.
Acceptance:Okay
71. Capacity
People under 18 cannot enter into legally binding contacts.
Acceptance:Okay
72. Capacity
They dont have capacity
Acceptance:Okay
73. Capacity
Under the age of 18 (for non essentials).
Under the influence of substances such as illegal drugs, alcohol or medicines.
Limited mental capacity.
74. When do you turn 18?
You turn 18 the day before your 18th birthday.
Heres why
Say you were born on January 1 at noon.
At the end of the day, you are considered one day old (a part of a day counts as a day in the law).
On December 31 you have been alive for 365 days.
You are a year old on December 31.
Offer
Acceptance
Capacity of parties
Legality
78. Legality
Contract agreements cannot violate the law.
79. Legality
You cannot win a lawsuit if you sue someone for not delivering your marijuana on time.
80. Legality
You cannot win a lawsuit if you sue someone for not paying after hiring you to kill his ex-wife.
81. Legality
You cannot win a lawsuit if you sue someone for not paying your winnings at a home poker game.
82. Legality
You cannot win a lawsuit if you sue someone for not paying your fee for fixing their electrical wiring if you dont have an electrician's license.
83. Legality
You cannot win a lawsuit if you bribe a witness to lie for you, give them money, and then they dont lie like they promised they would.
84. Legality
You cannot win a lawsuit if you pay someone not to get married and they get married anyway.
85. Legality: contracts not to compete
If you buy a pizza parlor, you can have in your sales contract a do not compete promise if the promise is limited in time and geographic area.
Offer
Acceptance
Capacity of parties
Legality
87. Four categories of contracts
Valid
Void
Voidable
Unenforceable
Valid
Void
Voidable
Unenforceable
89. Valid contract
Has all the elements of a legal contract.
90. Valid contract
Written
or
Oral
91. Valid contract
Written
or
Oral
Doesnt matter(except in specific cases)
92. Valid contract
Only needs to be in writing for things like:
Real estate contracts
Contracts that take more than a year to perform
Contracts to pay the debt of another
(California Civil Code Section 1624)
93. Valid contract
Jane, an ordinary 24-year-old woman, offers to lend Gil, an ordinary 21-year-old man, $400 to bail him out of jail.Gil accepts the $400, promises to pay by the end of the month, and gets out of jail.Does Gil have to pay by the end of the month?
94. Valid contract
Jane, an ordinary 24-year-old woman, offers to lend Gil, an ordinary 21-year-old man, $400 to bail him out of jail.Gil accepts the $400, promises to pay by the end of the month, and gets out of jail.Does Gil have to pay by the end of the month?Yes, it was a valid contract.
95. Valid contract?
Maleek promises to supply Bens copier company with up to 5000 reams of paper every month for the next year for $3.00 a ream.After the 9th month, Maleek tells Ben that he is very sorry but he has to raise the price to $3.25 a ream.Ben begins buying paper from Paula for $3.10 a ream and sues Maleek for the extra 10 a ream.Is Ben likely to win his lawsuit?
96. Valid contract?
Maleek promises to supply Bens copier company with up to 5000 reams of paper every month for the next year for $3.00 a ream.After the 9th month, Maleek tells Ben that he is very sorry but he has to raise the price to $3.25 a ream.Ben begins buying paper from Paula for $3.10 a ream and sues Maleek for the extra 10 a ream.Is Ben likely to win his lawsuit?Yes, but why?
97. Valid contract?
Opal offers to supply Victoria with one kilo of cocaine each month by the first Friday of the month for $5,000.Victoria agrees.After the third month, Opal is in prison and does not supply Victoria that month or the next.Is Victoria likely to win if she decides to sue for breach of contract?
Valid
Void
Voidable
Unenforceable
99. Void contract
Never was a legal contract in the first place.
100. Void contract
Toms Offer:If you kill my ex-wife on Saturday, Ill give you $5,000 on Sunday.
Jims Acceptance:Ill do it.
Jim kills Toms ex-wife on Saturday.
Tom doesnt pay Jim on Sunday.
Can Jim sue Tom to get his money?
Valid
Void
Voidable
Unenforceable
102. Voidable contract
One party can cancel the contract.
One party can cancel the contract.
Agnes lives in a nursing home and takes prescription medication that makes her sleepy.Tim, a pet shop owner, convinces Agnes to buy a 4-year-old pit bull.Agnes pays $4,000 for the pit bull.Agnes claims she can void the contract and rescind the deal because she agreed to it while under the influence of prescription medication.Do you agree?
Voidable contracts arise from questions of capacity and from actions which invalidate mutual assent--duress, undue influence, fraud.
A contract entered into by a minor (under the age of 18) for non essentials.
A contract signed by a person under the influence of substances such as illegal drugs, alcohol or medicines.
A contract involving fraud
A contract involving material misrepresentation
A contract entered into by a person with limited mental capacity.
Valid
Void
Voidable
Unenforceable
107. Unenforceable contract
A legal contract for which the courts cannot help the injured party.
Ruth sold Jennifer her iPod for $240.Jennifer paid $100 and promised to pay the rest when she received her income tax refund check.Jennifer received her income tax refund check but never paid Ruth because, she said, the iPod was stolen and she didnt think she had to pay anymore.Six years later, Ruth sued Jennifer for the remaining $140.By then, the contract was unenforceable because the law requires you to sue within 5 years.
Tom talks with Ann and promises to sell his house for $200,000 today and another $100,000at the end of the year.Ann agrees, pays $200,000 and moves in.At the end of the year Ann doesnt pay.Tom sues Ann.In court, the judge says, I cant help you, Tom.To enforce a contract for the sale of a house in California, you need a written agreement.Your contract is unenforceable.
110. Express contractvs.Implied contract
111. Express contract
A legal contract agreed to in wordsoral OR written.
112. Express contract
A legal contract agreed to in wordsoral OR written.
Id like to rent one of your jumping castles on Saturday.
Sure, Ill bring it over at 9:00
OR
113. Implied contract
A legal contract agreed to without any words.
?
You walk into the AM/PM, pick up a bag of chips, take it to the counter, give the cashier money, receive your change, and walk out without saying a word
You open the bag.Its full of popcorn.If the clerk refuses to give you your money back, will a lawsuit for breach of contract likely succeed?
You open the bag.Its full of popcorn.If the clerk refuses to give you your money back, will a lawsuit for breach of contract likely succeed?
Was there a contract?
An unconscious person is brought into a doctors office.The doctor mends the mans wounds.The wounded person will have to pay the reasonable fee of the doctor.
119. Bilateral contractvs.Unilateral contract
120. Bilateral contract
The offerer makes a promise and the offeree makes a promise.
Unilateral contract
The offerer makes a promise and the offereedoes something the offerer asked for.
Most contracts are bilateral.
Most contracts are bilateral.
I promise give you $1000 for your car.
I promise to give you the title to the car when I get the $1000.
123. Unilateral contract
The offerer makes a promise.
The offereedoes something.
Most contracts are NOTunilateral.
Pete:Ill promise to give you a $50 reward if you find my lost dog and return it safely.
Pete:Ill promise to give you a $50 reward if you find my lost dog and return it safely.
You do not promise to find the dog.
You are not required to find the dog.
If you do find and return the dog safely, Pete must pay you the $50 reward.
The offerer makes a promise.
The offereedoes something.
Most contracts are NOTunilateral.
128. Bilateral or Unilateral?
Kay:Tim, Im going to a big party tonight.If youll wash my car by 4:00, Ill pay you $7.00.
Unilateral, only Kay made a promise.
Tim:Ill do it!
Tim:Ill do it!
Bilateral, both made promises.
132. ---end of presentation---

Date post:	12-Jan-2015
Category:	Education
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Basic contracts

Education