100%(2)2 out of 2 people found this document helpful
This preview shows page 1 - 3 out of 9 pages.
The preview shows page 1 - 3 out of 9 pages.
Business Law FinalChapters 7-14 Chapter 7: Intro to ContractsNature of a ContractoContract: a legally enforceable agreement that is created when two or more competent parties agree to perform, or to avoid performing, certain acts that they have a legal right to do and that meet certain legal requirements. oUCC defines a contract as “the total obligation which results from the parties’ agreement as affected by the UCC or any other applicable rules of law”Sources of Contract LawoTangible Personal Property: personal property that can be moved oCommon Law: source of contract law regarding fixed assets, services, or intangiblesoErnest Money: seller can have this money for protection, so if buyer decides to bail out at last minute from the contract, the money goes to the sellerAll contracts are agreements, but not all agreements are contractsoIf there’s a legal obligation, it can be a contractoIf it’s only a social or moral obligation, there is no reason for a contractFriend offers to pick up other friend, but does not show up. This is not a contractWhat makes a contract?oOffer, acceptance, and considerationoOffer: someone poses a question, a bidCan either accept, decline, or negotiate Counter offer: first offer was rejected and a new offer is created (counts as an entire new offer)oAcceptance: agreement to the offerMutual agreement: the parties have a clear understanding of what they are undertaking and both agree to the termsoConsideration: each party must promise to give up something (detriment) and may gain a benefit oCompetent Parties: parties to a contract must be competent and capable of understanding what they are doing (legal age, mentally stable)oLegality of Purpose: the intent of the contract must not violate law oProper Form: Requirements of a proper contract must be met to be enforceable Status of Contracts
oExecutory Contract: hasn’t been started or fully finished, waiting for someone to do their partoExecuted Contract: the terms of the contract are totally fulfilled Enforceability of ContractsoValid Contract: all elements are met (legality, format, competency, etc.)oVoid Contract: contract that was never valid, lacks one or more of the essential elements Mentally instable is void because they will never know what they’re getting into, usually have a adjudicated guardianoVoidable Contract: may be rejected by one of the parties for a legally acceptable reason Minors know what’s going on and in some cases can sign into a contract