LEB Exam 3 Study Guide.docx - LEB Exam 3 Study Guide Chapters 11-12 Contracts Consideration Element#1 Agreement What constitutes a legal agreement

LEB Exam 3 Study Guide.docx - LEB Exam 3 Study Guide...

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LEB Exam 3 Study Guide Chapters 11-12: Contracts & Consideration Element #1: Agreement What constitutes a legal “agreement”? Reasonableness: both parties have read all the concepts, must make sense to a reasonable person Intent: intent to follow through with the contract 2 Parts of the Agreement : Offer Acceptance 3 Requirements of the offer: Intent to enter into a contract Reasonably definite Must be communicated – fulfilled when someone reads or hears it Are rewards offers? These are valid offers (legally valid) Are advertisements offers? These are not legal offers 4 ways to terminate the offer : 1. Revocation: can only be revoked by person who made the offer – must be done before other party accepts it 2. Rejection: other person rejects the offer 3. Termination by law: party making the offer dies or goes insane 4. Lapse of time: reasonable time period considering appreciation/depreciation – very situation dependent 3 Requirements of the Acceptance : 1. Intent to enter into a contract 2. “Mirror Image” – we must mirror the offer 3. Must be communicated: different from the offer in that this must be “sent out” When does the acceptance take effect? When they effectively communicate it to the offeror Can the offeror apply conditions to the acceptance? NO! Element #2: Consideration Consideration: Who must give consideration? Both of the parties How is the value defined? Both parties must agree on the value Why must it be “bargained for”? negotiation must be equal on both sides What is a “detriment”? something negative happened to us, one party walks away, the other party suffers a detriment What happens if someone doesn’t give consideration? Then it is not a valid contract What can’t be consideration? Something that is per-existing Will courts ever enforce a contract that doesn’t have consideration? Yes for example: Promises to Charities: can be enforced
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Chapters 13-14 Element #3: Capacity Capacity What makes a contract “voidable”? Minors General Rule: minors can walk away from contract Ratification: minors can also ratify contracts (turn 18 and continue in it) Exception to General Rule: if minor has contracted for necessity Ex. Minor signs lease contract to live somewhere Mentally Impaired Insanity (2 types) Legal insanity: contract void Insanity in fact: have partial legal capacity, contract is voidable Intoxication Doesn’t matter if its voluntary, contract will be voidable Lack of Consent Fraud: deception into entering a contract, must be material (like miles on a car) Mistake of Fact: misunderstandings Mutual: both parties can walk away Unilateral: stuck into a contract Duress: under threat or scared to sign a contract Undue Influence: peer pressure Legal Purpose What can make a contract illegal?
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