RSM225 Fall 2019 Sahni Class 8 Lecture Outline.pdf - RSM225 Legal Environment of Business CLASS 8 INTRODUCTION TO CONTRACT LAW Raj Sahni This is an

RSM225 Fall 2019 Sahni Class 8 Lecture Outline.pdf - RSM225...

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1 RSM225 Legal Environment of Business CLASS 8 : INTRODUCTION TO CONTRACT LAW Raj Sahni This is an outline only. Students are responsible for all assigned reading and lecture content. Copyright © 2019. R.S. Sahni. All Rights Reserved. 1. What is a Contract? A promise or set of promises that the law will enforce A legally enforceable “bargain” struck between parties Not all promises are contracts (i.e. legally enforceable) – an unenforceable promise is known as a “gratuitous promise” In order to have a legally enforceable contract, there must be a “meeting of the minds” and an intent to create a legally binding promise between the parties 2. Overview of Basic Requirements for Contract Formation Intention to create a binding promise (contract) “Meeting of the minds” between parties Offer, acceptance and consideration The parties have the legal capacity to enter into and be bound by contract The contract and its terms are not illegal or void as being contrary to public policy
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2 3. Three Essential Elements of a Contract In addition to the requirement that there be a meeting of the minds and an intention to create a legally binding promise, there are three essential elements to the formation of a contract: Offer: “promise” made by the Offeror Acceptance: acceptance of the promise by the Offeree Consideration: the “value” given in exchange for the promise 4. Offer An offer is a tentative promise made by the Offeror, subject to a condition or containing a request of the other party (the Offeree) Typically, the Offeror promises to do something on the condition that the offer is accepted by the Offeree and that the Offeree promise something (e.g. payment money) in exchange
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