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Unformatted text preview: Chapter 12 NATURE AND CLASSES OF CONTRACTS: CONTRACTING ON THE INTERNET Definition of Contract A contract is a binding agreement between two or more parties. A contract arises when an offer is accepted with contractual intent (the intent to make a binding agreement) and the acceptance is communicated properly. Offer Acceptance = CONTRACT 2 Parties to a Contract General: Examples: Insurer Insured Carrier Shipper Promisor (Obligor) Promisee (Obligee) Parties may be: individuals, partnerships, corporations, governments Parties to an Insurance Policy Landlord (Lessor) Tenant (Lessee) Parties to a Transportation Contract Vendor Vendee Parties Agreeing Upon Occupation of a Building for Money (a Lease) Parties to a Sales Contract 3 Classes of Contracts FORMAL contract under seal, contracts of record, negotiable instruments INFORMAL OR all other contracts EXPRESS spoken or written words IMPLIED OR created by law based on acts or conduct of parties 4 Classes of Contracts VALID binding and enforceable OR VOIDABL circumstances E allows cancellation at option of one party VOID OR without legal effect 5 Classes of Contracts EXECUTE completely performed D OR EXECUTO something RY remains to be done BILATERAL one promise given in exchange for another OR UNILATER one party promises to AL perform after the other party does some designated act 6 Contract Example Parties This contract is executed between the Lookout Alarm system, herein called System, of 276 West Jackson Street, Phoenix, Arizona, and A.J. Armstrong, herein called Homeowner, of 737 Inwood Drive, Phoenix, Arizona in accordance with the specifications that are attached hereto. Installation System agrees to install a burglar alarm system at the above address of the homeowner, Payment Homeowner agrees to pay System for the above installation the sum of $4,863.00, $663.00 being paid upon execution of this contract and the balance of $4,200.00 being paid within 90 days following satisfactory completion of the work by System. } } } 4 5 1 2 3 Lookout Alarm System by S.J. McRory S.J. McRory, President A.J. Armstrong A.J. Armstrong July 1, 2001 Date July 1, 2001 Date 7 Other Types of Contracts Option Contract: gives one party the right to enter into a second contract at a later time. Right of First Refusal: obligates the offeror to make the offer to the person holding this right first. 8 Quasi Contracts In certain situations, the law regards it as unjust for a person to receive a benefit and not pay for it. In such a case, the law of quasi contracts allows the performing person to recover the reasonable value of the benefit conferred on the benefited person even though no contract between them requires any payment. 9 Contracting on the Internet Forming electronic contracts involves the same principles as "real space" contracts. Online contracting involves statutes of fraud issues. B2B contracts (Business to Business). B2C contracts (Business to Consumers). E-Sign and UETA help enforce electronic signatures. 10 ...
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