Hotel, Restaurant, and Travel Law

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Unformatted text preview: Week Three Week Chapter 4 - Contracts and the Hospitality Industry Chapter *A business needs enforceable contracts to assure cash flow. A valid, enforceable contract generally requires. *Offer and acceptance *Contractual capacity *Genuine Assent *Consideration *Legality *A required form, if applicable *A contract can either be expressed or implied. *Express Contract is where the contract and its terms are stated by the parties. An express contract can be a: *Written contract *Verbal contract (Oral, but not written or signed) *Implied Contract, where the contract and its terms are created by law, due to the conduct of the parties. *If the parties act like they have an agreement, a court can enforce the agreement *Both kinds of contracts are interpreted by a court based upon what a reasonable person would believe the contract terms were. *Question of fact for a judge or jury based upon evidence of writings or actions of the parties. *A contract can either be valid; void; voidable; or valid, but unenforceable. *Valid Contract: Binding and enforceable by either party *Void Contract: No legal effect *Does not exist as far as the law is concerned. *Neither party can enforce it. *Voidable Contract: A binding contract, though one of the parties has the right to reject or enforce it. *The one with the right to reject is protected by the law, for some reason, i.e. they are a minor. *The other party does not get a choice. *Valid, but unenforceable *A contract that has the elements of a valid contract, but there is some defect that creates a defense to enforceability. *Example: Statute of limitations has lapsed a lawsuit based upon breach of contract. lawsuit based upon breach of contract. *Breach of Contract *A lawsuit to enforce a breached contract *Generally the plaintiff must be a party to the contract. *Strangers to a contract generally have no rights to enforce it. Contractual Capacity *Parties to a contract must have capacity or they will be protected by the law, allowing them to reject their contract. *A lack of capacity makes a contract voidable. *Parties need both legal capacity and actual capacity. *Legal capacity is concerned with a party who needs to be protected because the law says so – Minors *Actual capacity is concerned with a party who does not understand the nature and consequences of their actions when they entered the contract. *Legal Capacity. *A minor must affirmatively reject their contract or it’s enforceable against them. *If rejected, any remaining consideration must be returned to the other party. *Rejection must occur before their 18th birthday, or within a reasonable time thereafter. *If not rejected in that time, or if minor continues to perform after 18th birthday, contract becomes valid. *Minor’s contract for necessities *A minor can reject such a contract – it is voidable. *If they reject, they are not liable for the contract price of what they received, but are liable for the reasonable value of the goods or services received. *This theory of liability is call Quasi­Contract. *A contract requires that an offer was made by a party to the contract. An offer must be: *Sufficiently definite *Sufficiently certain *Communicated to the offers (one receiving the offer) *Advertisements and price quotes are usually considered invitations to negotiate and not offers ­they are usually communicated to the general public and not to specific offeree(s) *If something is not an offer, it cannot be accepted to create a contract. *A contract also requires that the offer be accepted. The elements of true acceptance are: *It is sufficiently definite. *It is sufficiently certain. *It is communicated to the offeror. *It complies with terms of the offer. *A rejection terminates the offer. *A non­complying acceptance is actually a counteroffer and also terminates the original offer. *A contract requires consideration *Consideration is a bargained­for­exchange for value *Each party gets something and each gives something *If one party makes a promise to another, but nothing is promised in return, there is no consideration to support the promise. *The unsupported promise is a promise of a gift. *A promise of a gift is generally unenforceable. *Consideration can take one of four forms *A thing of value, ­ foods, furniture, or money. *A valuable service, ­ repair, legal or catering service. *A valuable forbearance – giving up legal right that one party already has, like a right to sue. *A binding promise to do one of the 1st three at a future time. *The promise must bind the promisor. *A non­binding promise may sound real, but when analyzed it is found to be illusory. *A contract must be legal. *If a contract or its consideration violates a law, the contract is void. *Neither party can enforce it *A court may separate out the illegal part of the contract and enforce what is left, if enough of the contract remains. *Some possible violations of law include: *A contract that violates a criminal statute, such as a contract for drug dealing or illegal gambling. *A contract that violates anti­trust laws, such as to create a monopoly or price­fixing. *A contract that violates public policy *A contract that prohibits marriage (a fundamental right) is void. *A non­competition contract, where one party agrees not to compete in business with another party, can be void. *A non­competition contract will be enforceable if: *1. It is part of a contract for sale of a business or if it is part of an employment contract, and *2. The non­competition contract is not overly restrictive in time, territory, or market. *A contract requires genuine assent by the parties. *They must have intended to agree. *They entered the contract knowingly and voluntary. *A lack of genuine assent can make the contract voidable. *“Fraud” is an intentional misrepresentation of a material fact. *Though there are exceptions, a statement of opinion is not fraud. *The misrepresented fact must be important as to the contract and its value. *Fraud is also an intentional tort. *“Innocent misrepresentation of a material fact” also results in a voidable contract, since one of the parties is still deceived. *“Duress” is where a contract is entered through force or threat of force. *One party, the one deceived or forced into the contract, can reject the voidable contract. *A contract entered due to “mutual mistake of a material fact” can be rejected by either party, as they never truly agreed on anything. *Statute of Frauds – Some oral contracts must be evidenced by a signed writing to be enforceable in court. in court. *The general rule about oral contracts is that they are enforceable in court. *An exception to that rule is that some contracts are considered so important, complex or valuable that the law states they should be in writing. *Contracts that must comply with the statute of Frauds: *A contract for the transfer of an interest in real property. *Property can be real property or personal property. *Real property is land and that which is in, over or attached to the land. *Real property includes building and trees attached to the land as well as an easement to use another’s land. *A lease of real property is not real property. It is personal property. *Personal property is any property that isn’t real property and includes: *Tangible personal property, such as furniture, jewelry, cars, food or beverages; and *Intangible personal property, such as intellectual property or shares of stock in a corporation. *Other contracts that must comply with the Statute of Frauds. *A contract that cannot, by its terms, be completed within one year. *The issue is not how long the contract lasts, but what are the terms of the contract. *Example: A 3­year car loan can be paid off within one year, but it is still a 3­year contract. *A contract for the sale of goods, valued in excess of $500. *“Goods” are tangible personal property. *This is a very low dollar amount which may cause a phoned­in food or liquor order to be unenforceable. *Partial performance can create an exception to the Statute of Frauds. *This means that even these oral contracts can be enforced without a writing if the agreement has been partially performed. been partially performed. *This exception requires that one or both of the parties has sufficiently performed the contract to prove to a court that there was a contract and prove the terms of that contract. *The Statute of Frauds requires evidence of a signed writing. *The writing need not be a long, formal contract. *The signatures don’t need to be original. They can be photocopied, faxed, emailed or electronic signatures. *The writing must be signed, at least, by the defendant – the one being sued for breach of contract. *A contract that is vague by its own language may need to be interpreted by a court, if someone is suing to enforce it. *Along with many other rules, an ambiguous contract is generally interpreted in a light least favorable to the party who drafted the contract. *Clearly written contracts, which include all of the elements of a valid contract, are the best way to stay out of court. *Contracts formed online, by clicking “I Accept” or otherwise, are generally valid and enforceable. *A court may restrict the agreement to the terms that were readily accessible to the accepting party. *Thus terms that were contained in a scrolling box, which did not need to be viewed or which were described in a separate web­page, might not be enforceable. ...
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This note was uploaded on 11/06/2011 for the course LAW 2010 taught by Professor Davidspatt during the Fall '11 term at Johnson & Wales University- Charlotte.

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