contracts and consideration acct

contracts and consideration acct - Contracts 4 elements of...

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Contracts 4 elements of every contract Agreement between parties Bargain for exchange (something of value) Contracting parties have to have the capacity Contract has to be legal A valid contract is one that contains all the legal elements set forth in the beginning, generally a valid contract is one that can be enforced Sometimes a contract can be valid yet unenforceable when a law prohibits the courts from enforcing it. The statute of frauds requires that certain contracts must be evidenced by a writing before they can be enforced The statue of limitations mandates that an action for breach of contract must be brought within a set period time, thereby limiting enforceability A contract is voidable if one or both parties have the ability to either withdraw from the contract or enforce it. If the parties discover the contract is voidable after one or both have partially performed, and one party chooses to have the contract terminated, both parties must return anything they had already exchanged under the agreement so that they will be restored to the condition they were in at the time they entered into it. Once all the terms of the contract have been fully performed, the contract has been executed As long as some of the terms of the contract have not yet be performed the contract is executor Ex) if Randolph hires Carmine to paint his garage on Saturday for $800, which 200 paid as a down payment and the balance due on completion of the job, the contract becomes executor as soon as they reach agreement. Once the painting has been finished and the final payment is made the contract is an executed contract. Formal contracts- have a special form and must be created in specific manner. Known as contract under seal 4 types of formal contracts- contracts under seal, recognizances, letters of credit, negotiable instruments Recognizances- arise when a person acknowledges in court that he or she will perform some specified act or pay a price upon failure. A bond used as bail in criminal case is a recognizance. The person agrees to return to court for trail or forfeit the bond. Letter of credit- is an agreement by the issuer to pay another party a sum of money on receipt of an invoice and other documents. The UCC governs letters of credit Negotiable instruments- are unconditional written promises to pay the holder a specific sum of money on demand or at a certain time. They are governed by the UCC; ex) checks, notes, drafts, and certificates of deposit Contracts under seal- sealed contracts may still be sealed with wax or some other soft substance, but they are more likely to be simply identified with the word seal of the letters L.S U.S. states today do not require that contracts be under seal; however 10 states still allow a contract without consideration to be enforced if it is under seal.
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Informal contracts (simple contracts)- are quite complex, they are called simple because no
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This note was uploaded on 03/23/2012 for the course ACCT 324 taught by Professor Eppink during the Spring '10 term at South Carolina.

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contracts and consideration acct - Contracts 4 elements of...

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