5 chapter summary focus on ethics case study hamer v

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Unformatted text preview: onsideration Requirement 4.5 Chapter Summary • Focus on Ethics • Case Study: Hamer v. Sidway • Case Study: South Shore Amusements, Inc v. Supersport Auto Racing Association • Critical Thinking Questions • Hypothetical Case Problems • Key Terms 10/26/12 5:42 PM Section 4.1 Types of Contracts CHAPTER 4 A contract is a legally enforceable agreement. As this definition implies, a contract comes into existence from the voluntary assent of two or more individuals to enter into a legally binding agreement. Mutual accord is crucial to the formation of a contract. One party, referred to as the offeror, makes an offer—a business proposition—to another; the other, known as the offeree, accepts. Provided that the other three requirements are present (consideration, capacity, and legality), a valid contract is formed. If Manuela offers to sell Linda her laptop for $450 and Linda accepts the offer, a valid contract is formed since there is a valid offer and acceptance, consideration (something of value is given and received by each party—the laptop and the $450), capacity (both parties are of sound mind and are freely entering into the agreement), and the contract is for a legal purpose. So that seems relatively straightforward. But beware: contracts are not always so simple. In fact, there are many subtle and difficult issues that can arise when attempting to determine if there is an offer and acceptance. 4.1 Types of Contracts C ontracts can be classified as express or implied in fact, bilateral or unilateral, and simple or formal. In addition, sometimes when a contract does not exist, there may be something known as a quasi contract (contract implied in law). Each type of contract will be briefly examined below. Express Contracts v. Implied Contracts Express contracts are formed by the express language of the parties—the actual words they use in their agreement—and can be either written or oral. Example 4.1. Sam says to Ben, “I’ll sell you my Business Law book for $50.” Ben replies, “I...
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