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BUS311_chapter_05 - Contracts Capacity Genuine Assent the...

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Chapter Overview Pixtal/SuperStock 5.1 Valid, Voidable, Unenforceable, and Void Agreements 5.2 Capacity Capacity and Age: Minors Capacity and Mental Incompetence 5.3 Genuine Assent Mutual Mistake of Material Fact Fraud Duress Undue Influence 5.4 Unenforceable Contracts and the Statute of Frauds A Promise to Pay the Debt of Another A Promise That by Its Terms Cannot Be Performed Within One Year of the Date the Contract Is Made A Promise in Consideration of Marriage Contracts for the Sale of Goods With a Price of $500 or More Contracts Creating an Interest in Real Estate Requirements of the Writing Under the Statute of Frauds 5.5 Illegality Contract Interpretation and the Parol Evidence Rule 5.6 Chapter Summary Focus on Ethics Case Study: Lamle v. Mattel, Inc. Case Study: Sherman v. Burton Critical Thinking Questions Hypothetical Case Problems Key Terms Learning Objectives After studying this chapter, you will be able to: 1. Distinguish between voidable, unenforce - able, and void agreements. 2. Explain the requirement of capacity and describe why a person might lack it. 3. Describe mutual mistake, duress, undue influence, and fraud. 4. List the types of contracts required to be in writing. 5. Give examples of illegal agreements. Contracts: Capacity, Genuine Assent, the Statute of Frauds, and Illegality 5
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CHAPTER 5 Section 5.1 Valid, Voidable, Unenforceable, and Void Agreements A fter determining that an offer and acceptance are valid, and that there is valid consideration, each party to the contract must have the capacity to enter into a binding contract and must give his or her genuine assent to enter into a binding agreement. To put it another way, the parties must fully understand that they are entering into a contract, and they must willingly enter into a contractual relationship with each other. To use a simple example, if Felipe holds a gun on Heather to persuade her to sell him her car, there may be offer, acceptance, and consideration, but the contract is defec - tive due to lack of mutual assent. Heather was not truly agreeing to sell her car; she just wanted to avoid getting shot. In this chapter we will examine a number of impediments that might invalidate what oth - erwise appear to be valid contracts. These include lack of capacity, defective assent issues (mutual mistake of material fact, duress, undue influence, fraud), illegality, and having an oral agreement in one of the few situations in which the law requires a writing. But first, it’s time for some more terminology! 5.1 Valid, Voidable, Unenforceable, and Void Agreements A valid contract is one that meets all legal requirements. It’s what people generally aim for when they seek to make a contract. Sometimes, though, it’s not what they end up with.
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