-=Contract Law=-

[Aces]

What are the key elements of a binding contract?

 

Competent Parties - For a contract to be valid, each side must have the capacity to enter into it. Most people and companies have sufficient legal competency. A drugged or mentally-impaired person has impaired capacity and chances are a court may not hold that person to the contract. Minors (e.g., usually those under eighteen) cannot, generally, enter into a binding contract without parental consent, unless it is for the necessities of life, such as food, clothing, or for student loan contracts.

 

Consideration - If the other side is to be held to the contract, you must give up something in exchange. This is called consideration. No side can have a free way out or the ability to obtain something of value without providing something in exchange. Money is the most common form of compensation, but it can also be property, giving up a right or valid claim, making a promise to do or not to do something, or anything of value. Agreeing to perform an illegal or illicit act is not consideration and the contract is void.

 

Mutual Assent or Meeting of the Minds - This means that each side must be clear as to the essential details, rights, and obligations of the contract. Putting the deal down on paper prior to signing it goes A LONG way to avoid future misunderstandings and disputes. Meeting of the minds sometimes can be expressed by words spoken or gestures made or can be inferred from the surrounding circumstances. There is no meeting of the minds if: (1) one side is obviously joking or bragging, (2) there is no actual agreement (i.e., the farmer who is selling a gelding and the buyer thinks the horse is a brood mare), or (3) both sides have made a material mistake as to the terms or details of the contract.

 

The offer of a contract

 

When you ask someone to do something, or offer to see someone for a price, you are making an offer. An offer is the first step in forming a contract. The middle step is the other party's acceptance of the deal. The last step is performance -- where you each live up to your side of the bargain.

 

Words, gestures, or actions can signal an offer to enter into a contract and an acceptance. If you are forced to make an offer ("your money or life") it is not a valid offer. Similarly if you are tricked into accepting, it will not be deemed acceptance of the terms offered. To have a binding obligation on both sides, both sides must approve and accept the terms and conditions of the offer. Offers remain open until: (1) accepted, (2) rejected, (3) retracted prior to acceptance, (4) countered, or (5) expired by their own terms.

 

If you reject an offer, you have no contract unless at a later date a new offer is put on the table (called a "counter-offer"). A counter-offer is a new set of terms and conditions given in response to the original offer. The difference between the original offer and the counter-offer may be just one clause in particular or multiple provisions or the entire contract.

 

Be mindful that you can take back or withdraw an offer at any time before the other side has agreed to the deal. This is called retraction (proving that you have withdrawn the offer before the other side accepted may present a problem). On the other hand, changing your mind after you have signed or agreed precludes retraction. Absent compelling reasons for not holding up to your end of the bargain, you will be a party to a contract.

 

What is the performance of a contract?

 

Performance is actually completing the deal according to the terms given in the contract. For example, you want to buy that snazzy looking 1998 Ferrari at your local dealer's clearance sale. Your dealer, Mr. X, offers to sell you that slick-looking Italian car if you pay him $97,000. After a bit of bargaining, you agree to the terms and get the car at a reduced price of $96,995, signing on the dotted line. A contract has been accepted. Mr. X, your car dealer, will deliver the 1997 Ferrari and then you pay him the balance due. The dealers delivery of the car and your payment of $96,995 are the performance of the contract.

 

Both parties must live up to their end of the bargain in the contract to have closure. In other words, until both parties have properly performed under the contract, the contract remains open.

 

Are there different kinds of acceptance?

 

Yes. Acceptance typically can come in one of three types:

 

(1) Express - a direct and absolute outward manifestation of agreement, such as, "I accept your offer."

 

(2) Implied - the acts of the parties show that the offer has been accepted, such as when both parties to a contract begin to perform the terms of the contract.

 

(3) Conditional - acceptance is conditional on the happening of something, such as, "I accept your offer so long as you trim my tree in the next two days." By its terms, a conditional acceptance is a counter-offer.

 

Must the contract be in writing?

 

That depends primarily on the nature and subject matter of the contract. If you orally agree to purchase your brother's 1988 Ferrari that is in "mint condition" for $25,999.99, that agreement is legal. As a general rule, however, it is wiser to have the terms written in understandable language - plain English -- to save future misinterpretations and errors.

 

Most states have laws (called "Statutes of Frauds") listing the types of contracts that must be written in order to be enforceable. The purpose of the Statutes of Frauds is to prevent fraudulent claims from arising. Although the laws vary from state-to-state, the most common examples of contracts that generally must be in writing are:

 

(1) sales of real property;

 

(2) promises to pay someone's debt obligations;

 

(3) a contract that takes longer than one year to complete;

 

(4) real property leases that run for more than a year;

 

(5) contracts for an amount or other consideration that exceeds the state's threshold;

 

(6) a contract that will go beyond the lifetime of the one performing the contract;

 

(7) the transfer of property upon the death of the party performing the contract.

 

If you agree verbally to a type of contract listed in your state's Statutes of Frauds without getting the agreement in writing, the contract is not enforceable, although there are some exceptions. Because state laws vary in this area, it is strongly suggested that you consult with your attorney if only to review the proposed contract. Do not wait until after you have signed. That can be too late.

 

Does a contract have to be notarized?

 

Typically no. A notary public (or simply "notary") provides an acknowledgment that the signature appearing on the document is that of the person whose signature it purports to be. There is a requirement that some documents be notarized, such as a real property deed. Unless specifically required by state or municipal law, a contract does not have to be acknowledged before a notary public.

 

I inadvertently left my wedding ring at a restaurant and suspect the waiter lifted it. I filed a police report and put an ad in the paper, offering a reward. Am I obligated to pay the reward?

 

Unless you can prove that the waittress stole your ring, then you'd have to pay the reward. Your assumptions, presumptions, feelings, suspicions, etc. wouldn't hold any water.

 

An offer of reward is like any other offer to the general public; like a store coupon, or "sale" offer. That is, if a person sees your offer, or has Notice of your offer (promise of a reward), and the person complies with your offer (returns your ring to you), then a contract has been made, and compliance will be your responsibility.

[moonlite]

should we say, posted in the wrong place, more for the reader comments thread.

[Aces]

Everyone should read this over eh?

 

Maybe the marketplace will be a better place.

 

:wishfulthinking:

[143ksk]

What about the UCC?

[Transplant]

Amen. UCC. Most states use it when dealing with the sale of goods.

Implied and express warranties.

[Aces]

Just be thankful I didn't start an Iron Man movie thread here.

[cloudofwit]

Just be thankful I didn't start an Iron Man movie thread here.

 

Or the latest Overstreet Guide just came out...

[Aces]

Amen. UCC. Most states use it when dealing with the sale of goods.

Implied and express warranties.

 

Not everyone here is from the 50 states.

[Count]

[Transplant]

Amen. UCC. Most states use it when dealing with the sale of goods.

Implied and express warranties.

 

Not everyone here is from the 50 states.

Not everyone uses English common law either.

[Aces]

Amen. UCC. Most states use it when dealing with the sale of goods.

Implied and express warranties.

 

Not everyone here is from the 50 states.

Not everyone uses English common law either.

 

Well I'm not learning Japanese any time soon so people that deal with me will have to use English common law.

[seank]

Not everyone wants to relive the first year of law school either.

[PokerKid]

Where do I sign?

[Aces]

Not everyone wants to relive the first year of law school either.

 

It's what goes on here everyday put into fancy words.

Example:

 

Are there different kinds of acceptance?

 

Yes. Acceptance typically can come in one of three types:

 

(1) Express - a direct and absolute outward manifestation of agreement, such as, "I accept your offer."

 

 

(2) Implied - the acts of the parties show that the offer has been accepted, such as when both parties to a contract begin to perform the terms of the contract.

 

PM sent

 

(3) Conditional - acceptance is conditional on the happening of something, such as, "I accept your offer so long as you trim my tree in the next two days." By its terms, a conditional acceptance is a counter-offer.

 

Low-Ball offer sent

[skypinkblu]

Just be thankful I didn't start an Iron Man movie thread here.

 

I just saw that movie, post away...

 

Ummm...I'm familar with contract law, but totally confused as to why you are posting this thread here? Was there some specific incident?

[Aces]

Just be thankful I didn't start an Iron Man movie thread here.

 

I just saw that movie, post away...

 

Ummm...I'm familar with contract law, but totally confused as to why you are posting this thread here? Was there some specific incident?

 

Some people on the probation list are mad because they think their agreements to buy stuff don't count.

 

[Detroit MIke]

[skypinkblu]

Just be thankful I didn't start an Iron Man movie thread here.

 

I just saw that movie, post away...

 

Ummm...I'm familar with contract law, but totally confused as to why you are posting this thread here? Was there some specific incident?

 

Some people on the probation list are mad because they think their agreements to buy stuff don't count.

 

I see, you mean the young man who has not yet learned that it's foolish to be penny wise and pound foolish...

[Transplant]

(2) Implied - the acts of the parties show that the offer has been accepted, such as when both parties to a contract begin to perform the terms of the contract.

 

PM sent

This . . . is not right. An appropriate analogy would be if A paypals money and B sends the book without anyone ever posting an

[Aces]

(2) Implied - the acts of the parties show that the offer has been accepted, such as when both parties to a contract begin to perform the terms of the contract.

 

PM sent

This . . . is not right. An appropriate analogy would be if A paypals money and B sends the book without anyone ever posting an

 

I wish I had buyers like that.