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CHAPTER 1
0
STU
DY G
UID
E FO
R T
EST
CONTRACTS ARE…..Legal links between producers and
consumers that help to get most of the worlds work done.
AN OFFEROR IS…The one who MAKES the
offer to contract.
AN OFFEREE IS…
The one that may accept the contract but is not required to do so.
TO NULLIFY OR VOID CONTRACTS
Minors can at anytimeIf a contract is made between a minor and an adult only the minor can disaffirm.
AN ADVERTISEMENT IS…NOT an offer to sell even when the advertiser is eager to make sales.
PROPERLY MADE OFFERMay be ended by
AcceptanceRejection
ModificationCounteroffers
Death or InsanityTime Stated
FIRM OFFERS• Binding• Must be in Writing• Only by Merchants• Definite Time-No Longer than 3
months• No money needed to keep the
offer open
QUESTIONS 7 and 11
CAN NOT MAKE CONTRACTS
• Intoxicated by drugs or alcohol (this doesn’t mean anyone who uses)
• Insane or mentally deranged• Minors
MINORS MAY VOID OR NULLIFY BECAUSE…
To protect minors from exploitation, fraud, and dishonest persons.
They lack knowledge needed to enter into contracts wisely
Lack maturity, experience, and overall ability needed.
A VALID OFFER IS?Must know these 3 things.
Must Intend to create a legal obligationThe terms must be definite and completeMust be communicated to the offeree
AN OFFER TO CONTRACT, IF NOT ACCEPTED IS ENDED BYTime stated or reasonable
length of time (perishable goods)
Rejection (saying No Thanks)CounteroffersRevocation (taking it back
before the offeree does anything)
ModificationDeath – Not illness
ACCEPTANCE OF AN OFFER TO CONTRACT MUST BE…
COMMUNICATED to the OFFEROR
EXCEPTIONS TO THE REQUIREMENT OF DEFINITENESS
Exceptions:• Medical or Legal
ServicesNo Exception must be Definite • Employment contractsSale of landSales by merchants
A VALID CONTRACT CAN BECOME UNENFORCEABLE WHEN…The time to sue has elapsed because of statute of limitations
Defendant has gone bankrupt and there are no assets to get.
Defendant dies and there are no assets.
ADD TO THE BOTTOM OF YOUR STUDY SHEET.
Option OfferGiving something of value to keep the offer open (selling a house and they give you $5000 to not sell it to someone else)
Unilateral ContractsOnly one party makes the contract (Reward $100 to find my dog)
Bilateral Contracts2 or more people make a contract
An agreement is NOT a Contract
Capacity to contract meansA person has the ability to understand his or her actions