Contract -Legally Enforceable Agreement • Expressed - declare • Implied - created by action • Bilateral - promise exchanged for a promise • Unilateral - promise exchanged for performance
Bilateral Contract Unilateral Contract Promise for Promise Promise for Performance
Legal Effect of Contracts • Valid- meets all requirements of law. • Void- no legal effect & not a contract. • Voidable- one party bound but not the other. • Unenforceable– may have been valid at an earlier time but now enforcement is barred.
Contract Essentials • Competent parties • Mutual assent • Lawful objective • Consideration • Written
Statute of Frauds In each state there is a law that is commonly known as a statute of frauds. Its purpose is to prevent frauds by requiring that all contracts for the sale of land, or an interest in land, be in writing and signed to be enforceable in a court of law.
Esign Act • Effect as of March 1, 2001 • Authorizes electronic agreements • Allows for electronic signatures • State may supercede this legislation
Meeting of the Minds Acceptance Offer Offer Counteroffer Acceptance
Performance Most contracts are discharged by being fully performed or executed by the contracting parties in accordance with the contract terms.
Breach of Contract • Partial performance • Rescission • Money damages • Specific performance • Liquidated damages • Statute of limitations
Key Terms • Breach of contract • Competent party • Consideration • Contract • Counteroffer • Duress • Fraud • Liquidated damages • Power of attorney • Specific performance • Void contract • Voidable contract