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Contracts

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by

Sara Skowronski

on 6 October 2014

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Transcript of Contracts

Bilateral and Unilateral contracts
Unilateral and Bilateral Contracts.
Unilateral: contract calling for an act in consideration for a promise.
Bilateral: contract consisting of mutual exchange of promises.

Counteroffers
The proposal to make a contract is the
offer.

Rejection of the offer by the offeree and communication of the rejection to the offeror terminates the contract.
If the performance of the contract becomes illegal, the offer is terminated.
Acceptance is the assent to an offer which results in a contract.
A counteroffer rejects the original offer, thereby terminating the offer.

Fraud
Fraud
- One who intends to, and does, induce another to enter into a contract as a result of an intentionally or recklessly false statement of a material fact commits
FRAUD
.

Fraud in the Inducement.
Party intended to make a contract based on false statement of terms or obligations of transactions.
Contract is voidable.

Fraud in the Execution.
Defrauded party did not intend to sign a contract when nature of writing could not be understood.
Contract is void.
Requirements of a contract
Based on a mutual agreement by the parties
Made by competent parties
Supported by consideration given by each party to the contract
Be for a lawful purpose
Sometimes meet certain formal requirements
Default
Debt refers to an obligation to pay money
Default
refers to a breach of contractual obligation including the payment of money, but also other obligations such as the failure to build a house, etc.
Contracts in Business Law
presented in part by Sara Skowronski
Contract Termination
#1 - Performance.
Contract is discharged when all terms have been fulfilled.

Factors of fulfillment:
1. Time of performance.
2. Tender of performance.
3. Tender of payment.
4. Satisfactory performance.
5. Substantial performance
Contracts in Unreasonable Restraint of Trade
Government policy encourages competition, therefore any contract that intends to restrain trade unreasonably is null and void. The for most common acts in this class are:
Contracts not to compete
Contracts to fix the resale price
Contracts to restrain trade
Unfair Competitive Practices
Ways to terminate a contract
#2 Discharge by Operation of Law.
1. Discharge in bankruptcy.
2. Running of the statute of limitations.
3. Alteration of written contract.

Promissory Estoppel
Promissory estoppel
Substitute for consideration when another acts in reliance of promisor’s promise

Elements or a promissory estoppel:
1. A Promise is Made
2. Promisor reasonably expects the promise to induce action by promissee
3. The promissee does act.
4. Justice requires enforcement of the promise.
Active Fraud.
Party engages in action which causes the fraud.
Four elements of Fraud:
1. Misrepresentation.
2. Must be made by one who knew it to be false or made it in reckless disregard of its truth or falsity. 
3. Must be made with intent to induce the innocent party to act.
4. The innocent part justifiably relies on the false statement and makes a contract.
Passive Fraud.
If relationship is based on trust and confidence, silence may constitute passive fraud.
Silence is not fraud.

Innocent Misrepresentation.
False statement made in belief it is true.
Contract is voidable.

Statements of Opinion.
Opinion does not constitute fraud.
A misstatement of valued opinion can amount to fraud.

Promissory estoppel is when a person makes a false statement to another and the listener relies on what was told to him/her in good faith and to his/her disadvantage. In order to see that justice is done a court will treat the statement as a promise, and in a trial the judge will preclude the maker of the statement from denying it. Thus, the legal inability of the person who made the false statement to deny it makes it an enforceable promise called "promissory estoppel," or an "equitable estoppel."

Example: Bernie Bologna tells Arthur Artist that Bologna has a contract to make a movie and wants Artist to paint the background scenery in return for a percentage of the profits. Artist paints, and Bologna then admits he needed the scenery to try to get a movie deal which fell through and there are no profits to share. Artist sues and the judge finds that Bologna cannot deny a contract with Artist and gives Artist judgment for the value of his work.
That’s All On…Contracts
Next Week – Product Warranty
Product Warranty Example
(worth 25 points)
Please bring to class an example of a warranty, a specific product and the warranty, it should be printed, you can also find it online, if you find it online and want to provide an link or provide a summary, it can be submitted here.  
You DO NOT have to type out anything, but you must be prepared and share it in class in order to receive the full 25 points for this activity. 

Ways to terminate a contract
#3 Voluntary Agreement of the Parties.
Parties can agree to not carry out the contract’s terms; it is then discharged.


Ways to Terminate a Contract
#4 Impossibility of Performance.
No contract is ever made if the act is impossible to perform. Common causes:
1. Destruction of the subject matter.
2. New laws making the contract illegal.
3. Death of physical incapacity of a person to render personal services.
4. Act of the other party.

Ways to terminate a contact
Acceptance of Breach of the Contract by One of the Parties.
If innocent party accepts breach the contract is discharged.

Remedies for Breach of Contract
Sue for Damages.
Rescind the Contract.
Sue for Specific Performance
Malpractice suit
Bilateral and Unilateral definition and examples
Fraud in the Inducement (above) Execution (Below) Videos
Full transcript