CONTRACTS
6 Essential Elements of Contract Formation
1. Mutual assent- mutual agreement
a. most commonly determined by offer and acceptance
b. Deciding whether or not parties intended to make an enforceable agreement.
2. Consideration (or another validation device) the bargained-for exchange
3. Two or more contracting parties
4. Agreement has to be sufficiently definite-defined exchange
5. Parties must have legal capacity to make contract
a. mental state
b. age
c. physical state
6. Proper legal subject- cannot be illegal
Classification of Contracts
1. Formal & Informal (formal- written under seal) (informal-not under seal but could be written)
2. Unilateral & Bilateral (unilateral- promise for performance) (bilateral-promise for promise)
3. Enforceable & Implied
ASSENT
Assent- must have mutual assent (some type of agreement between the parties) and restatement (section 17)
Mutual Assent
Offer and acceptance is how this agreement is made. It is imp. To know both parties agree and imp to know if there are any reservations and if so, the other party is aware of it. If the person knows that the other party has reservations or has reason to know that they did not intend to conclude the bargain then there is not mutual assent.
Objective v. subjective theory of assent
Objective- whether a reasonable person hearing the words would believe the offerror had a present intent to contract
Subjective- requires meeting of the minds, parties secret intentions are relevant (old test)
Offer an acceptance
Offer- must have1. specific content, describes not only for receiver of contract but others as well
2.Intent- does the offerer intend to be bound?
3.Communication-must be communicated to offeree
Offerer- gives terms of agreement
Offeree-must accept on those terms or offer a counteroffer
There cannot be a bargain if the offeree knows or has reason to know that the
An offer can become irrevocable when the offer is created through an option contract. The offeror allows the offeree to have a set time period in which the offer can not be revoked. The offerror is basically giving up power of revocation. An offer that has a time period in it has no legal effect, unless an option contract has been created. Ex. I will sell you my car for $500. I will give you 7 days to think about it if you give some type of consideration.
Advertisements as offers- the general rule is that advertisements are not offers, but rather an invitation by the seller to the buyer to make an offer to purchase
option- contract- a contract for which separate condition is paid to make an offer irrevocable. ( consideration is any legal right the promisee can give up, usually money),
