Chapter 23

Contracts

-A contract is an agreement between two or more persons to exchange

something of value

-Legally binds both sides to do what they promised

-If not, “breach of contract”

-Elements of a contract

-Must have an “offer”

-Directed to a specific person

-Offer must be “accepted”

-Must be an exchange of “consideration”

-Something of value is given for something else of value

-Person entering contract must be legally competent

-Agreement that does something illegal is NOT enforceable

Minors and Contracts

-Minor = under 18

-Minors can make contracts but usually cannot be compelled to hold up

their end

-Minors who cancel contracts must return items

-Many people won’t enter into a contract with minors

-Usually have parent “cosign” contract

Written and Oral Contracts

-Contract can be written or oral (spoken)

-Both are enforceable

-Oral contracts more difficult to prove

-Many kinds of contracts must be in writing

-Land, goods worth more than $500

Illegal Contracts

-Some contracts unenforceable

-Unconscionable contracts

-Sometimes contract is so unfair court will not enforce

-Consumer is presented with “take it or leave it” contract

-Uneven bargaining power

-Fraud

-Fraud is a false statement about an important fact meant to influence

someone else

-Not volunteering information is not fraud