Lets Make a Deal Discussion

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Lets Make a Deal! Discussion

• Barbara Grodaes

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Purpose of Discussion

• Dont need to know, but good to know
• Understand the nature and effect of contract (eg.
  What is the meaning and what are the
  consequences?)
• Good to be aware of the consequences of lack of
  attention to detail in contracts
• Avoid pitfalls leading to unenforceable contracts

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6 Elements MUST exist

• Capacity of parties (legally competent)
• Legality of object (lawful)
• Legal intention (intention to be legally binding)
• Consideration (each receives something of value)
• Mutual agreement (offer/acceptance)
• Genuine consent (all facts needed to make a
  reasonable decision and have free will)

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Contract valid if all 6 elements are present,
otherwise, contract is

• Void (never existed)
• Voidable (originally valid but able to be
  rejected by one of the parties later
• Illegal (contravene a law and not enforceable)

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Capacity of Parties (Legally Competent)

• Individuals NOT considered to have the capacity
  to make a contract are
• Infants or minors
• Mentally incapacitated persons
• Intoxicated persons
• Cannot read OR speak English

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Legality of Object (Lawful)

• Courts will not enforce contracts made for
  illegal purposes and violate criminal laws.
• Contracts can NOT contravene regulatory statutes
  or public policy.
• Though no longer legality of object, practical
  reasons suggest contracts be made during a
  weekday as opposed to being conducted on a
  weekend (closing date).

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Legal Intention (Intention to Be Legally Binding)

• This refers to the parties intending to be a part
  of a binding arrangement.
• Must intend to create a binding obligation (not a
  social or family-type arrangement that they can
  come or not no matter).

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Consideration (Each Receives Something of Value)

• Main points to consider consideration
• MUST be of some value but the court will not
  inquire into its adequacy
• MUST be lawful
• Past consideration is NO consideration
• Exception is contract made without consideration
  made under seal

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Mutual Agreement (Offer/acceptance)

• General Rules with respect to Offer in the Offer
  and Acceptance
• MUST be definite and made with the intent to
  create legal binding contract
• MUST contain all 6 essential elements/terms
• After communication of acceptance, CANNOT be
  revoked or withdrawn.

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Mutual Agreement (Offer/acceptance)

• General Rules with respect to Acceptance in the
  Offer and Acceptance
• MUST be unconditional
• MUST be communicated to the Offeror.
• MUST be made in the manner required by the Offer,
  or within a reasonable time if none is stated
• After communicated, CANNOT be revoked.

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Genuine Consent (All Facts Needed to Makea
Reasonable Decision and Have Free Will)

• To form binding contract, the mutual agreement
  MUST be real and genuine. Inducements that may
  invalidate a contract are
• Mistake
• Misrepresentation
• Failure to disclose
• Duress or undue influence

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Mistake

• May nullify apparent consent, contract has no
  legal effect because it is based on a mistaken
  assumption.
• May remove the element of genuine consent
  essential to a contract and negates consent where
  it prevent the parties from reaching agreement
  such as where they intend to contract about
  different things.

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Misrepresentation

• Any statement made before or at the time of
  contracting, with regard to any existing fact
  which induces other party to enter contract. Can
  be
• Innocent (false without realizing)
• Negligent (intended to be fact without checking
  for accuracy)
• Fraudulent (knows it is false)

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Failure to Disclose

• Caveat emptor (let the buyer beware) patent
  defects (visible to the eye).
• HOWEVER, latent defects, MUST be disclosed to the
  buyer. Failure to do so or actively conceal may
  INVALIDATE the contract.

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Duress and Undue Influence

• Duress is compulsion which forces a person to act
  through fear of personal suffering not of
  his/her own free will.
• Undue influence is the improper use of ones
  power over another to induce into a contract
  (such as educated/uneducated, experienced/unexperi
  enced) takes advantage because of his/her
  position.

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5 Ways to Terminate Contract

• Performance (fulfillment)
• Agreement (mutually agree)
• Frustration (events beyond control)
• Non-fulfillment of a condition (subject to
  clauses or condition not met by stipulated time
• Breach of contract (fails to complete)

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Remedies

• Rescission (court have contract set aside)
• Damages (financial compensation for losses
  caused) damages not available where innocent
  misrepresentation occurred rescission is only
  available recourse
• Specific performance (court force)
• Injunction (court order)
• Quantum Meruit (as much as he deserves)

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Further Contract Considerations

• Requirement of writing (statute of frauds
  requires any contract for the sale of lands or
  any interest in lands must be in writing and
  signed by parties. Any contract must be
  performed in one (1) year unless written).
• Dower act IMPORTANT only when title shows only
  one owner and that owner is married.