Law Blog

Contracts: Capacity

Posted by on Oct 23, 2017 in Blog Post | 0 comments

Capacity is the forth element in establishing a legally binding contract. The mental ability, or capacity, to enter into a contract might seem like a straightforward requirement at first, but can actually be one of the more difficult elements to establish in certain situations. Certain classifications of people, such as minors, mentally incapacitated, and sometimes even intoxicated persons, may inherently lack the capacity to contract. Minors, unless they are emancipated, are given the legal authority in most states to disaffirm, or void, any contract they enter into. Mental incapacity can be a little harder to determine. However, if any person, suffering from a mental disorder or not, enters into a contract understanding both the nature and obligations of the contract, they will be bound by the contract. In a similar way, if an intoxicated person merely exercises poor judgment due to their intoxication, but understands the contract, they will still be bound.

Contracts: Consideration

Posted by on Oct 18, 2017 in Blog Post | 0 comments

Consideration is another very important aspect of a contract. Consideration can be thought of as what each party will receive from the contract. In the example from last week, Liz sold her car to Ben. Once Ben made the offer and Liz accepted, the money he promised to give her is his consideration and the car she promised to give him is her consideration. There are many different types of consideration. First, it can be something that benefits the promise, such as Ben gaining a car or Liz gaining money in the example above. Second, it can be a detriment to the promisor. This would be Liz giving up the car and Ben giving up the money. Third, it can be a promise to do something, like paying someone in advance if they promise to come mow your lawn next week. Fourth, it can be a promise to refrain from doing something. This can be as simple as making a deal with your friend to give up eating chocolate for a month in exchange for $20.

Although a contract must have consideration on both sides to be considered valid, a court will rarely, if ever, judge the fairness of the consideration. Therefore, if Ben only offered Liz $3 for her car, but Liz accepted the offer, the consideration requirement is still fulfilled. Even though $3 doesn’t necessarily seem like a fair exchange for a car, a contact would still be formed between the two.

Contracts: Acceptance

Posted by on Oct 9, 2017 in Blog Post | 0 comments

Accepting the offer is the next step in establishing a valid contract. Most importantly, the offeree must show intent to be bound by the contract upon acceptance. This can look different among different types of contracts. In unilateral contracts (a promise in exchange for an action), the contract is accepted once the offeree performs, or begins performance, on their side of the contract. For example, if Ben promises a $100 reward for the return of his lost cat, Liz accepts the contract when she returns the cat to Ben. If she were to call Ben and simply promise to find the lost cat, no contract would be formed because Liz did not complete the action Ben requested. Liz would have to find Ben’s cat and return it before a contract is formed between them. Bilateral contracts, on the other hand, can be thought of as a promise in exchange for a promise. If, for example, Liz decided to sell her car to Ben, Ben then makes an offer and Liz accepts the offer, a contract is formed before money, or the car, is ever exchanged.

 

If the offerer makes an offer, but the offeree makes a counteroffer instead of accepting, the original offer is terminated. Then the original offerer may decide whether to accept the new offer, make a new counteroffer, or reject the offer altogether. In effect, a counteroffer starts the entire process over.

Contracts: Offer

Posted by on Oct 2, 2017 in Blog Post | 0 comments

The offer is the first step in establishing a contract between two parties. This stage outlines the actual terms of the contract. The party making the offer generally must have present intent to enter into the contract. This means that if a reasonable person understands the offer to be a joke, the contract can’t be valid. However, if the offering party claims that the offer was only a joke, but a reasonable person does not understand it to be a joke, the offer can still be considered valid. This is known as the reasonable person standard and is a common theme throughout contract law.

Once an offer has been made, it does not remain valid forever. In many situations, the party making the offer has the right to revoke the offer after some amount of time has elapsed. Whether this is specified by time-limitation language in the offer or is simply permissible before the other party has accepted the offer relies heavily on the circumstances surrounding the contract.

An Introduction to Contracts

Posted by on Sep 27, 2017 in Blog Post | 0 comments

Whether or not we realize it, contracts are a daily reality in all of our lives. They are present in actions as common as purchasing food at the grocery store to major life events such as signing the lease on a new house. Contracts can come in many forms, written or oral, express or implied. Despite how frequently we all engage in contracts, determining what makes a contract legal can seem tricky. At the most basic level, a contract must exhibit five essential characteristics to be considered valid: offer, acceptance, consideration, capacity, and legality. Over the next five weeks, we will explore each of these characteristics and how they relate to the contracts in your life.