Contract law

1. Contract law Creation of Offers Termination of Offers Acceptances

2. WHAT IS A CONTRACT? • A binding agreement between two or more persons or parties • An agreement that courts will enforce • A business arrangement for the supply of goods or services at a fixed price • Often involves negotiations

3. Have you ever entered in to a contract? • E-mail • National Letter of Intent • Car Loan • Credit Cards

4. Is this a contract? • Blake and Zach were talking during passing period, “Remember ‘Great Moments in Sports’, the video that I showed you last week?” asked Blake. “You thought it was great and said you wished it was yours. I’ll let you have it for $5. Want it?” “Sure!” Zach answered. “Bring it to school tomorrow, okay?”

5. Elements of a contract • 3 main elements: • Offer • Acceptance   • Consideration • Other elements needed to hold up in court: • Genuine assent   • Legality • Capacity • Writing

6. Offer • An invitation to make a contract • Must be a serious, definite offer • Examples • Displaying a take it or leave it contract online • Bidding on ebay • Putting a price tag on an item in a store

7. Acceptance • The point at which one party agrees to the other parties offer • Examples • Clicking that you accept the online contract • Winning an ebay auction • Buying the item from the store

8. Consideration • Both sides must receive something of legal value as a result of the transaction • Uncle Bob says he will buy you a car when you graduate from college. Instead he gives you a leather briefcase. • Did Uncle Bob have a legal obligation to buy you a car? • No, one sided gifts are not contracts; there must be some sort of exchange

9. Genuine Assent • Contract cannot be deceptive • Contract cannot exclude key elements • Contract cannot be created under pressure or force

10. Legality • Contract cannot be illegal • If the price looks too good to be true, it’s either a scam or stolen • If you buy stolen goods and the rightful owner finds you and demands it back, you must return it, even if you paid for it

11. Capacity • You must be able to contract for yourself • Effects minors • Not legally binding if signed by parents or legal representatives

12. Writing • Some agreements must be in writing to be fully enforceable in court • Statue of Frauds – these types agreements must always be written • Sale of land • Creditor or debtor relationships • Services that cannot be performed within one year • Other verbal agreements are enforceable, but difficult sometimes to prove

13. REQUIREMENTS OF AN OFFER • An offer is a proposal by an offeror to do something, provided the offeree does something in return • Expression of intent to create a legal obligation • Offer must be complete and clear • Offer must be communicated to the offeree

14. REQUIREMENTS OF AN OFFER • Expression of intent to create a legal obligation • Test of the Reasonable Person • Facts and Circumstances • Preliminary Negotiations • Social Agreements

15. Is this a contract? • Taylor had worked after school since she was 14 to save money for a car. When she turned 17, she finally bought her first car. Two weeks later she was driving a group of friends to school. The car stalled at a stop light and people behind her began honking. Taylor became frustrated when the car wouldn’t start and said, “I’ll sell this thing for $300 right now!”. Rachel gathered $300 from her purse and handed it to Taylor stating, “I accept, here’s your money.”

16. REQUIREMENTS OF AN OFFER • Offer must be complete and clear • Complete • In general, must include price, subject matter, and quantity • Real estate more specific: must include lot, price, terms of payment, date of possession, date of deed

17. REQUIREMENTS oFAN OFFER • Offer must be communicated to the offeree • A person who is not the intended offeree cannot accept the offer • A person cannot accept an offer without knowing it has been made

18. Is this a contract? • Max was talking with his friends after school. He accidently left his backpack on the front steps. When he came to school the next morning, the backpack was gone and not in Lost & Found. To get his backpack back, Max posted flyers throughout the school offer a $20 reward for it’s return. Megan, who had not seen the flyers, found his bag and returned it to Max. • Is Megan legally entitled to the reward?

19. HOW CAN OFFERS BE terminated? • Revocation by the offeror • Time stated in the offer • Reasonable length of time • Rejection by the offeree • Counteroffer • Death or insanity of either the offeror or offeree

20. HOW CAN OFFERS BE terminated? • Revocation by the offeror • Revocation – the right to withdraw an offer before it is accepted • Invalidates an offer even if the offeror promised that the offer would remain open for a particular period

21. Is this a contract? • Example: Collin offers to sell Caiden hisprized Pokémon cards for $200. Caiden asks if he can think about it and Collin agrees. While Caiden was trying to raise the money, Collin has second thoughts. So he calls Caiden and says, “I’ve changed my mind, I’m not interested in selling the cards.” Caiden replies, “It’s too late, you promised to sell them to me, and I’ve got the money so I accept.” • Does Collin have to sell the cards?

22. HOW CAN AN OFFER BE KEPT OPEN? • Options • the offeree gives the offeror something of value in return for a promise to keep the offer open • Offer cannot be withdrawn once an option is accepted • Offeror keeps the payment received for the option even if the offeree decides not to exercise the right to buy • Example: earnest money on a house • After you make an offer, to prevent other people from outbidding you, buyer gives seller 10% of sale price to lock in agreement

23. HOW ARE ACCEPTANCES CREATED? • Who can accept an offer? • Only the person whom the offer was presented to • Acceptance must match the offer • Can’t change terms and conditions of the agreement • Acceptance must be communicated to the offeror

24. Is this a contract? • Grant, an overworked student, says to Alex “I hear you write really good essays. I’ll pay you $50 for an English paper that’s a B or better. Unless I hear back from you to the contrary, I’ll treat your silence as acceptance and come to your house Monday morning to pick up the paper and deliver the cash.” Alex does not reply. • Is Alex bound to write the paper for Grant?

25. Examples of contracts • “Simple” used car buying agreement

26. Business contracts • Lengthy contract negotiations • Can take several months • Complex terms and conditions • Requires extensive legal review • Often contemptuous • Unpleasant negotiations can lead to one party walking away and doing business with a competitor

27. Negotiation and drafting Activity • We are going to negotiate and draft a contract • The goal is to come to an agreement. • This requires each side to compromise, so that they can get what they really want—to make a deal

28. When drafting be sure to Include all the terms Don’t be afraid of creative solutions Use specific binding language

29. situation • NFL Player Contract Negotiation - Brandon Mebane • He is going into his fourth year in the NFL; Defensive Tackle for Seattle Seahawks • He went to UC Berkeley (Cal) for college and was drafted in the 3rd round, 85th pick overall • He has been starting ever since he entered the NFL • His contract will expire next year and he will begin the process for negotiating his new contract in the next few months. He would like you all to help him draft the perfect contract.

30. negotiation • Terms and Conditions • Guaranteed payment—this is how much money he will be guaranteed. This is the most important aspect of the contract to the player because this is the money he will receive no matter what happens. For example, if he gets injured, cut, etc., he will receive the amount of his guaranteed payment. • Overall payment—the overall payment differs from the guaranteed payment and is always more than the guaranteed payment. The player can strive towards making the overall payment if he reaches certain incentives in the contract. • Duration of contract - this will specify how long the contract will be. Mr. Mebane may want only a 3 year contract, while the Seahawks organization may want him to sign a 6 year contract. • Any other specific terms- Signing bonus?

31. players • Brandon Mebane’s sports agent • Take into account wishes of client; compare stats of comparable players in the league to know your client’s worth • Seahawks General Manager • Concerned with overall success of the team • Seahawks Vice President of Football Administration • Responsible for the financial well being of the franchise • Seahawks Vice President for Player Personnel • Directs scouting, free agency and draft preparations