Chapter 11: Requirements for a Contract
Consideration
Two basic elements of consideration
Inducement, price, or promise that causes a person to enter into a contract
Value
Exchange
Value
An act
A forbearance
A promise to act or forbear
What Constitutes Exchange
Must bargain for the consideration
Something is bargained for if it is sought by the promisor and give by the promise in exchange
Courts do not analyze the economic terms of an exchange to determine whether considerations was adequate
Legality
Noncomplete Agreement
Noncomplete agreement: Sale of a Business
Noncomplete Agreements: Employment Contracts
Capacity
legal ability to enter a contract
Consent refers to whether a contracting party truly understood the terms of the contract
Minority
problems with consent and capacity make a contract voidable
Minors
Disaffirmance
Restitution
a minor generally may disaffirm a contract.
Minor has the option of filing a suit to rescind the contract
Minor who disaffirms a contract must return the consideration he has received
Mentally Impaired Persons
A person with mental illness or defect, who is unable to understand the nature and consequences of a transaction
creates a voidable contract
Intoxication
when an intoxicated person makes a contract, it is voidable
Reality of Consent
There was a false statement of fact
The statement was important or material
The injured person justifiably relied on the statement
Puffery: exaggerated fact
Misrepresentation and Fraud
Innocent Misrepresentation
Mistake
Unilateral Mistake
Sometimes only one party enters a contract under a mistaken assumption
To rescind the contract mist demonstrate: enforcing the contract would be unconscionable and the non mistaken party knew of the error
Mutual Mistake
Occurs when both parties negotiate based on the same factual error
Conscious Uncertainty
Contracts in Writing
to pay the debt of another
made by an executor of an estate
that cannot be performed
made in consideration of marriage
for the sale of goods over $500
For any interest in land