Chapters 7 and 8

1. Chapters 7 and 8 Genuine Assent and Consideration in Contract Law

2. Genuine Assent Chapter 7

3. Donald Drapkin Awarded $16M • Discussing his lawsuit against former friend and colleague Ronald Perleman for breach of contract, with Donald Drapkin, former MacAndrew & Forbes vice chair. • http://video.cnbc.com/gallery/?video=3000070229 • http://video.cnbc.com/gallery/?video=3000071834

4. Six Requirements of a Legally Binding Contract • Offer and Acceptance • Offer: intent, communicated, terms • Acceptance: Come from the offeree, mirror image rule, Be communicated to the offeror • Genuine Assent • No deception • Legality • follow the Law/ cannot be based on any illegal actions • Consideration • Agreement must involve both sides receiving something of value • Capacity • Both Parties must be able to perform contract for themselves - Cannot “outsource” duties • Writing • As a general rule, it is wisest to have the terms written in understandable language • Statute of Frauds – lists Contracts that must be in writing to be enforced (By State)

5. Genuine Assent • True and complete intent to enter into a contract • Assent means agreement, approval or permission Without it, contracts are typically voidable

6. Federal Lawsuit Alleges Infringement of Minors' New York Right of Publicity by Facebook "Like" and "Friend Finder" Features • Read article: http://newmedialaw.proskauer.com/2011/05/articles/contracts/federal-lawsuit-alleges-infringement-of-minors-new-york-right-of-publicity-by-facebook-like-and-friend-finder-features/ • Be able to describe the issue of Assent in this article

7. Voidable – if the injured party desires, they can cancel their obligation and get back what they have already put in

8. Rescission – when the injured/forced party cancels their obligation of a contract

9. Rescission • In contract law, rescission has been defined as the unmaking of a contract between parties. • Rescission is the unwinding of a transaction. • This is done to bring the parties, as far as possible, back to the position in which they were before they entered into a contract

10. Ratification: suggesting you intend to be bound by contract • Collective bargaining agreements • Example: • The Union authorizes one or more people to negotiate and sign an agreement with management. • A collective bargaining agreement can not become legally binding until the union members ratify the agreement. I • f they do not approve it, the agreement is of no effect, and negotiations resume.

11. Unfair persuasion • refers to a form of undue influence by which a stronger party succeeds over the weaker through seriously impairing weaker party’s free and competent exercise of judgment. • When compared to duress and misrepresentation, the effects brought by undue persuasion are less serious. • If a contract is obtained by undue influence, the document is invalid;

12. Duress • Occurs when one party uses improper threat or act to obtain a contract • Creates a VOIDABLE contract

13. Deion Sanders Divorce http://www.youtube.com/watch?v=EqXNiD3tFBk&safety_mode=true&persist_safety_mode=1 Should the Prenup be thrown out because of Duress?

14. Types of Duress • Threats of illegal conduct • Threats to report crimes • Threats to sue • Economic threats

15. Undue Influence • Occurs when one party is in a position of trust and wrongfully dominates and deceives the other party • VOIDABLE by the victim

16. Validity and Contesting a Trust / Undue Influence • http://www.youtube.com/watch?v=cL65pCXCbO8&feature=related&safety_mode=true&persist_safety_mode=1 • http://www.youtube.com/watch?v=Nm0IsUZhvC0&feature=related&safety_mode=true&persist_safety_mode=1

17. Mistake, Misrepresentation & Fraud

18. The People’s Court: Misrepresentation • http://www.youtube.com/watch?v=bpcgAGrjj0I&safety_mode=true&persist_safety_mode=1

19. Unilateral Mistake • Occurs when only one party holds an incorrect belief about the facts of a contract

20. Mutual (bilateral) Mistake • Both parties have an incorrect belief about an important fact of a contract • Also known as “Mutual Mistake” • Contract is VOID

21. Material Facts are the important facts that influence a persons decision to enter into a contract

22. Two types of Misrepresentation • Innocent Misrepresentation (involuntary) • Fraudulent Misrepresentation (voluntary)

23. Requirements of Misrepresentation • Untrue statement is one of fact or active concealment • Statement is material to the transaction • Victim reasonably relied on statement

24. Fraud • Based on misrepresentation • Must be proven to show… • All elements of misrepresentation • Intent • Injury

25. Remedies for Fraud • Rescission (cancel the contract) • Damages • Recovery from loss • Punitive Damages • Forms of punishment (above and beyond recovery from loss)

26. 5 Types of Contracts in Business • Many types of contracts are used in business, many of them specific to a particular industry.

27. Independent Contractor Agreements • An independent contractor agreement is an agreement between two independent parties to perform certain services. • The independent contractor has much greater freedom and is subject to far less supervision than an employee.

28. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when required, during which time he or she may be subject to the Law of Agency. • An independent contractor is An independent person, business, or corporation that provides goods or services to another entity under terms specified in a contract • Independent contractors are usually paid on a freelance basis.

29. Accountant Author DJ Engineering Consultant Entertainer Gardner General contractor Hair Stylist Lawn care worker Lawyer Massage therapist Doctor Nurse Personal trainer Pool Maintenance Person Private investigator Private security Professional athlete Real estate agent Short term university instructor Stock broker Talent agent Tattoo artist Taxi Driver or limousine driver Truck Driver Tutor Examples of occupations where independent contractor arrangements are typical:

30. Licenses and Permits • Before you start a business as an independent contractor, you will want to obtain the professional licenses and permits that are required for your profession. • Each professional organization has licenses and permits that are required, as does each city/state • This license is sometimes called a business license • Protects you Personally from being sued, only the Business can be sued!

31. Employment Agreements • Employment agreements set out the terms of the relationship between employer and employee. • It should include provisions that define job duties, work rules, duration of employment and grounds for termination. • Employed at Will

32. Find an article about an employee fired for violating their employment contract

33. Confidentiality Agreements • important in certain industries, such as the software and finance industry, where employees have access to company trade secrets. • Confidentiality agreements may be executed between a company and its employee, between a company an an independent contractor and between two companies doing business together.

34. Non-compete Agreements • A non-compete agreement prevents an employee or independent contractor from working for the employer's competitor, sometimes for years after the employment or contract relationship has ended. • State laws provide limits on the duration and geographic scope of non-compete agreements.

35. Sales Contracts • Sales contracts are generally executed between two companies when one purchases goods from the other. • A written agreement is required if the value of the transaction is at least $500. • In many cases, sales transactions are evidenced only by the exchange of letters, emails and invoices. • Under the Uniform Commercial Code, a valid contract can be created in this way even if there is no single written agreement.

36. Download and Complete the worksheet regarding types of Business Contracts and specific lawsuits (filed/pending)

37. Consideration Chapter 8

38. Consideration – what a person demands and generally must receive in order to make a contract legally binding

39. 3 Requirements of Consideration • Each party must give an act, forbearance, or promise to the other party Forbearance – refraining from doing something you have the right to do

40. 3 Requirements of Consideration 2. Each party must trade what they contribute to the transaction 3. What each party trades must have legal value

41. ** Consideration distinguishes a contractual promise from a promise to give a gift **

42. Gift – transfer of ownership without receiving anything in return • generally not legally enforceable Donor – gives Donee – receives • After gift exchange occurs, transaction becomes binding

43. Nominal Consideration – token amount identified in a written contract when parties either cannot or do not wish to state the amount specifically Ex. $1 and other valuable consideration in exchange for a car

44. QuestionableConsideration

45. Illusory Promises • A contract clause that allows you to escape legal obligation Ex. I promise to paint your house…if I have time.

46. Termination Clauses • Gives power to withdraw from a contract if certain circumstances change, or after the passage of a certain length of time  Exceptions must be defined

47. Output and Requirement Contracts Output Contract – A buyer’s agreement to purchase all of a particular producer’s production Requirements Contract – A seller’s agreement to supply all of the needs of a buyer

48. Existing Duty A promise to do something that you are already obligated to do by law or prior contract does not serve as consideration This is called… Existing Public/Private Duty

49. Liquidated Debt Where an agreement is made that a debt and the true amount of that debt exists and must be repaid • All debt must be recovered

50. Unliquidated Debts Where an agreement cannot be reached as to the amount of debt owed • Accord and Satisfaction - a compromise must be made