The answer to Elements of a Contract
1. What are the elements of a contract? Briefly describe each one.
a. An offer-Is the final stage of the negotiation process. An offer is the willingness to enter into an agreement of mutual consent and understanding of dividing assets, property, employment, etc.
b. Acceptance-Both parties come to the conclusion of finalizing the contract by accepting the terms, conditions and stipulations therein. Once the offer is accepted it cannot be reversed unless otherwise noted in the fine print from initiator of the contract.
c. Legal Purpose/Objective-the objective of a contract is for legal purposes only. Anything illegal is not binding.
d. Mutuality of Obligation-this element is to ensure that both parties are on the same page and possess a mutual understanding of the terms and conditions of the contract.
e. Consideration-"consists of either a benefit to the promisor or a detriment to the promisee . It is a present exchange bargained for in return for a promise." (Roark, 813 S.W.2d at 496)
f. Competent parties-must be in sound mind, body, and spirit to enter a contract and of legal age otherwise the contract is not binding.
2. What is the difference between a VOID contract & a VOIDABLE contract? Give examples of each one.
a. Void-a contract that lacks the essential requirements of agreement as ordained by the law. In other words, a contract with no legal effect. Example, entering an agreement for drug transactions.
b. Voidable-a legal contract is the opposite, it meets the legal criteria, however the stipulations may be undesirable. For example, a contract from a subsidy publisher that offers an author a contract that only pays the author a $1.00 advance to begin the publishing process.
3. Name three specific differences between Article 2 of the UCC (Sale of Goods) & the Common Law , as applied to contracts?
a. "The majority of contracts (i.e. employment agreements, leases, general business agreements) are controlled by the state's common law." (Findlaw, 2010).
b. "The common law does not control contracts that are primarily for the sale of goods." (Findlaw, 2010)
c. "Contracts for the sale of goods are controlled by the Uniform Commercial Code (UCC), a standardized collection of guidelines that govern the law of commercial transactions." (Findlaw, 2010)
4. What is the Statutes of Frauds? What does it seek to prevent?
a. The statute of fraud requires certain contracts be in writing and signed by all parties involved in order to be valid.
b. The Statute of Frauds is implemented to prevent fraudulent activity in contract negotiations.
5. What are the Equitable Remedies of Promissory Estoppel & Detrimental reliance all about?