Marketing
Learning Objectives
• What is a contract? What are the four basic elements necessary to the formation of a valid, contract? • What are the various types of contracts?
• What are the requirements of an offer?
• How can an offer be accepted?
• What are the elements of consideration?
CHAPTER 7
Contracts: Nature,
Classification,
Agreement and
Consideration
© 2005 West Legal Studies in Business
A Division of Thomson Learning
© 2005 West Legal Studies in Business
A Division of Thomson Learning
Contracts
Contracts
• Function of Contracts
2
• Definition of a Contract
– Fundamental to business.
– Creates rights and duties between parties.
– Provides stability and predictability.
– Agreement that can be enforced in court.
– Formed by two or more parties.
– Failure to perform results in breach and damages. • Parties: Promisor (makes the promise) and
Promisee (accepts the promise).
• Objective Theory.
– Reasonable person standard.
– Circumstances surrounding contract formation.
– Good faith in commercial agreements.
© 2005 West Legal Studies in Business
A Division of Thomson Learning
3
© 2005 West Legal Studies in Business
A Division of Thomson Learning
Requirements of a Contract
Types of Contracts
• A valid, enforceable contract includes:
4
• Every contract has at least 2 parties: the
Offeror (Promisor) and the Offeree
(Promisee).
• Bilateral Contracts.
– Agreement.
– Consideration.
– Capacity.
– Legality.
– Offeror and Offeree exchange promises to each other. – A contract is formed when Offeree promises to perform. • Defenses to formation include:
– Genuineness of Assent.
– Form.
© 2005 West Legal Studies in Business
A Division of Thomson Learning
5
© 2005 West Legal Studies in Business
A Division of Thomson Learning
6
1
Types of Contracts
Types of Contracts
• Unilateral Contracts.
• Express vs. Implied Contracts
– Offeror wants
• What is a contract? What are the four basic elements necessary to the formation of a valid, contract? • What are the various types of contracts?
• What are the requirements of an offer?
• How can an offer be accepted?
• What are the elements of consideration?
CHAPTER 7
Contracts: Nature,
Classification,
Agreement and
Consideration
© 2005 West Legal Studies in Business
A Division of Thomson Learning
© 2005 West Legal Studies in Business
A Division of Thomson Learning
Contracts
Contracts
• Function of Contracts
2
• Definition of a Contract
– Fundamental to business.
– Creates rights and duties between parties.
– Provides stability and predictability.
– Agreement that can be enforced in court.
– Formed by two or more parties.
– Failure to perform results in breach and damages. • Parties: Promisor (makes the promise) and
Promisee (accepts the promise).
• Objective Theory.
– Reasonable person standard.
– Circumstances surrounding contract formation.
– Good faith in commercial agreements.
© 2005 West Legal Studies in Business
A Division of Thomson Learning
3
© 2005 West Legal Studies in Business
A Division of Thomson Learning
Requirements of a Contract
Types of Contracts
• A valid, enforceable contract includes:
4
• Every contract has at least 2 parties: the
Offeror (Promisor) and the Offeree
(Promisee).
• Bilateral Contracts.
– Agreement.
– Consideration.
– Capacity.
– Legality.
– Offeror and Offeree exchange promises to each other. – A contract is formed when Offeree promises to perform. • Defenses to formation include:
– Genuineness of Assent.
– Form.
© 2005 West Legal Studies in Business
A Division of Thomson Learning
5
© 2005 West Legal Studies in Business
A Division of Thomson Learning
6
1
Types of Contracts
Types of Contracts
• Unilateral Contracts.
• Express vs. Implied Contracts
– Offeror wants