About This Chapter
Contract Law Basics - Chapter Summary and Learning Objectives
A contract is simply an agreement between parties to create legal obligations between them, but the process can be complicated. In this chapter, our instructor will elucidate concepts like mutual assent, acceptance, consideration, and estoppel. These lessons explore various contract law basics using real examples to help you understand and remember the concepts. There are many different types of contracts, and this chapter will define and contrast terms like unilateral versus bilateral and formal versus informal. This chapter is designed to teach you:
- The types of contracts
- The process of forming contracts
- Legal terminology used in contracts
- The obligations inherent in contracts
|Contract Law Terms: Definitions and Contract Types||Learn about different types of contracts and what each is used for.|
|Parties to a Contract: Promisor, Promissee, and Beneficiary||Explore who is involved in contracts and define their roles.|
|Mutual Assent and Objective Standard in Contract Law: Definition and Examples||Understand the intentions of the parties forming the contract via mutual assent.|
|What Is an Offer in Contract Law?||Explore what constitutes an offer in the realm of contract law.|
|What Is Acceptance in Contract Law? - Definition, Rules, and Examples||Define acceptance of a contract, and learn about the mirror image rule.|
|The 'Mailbox' Rule and Contract Law||Learn about this exception to the general rule of acceptance in contract law.|
|Sources of Contract Law: Common Law and Uniform Commercial Code||Explore the two most important sources of contract law.|
|Unilateral vs. Bilateral Contracts: Examples and Differences||Understand the differences between unilateral contracts, in which one party makes a promise, and bilateral contracts, in which both parties make promises.|
|Expressed vs. Implied Contracts: Differences and Examples||Learn about how terms can be implied in a contract, even if not directly expressed.|
|Quasi-Contract: Definition and Examples||Explore the fictional contracts used by courts to ensure fairness.|
|Executed vs. Executory Contracts: Definitions and Differences||Understand the differences between executed contracts and those which have not yet been fully executed.|
|Informal vs. Formal Contracts: Examples, Differences & Definitions||Learn about the distinctions between formal and informal contracts.|
|What Is an Option Contract? - Example and Definition||Explore the type of contract that protects the offeree from contract revocation.|
|Rules of Consideration in Contract Law: Elements and Case Examples||Understand the process and principle of consideration. Reference case: Labriola v. Pllard Group Inc. or Smith v. Riley 2002 Tenn. App. Lexis 65.|
|Lack of Consideration in Contract Law||Explore illusory promises, alternative promises, and the adequacy of consideration in contract law.|
|Doctrine of Promissory Estoppel: Definition, Examples, and Elements||Understand the rule of estoppel, which keeps parties from denying an already-settled fact.|
|Joint Obligation Contracts: Obligations and Promises of Parties||Discuss and illustrate joint obligation contracts, and outline the promises and obligations of the parties involved.|
1. Contract Law Terms: Definitions & Contract Types
A contract is an agreement between two or more parties to perform a service, provide a product or commit to an act and is enforceable by law. There are several types of contracts, and each have specific terms and conditions.
2. Parties to a Contract: Promisor, Promisee & Beneficiary
There are at least two parties involved in a contract: the promisor, promisee and, sometimes, a third party beneficiary may be named. Each party has a different obligation to the contract terms. The beneficiary in a contract generally does not have the same level of responsibility for the contract's performance.
3. Mutual Assent & Objective Standard in Contract Law: Definitions & Examples
Mutual assent is considered the meeting of the minds between two or more parties that forms the foundation of a contract. At the time of mutual assent, it can be said that a legally binding contract exists.
4. What Is an Offer in Contract Law?
In contract law, an offer is a promise in exchange for performance by another party. An offer can be revoked or terminated under certain conditions. There are also times when an offer can be negotiated to create a counter-offer.
5. Termination of an Offer in Contract Law: Methods & Examples
There are several ways in which a contract can be terminated, including performance, impossibility of performance and breach of contract. Other ways to end a contractual agreement are a bit more complicated and involve a prior commitment on the part of one or both of the parties or even revocation.
6. What Is Acceptance in Contract Law? - Definition, Rules & Examples
There are essentially six elements in a contract. Once an offer is made, the next element is acceptance. Offer and acceptance combined with consideration make for the glue that creates a binding contract.
7. The Mailbox Rule and Contract Law
The mailbox rule applies to offer and acceptance in contract law. This common law practice, by default, states that when an offer or acceptance reaches the mailbox, it means a legitimate offer has been extended or the offer has been accepted.
8. Sources of Contract Law: Common Law & Uniform Commercial Code
There are two sources of contract law: common law, which is based on case rulings, and statutory law, which is based on federal and state statutes. Contract law uses both common law and a set of statutory rules known as the Uniform Commercial Code.
9. Unilateral and Bilateral Contracts: Examples & Differences
There are two types of contracts: a unilateral contract and a bilateral contract. The essential difference between the two is in the parties. Unilateral contracts involve only promisor while bilateral contracts involve both a promisor and a promisee.
10. Expressed vs. Implied Contracts: Differences & Examples
There are two types of contracts: an expressed contract, which states the promises in clear language, and an implied contract, which is where behaviors or actions lead parties to believe an agreement exists.
11. Quasi-Contract: Definition & Examples
A quasi-contract exists in the absence of a written contract and may be court ordered to avoid one party gaining at the expense of another party's actions.
12. Executed vs. Executory Contracts: Definitions & Differences
The main difference between an executed and executory contract is how quickly the contract's promise must be fulfilled. An executed contract must be satisfied immediately, while an executor contract has terms that will be fulfilled later.
13. Informal vs. Formal Contracts: Examples, Differences & Definitions
The distinct difference between a formal contract and an informal contract is its enforceability in a court. An enforceable contract is one that contains certain elements, like offer, acceptance, and consideration, and is in written form. An informal contract does not contain the same elements and can be oral.
14. What Is an Option Contract? - Example & Definition
The difference between a contract and an option contract is in the options that a buyer has a right to exercise in the contract, which makes the contract a bit more flexible.
15. Rules of Consideration in Contract Law: Elements & Case Examples
Consideration in contract law is simply the exchange of one thing of value for another. It is one of the six elements that must be present for a contract to be enforceable. Consideration must be both legally sufficient and bargained-for by the receiving party.
16. Lack of Consideration in Contract Law
One of the main elements of a contract is consideration. Lack of consideration in contract law can make a contract unenforceable when both parties do not receive a benefit from entering into an agreement.
17. Doctrine of Promissory Estoppel: Definition, Examples & Elements
The doctrine of promissory estoppel allows a party to recover the benefit of a promise made even if a legal contract does not exist. Use of this doctrine relies on how significant the promisee's loss is in the absence of the fulfilled promise.
18. Joint Obligation Contracts: Obligations and Promises of Parties
A joint contract involves two or more parties who are jointly obligated to a contract or whom receive the benefits of the terms and conditions of a contract. There are a few ways a joint contract can be written. Each type shifts liability in a different way.
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Other chapters within the CLEP Introductory Business Law: Study Guide & Test Prep course
- History of American Law
- Sources of Law
- Constitutional Law
- American Legal Systems
- Legal Procedures
- Capacity in Contract Law
- Contract Law and Third Party Beneficiaries
- Contracts: Assignment and Delegation
- Contracts: Statute of Frauds
- Contracts: Scopes and Meanings
- Contracts: Breach of Contract
- Contracts: Discharge of Contracts
- The Legal Environment
- Securities and Antitrust Law
- Property Law
- Creditors' Rights
- International Business Law
- Product Liability and Consumer Protection
- Types of Business Organizations
- Torts in Business Law
- The Role of Agency in Business Law
- Sales & the Law
- CLEP Introductory Business Law Flashcards