Chapter 4 – What Is a Contract?
 Not
always obvious, but they are
everywhere in our lives.
 Following through on a promise is an
important underlying assumption in a
contract between people and businesses.
 Is every contract a long, printed, formal
document?
• Contracts are created any time you agree to
exchange things of value.
 Examples
- Can You Think of Any?
Mortgage
Student code of conduct
Credit card company
Driver’s license
Car lease
House rental
Construction contract
Insurance contract
Employment contract
Will
Marriage contract
Pre-nup
Stock purchase agreement
Student Athlete/Training Rules
Cell phone contracts
Oral agreement to sell an item
College loans
Rental agreements
Subcontractor agreement
Noncompetition agreement
Nondisclosure agreement
Confidentiality agreement
(teachers, former employees,
medical, federal employees,
lawyers, tax accountant)
Intellectual property agreement
Summer rentals for
camps/cottages
Capacity
Consideration
Legality
Offer
Acceptance
Genuine
Agreement
 Buying a car
 Filling your tank with gas
 Taking out a loan at a bank or credit union
 Signing a VSAC promissory note
 Purchasing insurance
 Credit card application
 A ticket to a movie, concert or sporting
event
 Making an offer on a home that’s for sale
 An employment contract
 Accepting a job offer over the phone
 College acceptance over the phone
Capacity
The law presumes that anyone entering into a
contract has the legal capacity to do so.
Person cannot be:
•A minor
•Mentally impaired
•Under the influence of drugs or alcohol
Consideration
Consideration is the thing of value promised to
one party in a contract in exchange for
something else of value promised by the other
party. The mutual exchange is what binds the
parties together.
Parties are not allowed to enforce contracts
that involve illegal acts.
A
proposal made by one party (the offeror)
to another party (the offeree) indicating a
willingness to contract.
The agreement of the offeree to be bound
by the terms of the offer.
Offeror – Sellers of House- We are offering
our home for sale for the price of $275,000.
Offeree – Buyers of the House - We have been
approved by our bank for a mortgage and wish to
accept your offer of $275,000.
 Offer
and acceptance go together to
create genuine agreement or a meeting
of the minds.
• Agreement can be destroyed by fraud,
misrepresentation, mistake, duress, or undue
influence.
 All
6 elements must be present for a
contract to be legal and binding.



The other elements can be present in an ordinary
noncontractual agreement. Let’s say I offer to drive
another person to work tomorrow morning and the
person accepts. This arrangement has an offer,
acceptance, and agreement, yet it is not a contract.
Why not?
Even though I have a driver’s license, own my car to
which I have proper access, and have the
appropriate mental capacity to make such an offer,
the agreement does have capacity and legality, but
would still not be a contract.
Only when some sort of payment (monetary or not)
or promise of payment flows from the passenger to
the driver (consideration) would it be considered a
contract.
Class List of Contracts you may make
in your lifetime:
 Read
Chapter 4 – What Is a Contract ?
 Be prepared to discuss Apply & Debate
on page 96, 11-15 and the Case Study on
page 97.




With your partner, locate a contract. Read it through
first and make sure it’s written in a format and legal
jargon you understand.
Find a contract. Write your contract example on the
board before you start. No duplicates, please.
Copy and paste your contract into a Google doc.
Using the comment tool, find and identify all 6
elements of a contract.
Next, locate a challenging or interesting section of
the contract. Be prepared to share your findings out
on Thursday, March 30.
Example of Interesting Section
Teams
1
2
3
4
5
6
7
8
9
10
Bortnick
Bouffard
Casale
D’Amico
Davitt
Kurth
Fournier
Hamrell
Hoeppner
Holm
Huber
Kaplan
Toensing
Mullin
Menk
Miner
Leonard
Reynolds
Skiff
Solheim
Floater: Downey