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A Part of Every Day Life

What is a Contract?

A binding agreement between two or more persons or parties; especially one legally enforceable

A business arrangement for the supply of goods or services as a fixed price

-Merriam-Webster Dictionary

Who can be a party to a contract?

NBA players

Performers

Musicians

Students

Teachers

Home owners

Parents

Everyone

Contracts can also be oral, but they are more difficult to prove

Have you ever agreed to a contract?

How many of you think you have ever been a party to a contract?

What have you seen TODAY involving a contract?

School rules/code of conduct

Ride in a car or a bus

Driver’s license is a contract

Buying a car is a contract

Having a teacher

Teachers have contracts with the school

Examples of Contracts

Cell Phone Contracts

Examples


Credit Card Agreement

Examples



Signed agreement related to a Job

Examples




Online agreement when starting an email account or Facebook account

Examples





An agreement to buy something from a friend

Examples






Buying something from a store

Examples Cell Phone Contracts






Assumption of Risk or Waiver of Liability

Ex: bungee jumping or rollercoaster. You might sign something saying you will not sue if you get hurt.

Examples









Agreement to pay rent on an apartment or house

Examples









Agreement to pay rent on an apartment or house

You agree to do chores at home in exchange for an allowance

What does it mean to Contract?

Contracts are about:

Bargaining



Bargaining

Coming to an agreement



Bargaining

Coming to an agreement

Being willing to be legally bound to your side of the agreement, as long as the other party is bound to their side of the agreement

Basic Elements of a Contract

Offer

Acceptance

Consideration

Offer

An offer is an invitation to make a contract

An offer must be to a specific person at a specific place and a specific time regarding a specific subject

Examples

Bidding on ebay

Putting a price tag on an item in a store

Offering to buy a pen from your friend for $2.00

Offers can (but do not have to) go back and forth until…

Acceptance

A party Voluntarily agrees to the other party’s offer

If there is a threat of harm if do not accept, then there is no acceptance

Examples

Clicking that you accept an online contract

Winning an ebay auction

Buying the item at the store

Consideration

Generally, courts will enforce a contract if both sides are getting something.

What each side gives the other is called consideration

An exchange of value for the offer and the acceptance

The person who offers, promises something to the person who accepts

The person who accepts, promises something to the person who offers

Often times money is involved, but it may be something else

Examples of Consideration

Birthday gift


Birthday gift

No consideration because no promise is made. The person getting the gift did not have to do anything to get the gift.


Birthday gift


You give the cashier at the store $1.00 in exchange for a candy bar.


Birthday gift



There is consideration. You get the candy bar and the cashier gets $1.00.


Birthday gift




You offer to mow neighbor’s lawn in exchange for $20.


Birthday gift





There is consideration. You get $20 and the neighbor gets their lawn mowed.


Birthday gift






Teacher offers to give cake to students that visit his office.


Birthday gift






Teacher offers to give cake to students that visit his office.

No consideration because teacher doesn’t care if students come to his office, but if they do, they get cake. Teacher gets nothing.

What happens if someone breaks a promise to a contract?

Breach of Contract action

What happens?

Expectation Damages

Restitution Damages

Specific Performance

Expectation Damages

What you expected you would have after the contract was completed.

Example:

X offered to sell a rock he found to Y for $1.00. X finds out the rock is really a rare diamond worth $5,000. X didn’t want to sell to Y for only $1.00, so X breached the contract and did not sell.

What are Y’s expectation damages that he can recover?

Expectation Damages

What you expected you would have after the contract was completed.

Example:

X offered to sell a rock he found to Y for $1.00. X finds out the rock is really a rare diamond worth $5,000. X didn’t want to sell to Y for only $1.00, so X breached the contract and did not sell.

What are Y’s expectation damages that he can recover?

Only $1.00 because that is all he expected that the rock was worth.

Restitution Damages

You get paid back whatever you put in

Example

In above example if Y already paid X $1.00, what would Y get?

Restitution Damages

You get paid back whatever you put in

Example

In above example if Y already paid X $1.00, what would Y get?

Answer: $1.00 because that is all he lost.


The court will enforce the contract.

This only happens when the item contracted for is Special and Unique.

Examples include land or services

Something that cannot be replaced with $$.


The court will enforce the contract.

This only happens when the item contracted for is Special and Unique.

Examples include land or services

Something that cannot be replaced with $$.

Y could argue that he really wanted that rock and no other rock because that rock was unique. He could say that no amount of money will satisfy him, and he wants specific performance to get the rock.

Activity Time

Each group will get a list of famous contracts

Identify the:

Offer

Acceptance

Did they bargain? What did each side agree to do? (Consideration)

Breach…if there was one

What type of damages would you want if you were the lawyer?

Problem 1

• The Washington Wizards promised to give basketball star, Gilbert Arenas, $111 million dollars if he played 6 years with the Washington Wizards and conducted himself to standards of good citizenship, good character, and good sportsmanship. One day Arenas brought some guns into the arena where the Wizards play and pulled out the guns in an argument he had with a teammate in the locker room. Arenas was charged, and plead guilty to, the crime of carrying an unlicensed handgun. The Wizards suspended him indefinitely. The team still owes Arenas $80.2 million on the contract for the next four years.

•

Problem 2

• In 2010, late night talk show host, Conan O’Brien, finalized an agreement with NBC that terminated his work on The Tonight Show in return for $40 million, the right to perform on a different network, and a promise not to bad mouth NBC on his new show.

Problem 3

University of Central Florida (UCF) promised Marcus Jordan, son of NBA legend Michael Jordan, that he could wear his father’s Nike Air Jordan brand for the Knights’ basketball games during the season if he came to play for UCF. However, UCF has an exclusive $3 million, six-year contract with Adidas that requires all coaches and athletes to use Adidas shoes, apparel, and game equipment. Marcus Jordan said, “When I was being recruited, we talked about it. They said they had talked to the Adidas people, and it wasn’t going to be a problem…I’m wearing the Adidas uniform, and all my other UCF gear is Adidas, but the shoes are going to be Jordan brand.”

Problem 4

• Rap star, L’il Kim has been temporarily stopped from recording new music. Independent label Brookland Media seeks to $2.5 million from L’il Kim on a breach of contract claim. Brookland claims that it paid $300,000 to buy out L’il Kim’s contract with Atlantic Records. In return, L’il Kim agreed to record a new album with Brookland, but by the end of summer she had only recorded three tracks.

Problem 5

• NFL player Chad Ochocinco (formerly Johnson), faces significant problems

associated with his name change. It turns out that Reebok controls the jerseys that NFL players wear, and Reebok needs notice of changes that need to be made to jerseys (ordinarily numbers) months before the season begins. They need notice so that they do not manufacture jerseys with the wrong numbers. If Chad wants to wear a jersey with his new last name on it this season, Reebok says he has to cover their costs for the 100,000 or so jerseys already made and in circulation that say C. Johnson. Reebok’s cost for Chad wearing a jersey with his new last name on it would be $4.8 million.

a part of every day life - school of law · winning an ebay auction ... you get paid back whatever...

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