{"id":2863,"date":"2015-06-13T16:03:47","date_gmt":"2015-06-13T16:03:47","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterybusiness1xngcxmaster\/?post_type=chapter&p=2863"},"modified":"2017-04-18T18:49:02","modified_gmt":"2017-04-18T18:49:02","slug":"contracts-2","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-hccc-introbusiness\/chapter\/contracts-2\/","title":{"raw":"Contracts","rendered":"Contracts"},"content":{"raw":"\"Photo<\/a>\r\n\r\nA contract<\/b> is a voluntary arrangement between two or more parties that is enforceable\u00a0a<\/span>s a binding legal agreement.\r\n\r\nA contract arises when the parties concur\u00a0that there is an agreement. Formation of a contract generally requires an offer, acceptance, consideration, and a mutual intent to be bound. Each party to a contract must have capacity to enter the agreement. Minors, intoxicated persons, and those under a mental affliction may have insufficient capacity to enter a contract.\r\n\r\nA contract may be oral or written, and the lack of a writing does not automatically make the contract void. English law and later U.S. law, however, recognized that oral contracts were subject to fraudulent claims by unscrupulous parties, and so developed the \u201cStatute of Frauds\u201d requiring that certain types of contracts be put into writing in order to be enforceable.\r\n\r\nUnder U.S. law, a contract must have four essential elements in order to be valid:\r\n
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  1. Offer and Acceptance<\/li>\r\n \t
  2. Consideration<\/li>\r\n \t
  3. Competent Parties<\/li>\r\n \t
  4. Legal Purpose<\/li>\r\n<\/ol>\r\nThe following video explains these requirements in greater detail.\r\n\r\nhttps:\/\/youtu.be\/50YEE4UOqGY\r\n\r\nWe speak of contracts as being either\u00a0enforceable (legally binding) or unenforceable. An enforceable contract creates legal obligations, and the failure to comply with them creates a breach of contract.\u00a0<\/strong>\r\n\r\nWhen a party fails to live up to its obligations under the contract, he is said to have breached the agreement or to be in breach of contract<\/strong>. In the case of a breach of contract, the party that has suffered as a result of the breach may be granted one or more of the following remedies:\r\n
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    1. Specific Performance.\u00a0<\/strong>In some circumstances a court will order a party to perform his or her promise under the contract. In this case, the court will\u00a0make an order of what is called \"specific performance,\" requiring that the contract be performed.\u00a0There may be circumstances in which it would be unjust to permit the defaulting party simply to buy out the injured party with damages\u2014for example, if\u00a0an art collector purchased a rare painting and the vendor refused to deliver, the collector's damages would be equal to the sum paid, but that wouldn't\u00a0exactly be just, since the contracted stipulated receipt of the painting.<\/li>\r\n \t
    2. Damages.<\/strong>\u00a0Damages may be general or consequential. General damages<\/strong> are those damages that\u00a0naturally flow from a breach of contract. Consequential damages<\/strong> are those damages that, although not naturally flowing from a breach, are naturally supposed by both parties at the time of contract formation. An example would be when someone rents a car to get to a business meeting, but when that person arrives to pick up the car, it isn't\u00a0there. General damages would be the cost of renting a different car. Consequential damages would be the business lost if that person were\u00a0unable to get to the meeting, if both parties knew the reason the party was renting the car. However, there is still a duty to mitigate the losses. The fact that the car wasn't\u00a0there doesn't\u00a0give the party a right not to attempt to rent another car.<\/li>\r\n \t
    3. Discharge of Duties.\u00a0<\/strong>There are some instances when,\u00a0after the breach, both parties are relieved of their obligations under the contract. Let's say you enter into a contract to purchase a house, but the house is destroyed by a tornado before you can complete the purchase. In this case, the court may decide that since the house is no longer there, the best remedy is to discharge the contract and relieve both parties of their obligation to perform under the contract.<\/li>\r\n<\/ol>\r\nSince almost every exchange in business creates some form of contract, it is essential that business owners as well as consumers understand the fundamental principles of contracts and contract laws.\r\n
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      Check Your Understanding<\/h2>\r\nAnswer the question(s) below to see how well you understand the topics covered above. This short quiz does not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.\r\n\r\nUse this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.\r\n\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/2993\r\n\r\n<\/div>","rendered":"

      \"Photo<\/a><\/p>\n

      A contract<\/b> is a voluntary arrangement between two or more parties that is enforceable\u00a0a<\/span>s a binding legal agreement.<\/p>\n

      A contract arises when the parties concur\u00a0that there is an agreement. Formation of a contract generally requires an offer, acceptance, consideration, and a mutual intent to be bound. Each party to a contract must have capacity to enter the agreement. Minors, intoxicated persons, and those under a mental affliction may have insufficient capacity to enter a contract.<\/p>\n

      A contract may be oral or written, and the lack of a writing does not automatically make the contract void. English law and later U.S. law, however, recognized that oral contracts were subject to fraudulent claims by unscrupulous parties, and so developed the \u201cStatute of Frauds\u201d requiring that certain types of contracts be put into writing in order to be enforceable.<\/p>\n

      Under U.S. law, a contract must have four essential elements in order to be valid:<\/p>\n

        \n
      1. Offer and Acceptance<\/li>\n
      2. Consideration<\/li>\n
      3. Competent Parties<\/li>\n
      4. Legal Purpose<\/li>\n<\/ol>\n

        The following video explains these requirements in greater detail.<\/p>\n