Psychology Chapter 5 Homework Bug And That One Was Paying Bug

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PART TWO

CONTRACTS

Teaching Suggestions

1. After reading the chapter, ask the students to list at least five contracts they have made in the

last month. You many need to remind the students that every purchase is a contract.

Group Projects

1. Have groups of three students. Two students from each group should make a practice

contract with each other. Then have these students assign the contract to the third student in

CHAPTER 5

NATURE AND CLASSES OF CONTRACTS

Answers to Learning Objectives

1. To be valid, a contract must be: based on mutual agreement, made by competent parties,

supported by consideration, for a lawful purpose, and in the form required by law.

Lesson Outline

1. A contract is a legally enforceable agreement between two or more competent persons.

2. A valid contract is one that is enforceable by the courts and it has five requirements:

Chapter 5 Nature and Classes of Contracts

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d. Lawful purpose

e. Any formal requirements

3. All contracts are agreements, but not all agreements are contracts; only those agreements

enforceable by law are contracts.

e. Unilateral and bilateral

5. a. A void agreement is one that is of no legal effect.

b. A voidable contract is one that may be set aside by at least one of the parties.

6. a. An express contract is one in which the parties express their intentions by words at the

time of the agreement.

b. An implied contract is one in which the duties and obligations that the parties assume are

not expressed but are implied by their acts or conduct.

Comments on Cases

(p. 51) The fact that the city water department approved the activation of water service to the

parcel subsequently purchased by the Conners meant that the city was estopped from

claiming there was no contract. Conner v. City of Dillon, 270 P.3d 75 (Mont.)

(p. 53) The waiver of inheritance rights in the separation agreement had to be executory since

Toney did not have a right to inherit until after Josephine’s death. Once Toney and

Josephine reconciled, executory provisions in the separation agreement were rescinded.

In re Estate of Archibald, 644 S.E. 2d 264 (N.C. App.)

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*In a formal contract, the letters L.S. after a name stand for the Latin Locus Sigilli, which means “the place

of the seal.”

Discussion of Ethical Point

(Page 54)

The doctrine of quasi contract is clearly based on strictly ethical considerations. It is designed

to help produce fairness in business dealings.

Answers to Questions

(Page 55)

1. A contract is a legally enforceable agreement between two or more competent people.

2 If a party to a contract fails or refuses to perform it the law allows the other party an

appropriate action for obtaining damages or enforcing performance by the party breaching the

contract.

6. In order to execute a contract under seal, the word “seal” or the letters “L.S.” should appear

after the signatures. In some states the document itself must also recite that it is under seal.

7. A recognizance is a type of formal contract in which obligations are entered into before a

court whereby persons acknowledge they will do a specified act required by law.

Answers to Case Problems

(Page 55)

1. No. Settlement agreements are contracts and therefore have the requirements of a contract.

Here the court held there was no mutual agreement to the terms of a settlement agreement.

Murphy v. Home Depot, 270 P.3d 72 (Mont.)

2. Yes. The Hopkins implicitly waived the writing requirement when they repeatedly

requested extra work orally; accepted the benefits of the extra work; and paid for some of the

Chapter 5 Nature and Classes of Contracts

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4. No. Good Bird’s employment was set as one school year in each of the contracts. The fact

that Good Bird re-applied for the third year indicated that she knew the contracts were for

one school year at a time. Good Bird v. Twin Buttes School Dist., 733 N.W.2d 601 (N.D.)

6. In order for a contract to exist there must be mutual assent to the same terms. The evidence

showed that at most the parties entered into an agreement to agree that Parkhurst would

consider transferring a 49% interest in the ranch. The Boykins simply did not show the

existence of an oral contract that was certain. Parkhurst v. Boykin, 94 P.3d 450 (Wyo.)