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contract

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• Contract:  Agreement which has legal consequences
• Legal consequences: To have legal consequences the agreement must include all necessary elements and not be vitiated (verdorben) by any other factors. 
• Necessary elements for a contract 1. Intention to be legally bound by the agreement 2.   Offer and acceptance  3. Consideration 4. Capacity to contract
• 1.Intention to be legally bound Each party must want to make a binding contract. Both parties must fulfill his/her part of the contract, otherwise he/she can and will be sued.
• 2. Offerer and acceptance Offerer An expression of willingness to make a contract on certain terms - Usually no special form is needed
• The offer will end 1 After a reasonable time  2 (If the offer is expressly open for a certain amount of time) At the end of that period of time 3 Death of either party 4 Counter-offer is made : - I offer you $50 for a room, you only accept to give me a room for $60 = counter-offer Conditional reply (Yes, if) = counter-offer
• counter-offer Conditional reply (Yes, if)
• Offer VS Invitation to make an offer ( Invitation to treat) An offer: An invitation to make an offer: made with the intention to be legally bound if the offeree accepts , if the offer is accepted a contract is formed an invitation to the general public to make an offer to the inviter. Like an advertisement in the newspaper.
• Acceptance: An expression of willingness to accept the terms of the offer
• acceptance conditions Must be the same as the offer Must be made while the offer is still open Conditional reply is not an acceptance ( yes, if..), so acceptance must be unconditional 
• Acceptance must be communicated=> oraly, witten or by conduct 
• Civil law system countries, acceptance.. only occurs when the acceptance is received by the offeror, no matter what method of communication is used.
• In common law system countries, acceptance.. usually only occurs when the acceptance is received by the offeror. But there is an exception to the general rule: the ''postal rule exception''
• The postal rule exception: If the acceptor posts (mails) the acceptance, the date of acceptance is considered by law to be the date when the letter is mailed, and not the date when the offeror receives the letter.
• 3 Consideration: something of value.
• Under common law, an offeror is only allowed to hold a offer open if… you pay him consideration: A consideration can be money, a promise to give money, an action, a promise to perform an action or a promise to not perform an action.
• Common law: Basic rule: consideration in common law system countries, consideration is necessary for a valid, enforceable contract. There are 2 exceptions: Offer is made in a special written form : a Deed Promissory estoppel: If the plaintiff can prove that he relied on the promise and ‘changed position’ based on the promise.
• Promissory estoppel:  If the plaintiff can prove that he relied on the promise and ‘changed position’ based on the promise. Example: You promise to give me your car and because of that I build a garage. Suddenly you don’t want to sell the car anymore so I can sue you because I did and action what I wouldn’t have done if I didn’t buy a car. 
• 4. Capacity to contract The parties who are making the contract must be legally capable of doing so. ( You can not be drunk, or mentally ill). Minors (children) can make a contract but they can avoid the contract unless it is necessities of life, such as food, necessary clothing etc
• Standard form contract: pre-printed, standard form which is always being used in a particular situation with a particular sort of offeror ( who offers something) and offeree ( to whom offer is made)
• Battle of forms: Both parties are using standard form contracts, to make a contract with each other. Battle of forms occurs when there is a conflict between the terms in the contracts ( terms are not identical). In this situation, a agreement has not been achieved, so a contract has not been formed. Normally must the terms be identical to form a contract. But if both parties realize late that there is a conflict and the law decides that the contract has been formed, the terms included in the form of the replying party will be the terms of the contract. Rationale for this choice is that the form of the replying party is considered to be a counter-offer, and the offeror did not rejected the counter-offer.
• Vitiating factors Factors which can make the contract void(ungültig), voidable, unenforceable(undurchführbar ) Form Mistake Misrepresentation Duress Illegal agreement Undue infulence
• Form If correct form is not used, the contract is unenforceable.
• Mistake: The result of a mistake is that the contract is void, the contract is treated like it has never existed. Any goods or money obtained under the agreement must be returned.
• Misrepresentation: Misrepresentation: the effect of this it that the contract is voidable by the person who was misled. A misrepresentation is a false statement of fact made by one party which induces the other party to enter into the contract. This false statement is not part of the contract itself, was made during negotiation or it is difficult to prove that it is part of the contract.
• There are three types of misrepresentation: Fraudulent misrepresentation: the person that made the false statement knew it was false. Negligent misrepresentation: the person carelessly made false statement. The person did not know that the statement was false but did not have reasonable grounds to believe that the statement was true up to the time the contract was made. Innocent misrepresentation: the person who made a false statement was not fraudulent or careless, and had reasonable grounds to believe that the statement was true up till the time the contract was made.
• 4.Duress: The contract is void or voidable if it was formed under duress. An example of duress is threat of violence: ''sell me this or I will kill you’’.
• 5. Illegal agreement: If there is a illegal agreement, the contract is void. Money transferred under the contract will not be recoverable with the help of the law. For example an agreement to bet or gamble in countries where gambling is illegal
• Undue influence: The contract is unenforceable and is set aside if it was formed under circumstances of undue influence.  Undue influence occurs when a person enters into a contract under such circumstances as to show or give rise to the presumption that he has not been allowed to exercise his free will properly, or to exercise a free and deliberate judgment on the matter because of the influence of another party. Other party must acquire some sort of unfair advantage through the contract.
• Contents of contracts 1Express terms 2Implied terms 1terms expressly stated orally or in writing 2terms implied by law into a contract Examples:  The English consumer protection laws: limits liability for personal injury or death due to negligence are invalid Suitable quality: if a contract doesn’t say anything about the quality the goods must be fit for the purpose for which goods of that kind are commonly bought.
• contents of contracts Conditions: Conditions are the most important terms in a contract, if a condition is breached the injured party can cancel the contract. If a condition is breached ,the injured person can sue for breach of contract.
• contents of contracts Warranties: Warranties are the least important terms in a contract. If a warranty is breached, the injured party can only get damages, the contract can not be canceled and the party must go on doing what is promised.
• Exemption clause ( exclusion clause/ limitation liability clause) This kind of clause is attempt to limit liability, legal responsibility for injury. Exemption clause to prevent liability, must be a part of the contract. For example: There is a sign in a hotel which says that the hotel is not responsible for valuables left in the room. Customer must know about the existence of the exemption clause before or at the time of making contract.  If a person signs a contract, she is bound by what she signs (also the exemption clause)

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