CONTRACT UNIT 7

CONTRACT UNIT 7. Slides developed by: Mrs. Pryce-Brown March 17, 2020 Copyright @ 2006 Pearson Prentice - Hall.

OBJECTIVES. [image]. 2.

Introduction. Contracts are the basis of many of our daily activities They provide the means for individuals and businesses to sell and otherwise transfer property, services, and other rights Without enforceable contracts, commerce would collapse.

WHAT IS A CONTRACT?. A contract is an agreement that is enforceable by a court of law or equity If one party fails to perform as promised, the other party can use the court system to enforce the contract and recover damages or other remedy.

Parties to a Contract. Offeror – The party who makes an offer to enter into a contract Offeree – The party to whom an offer to enter into a contract is made.

Elements of a Contract. 1. Agreement 3. Contractual Capacity 2. Consideration 4. Lawful Object.

TYPES OF CONTRACT. Contracts can be classified into two (2) types. Contract for employment and Contract of employment.

CONTRACT OF EMPLOYMENT / EMPLOYEE CONTRACT / CONTRACT OF SERVICE.

CONTRACT FOR EMPLOYMENT / CONTRACT FOR SERVICE. A contract for services is a strictly business to business contract between two firms on a buyer and supplier basis. The client, or agency, is a buyer and the contractor’s limited company or umbrella company is the supplier. There is no question of any employment relationship. Contractor’s companies that enter a contract for services with another organization (including public sector organizations or not-for-profit companies) have clear rights and obligations..

Classification ot Contract Validity Valid contract Void contract Voidable contract Illegal agreement Unenforceable Formation Express contract 1 Implied contract Qu;rsi contract I Performance Executed contract Executory contract Unilateral contract Bilateral contract.

Classifications of Contracts: Formation (1 of 2).

Classifications of Contracts: Formation (2 of 2).

Classifications of Contracts: Enforceability. Valid contract – A contract that meets all of the essential elements to establish a contract Void contract – No contract exists Voidable contract – A party has the option of voiding or enforcing the contract Unenforceable contract – A contract that cannot be enforced because of a legal defense.

Classifications of Contracts: Performance. Executed contract – A contract that is fully performed on both sides Executory contract – A contract that is not fully performed by one or both parties.

[Audio] Popular fixed term contracts include cover for a permanent employee's maternity leave, covering a set period during a seasonal peak in trade and bringing in a worker with a specialist skill set to fulfil a specific task for a project..

Agreement. Agreement – the manifestation by two or more persons of the substance of a contract It requires an offer and an acceptance.

Offer. The manifestation of willingness to enter into a bargain, so as to justify another person in understanding that his assent to that bargain is invited and will conclude it [Section 24 of the Restatement (Second) of Contracts].

Termination of an Offer. Revocation of the offer by the offeror Rejection of the offer by the offeree Counteroffer by the offeree Destruction of the subject matter Death or incompetence of the offeror or offeree Supervening illegality Lapse of time.

Option Contracts. An offeree can prevent the offeror from revoking his or her offer by paying the offeror compensation to keep the offer open for an agreed-upon period of time This payment is called an option contract The offeror agrees not to sell the property to anyone but the offeree during the option period.

Acceptance. A manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the objective theory of contracts [Section 50 of the Restatement (Second) of Contracts] The oferee’s acceptance must be unequivocal The mirror image rule.

Time and Mode of Acceptance (1 of 2). Mailbox Rule (Acceptance-Upon-Dispatch Rule) An acceptance is effective when it is dispatched Proper Dispatch An acceptance must be properly addressed, packaged, and posted to fall within the mailbox rule.

Time and Mode of Acceptance (2 of 2). Express Authorization A stipulation in the offer that says the acceptance must be by a specified means of communication e.g., registered mail, telegram.

Offer and Acceptance - Summary. Communication by Offeror Communication by Offeree Effective When Effective When.

Consideration. Consideration – something of legal value given in exchange for a promise Consideration must be given before a contract can exist Most common types of consideration: Tangible payment (e.g., money or property) Performance of an act (e.g., providing legal services).

Gift Promise. Gift promises (gratuitous promises) are unenforceable because they lack consideration A “completed gift promise” becomes a true gift, which by definition is irrevocable.

Contracts Lacking Consideration (1 of 2). Illegal Consideration A contract cannot be supported by a promise to refrain from doing an illegal act because that is illegal consideration Contracts based on illegal consideration are void Moral Obligations Promises made out of a sense of moral obligation or honor are generally not enforceable on the ground that they lack consideration.

Contracts Lacking Consideration (2 of 2). Preexisting Duty A promise lacks consideration if a person promises to perform an act or do something he or she is already under an obligation to do The promise is unenforceable because no new consideration has been given Past Consideration Past consideration (e.g., prior acts) will not support a new contract New consideration must be given.

Termination of Employment Contract. 28.

DUTY OF THE EMPLOYER. Subsection (1) of the ETRPA highlighted that the notice required to be given by an employer to terminate the contract of employment of an employee who has been continuously employed for four weeks or more shall be: a) not less than 2 weeks’ notice if period of employment is less than 5 years b) not less than 4 weeks’ notice if his period of continuous employment is 5 years or more but less than 10 years. c) not less than 6 weeks’ notice if his period of continuous employment is 10 years or more but less than 15 years. d) not less than 8 weeks’ notice if his period of continuous employment is 15 years or more but less than 20 years. E) not less than 12 weeks’ notice if his period of continuous employment is 20 years or more.

DUTY OF THE EMPLOYEE. Subsection (2) of the ETRPA further posited that an employee who has been continuously employed for 4 weeks or more shall give not less than 2 weeks notice to terminate his contract of employment..

PROBATIONARY PERIOD. Subsection (4) of the ETRPA indicated that where the contract of employment of any employee specifies a period, commencing on the date of commencement of the employment, as a probationary period, either party to the contract may, notwithstanding the provisions of subsection (1) and (2), terminate the contract without notice during the probationary period or, where the probationary period is more than 90 days, during the first 90 days thereof..

SAMPLE EMPLOYMENT CONTRACT. https://sehub.stanford.edu/sites/default/files/SampleEmploymentContract.pdf.

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