Zehmer Farm

Transcription

>> WE ARE SPENDING MULTIPLE CHAPTERS TALKING ABOUT IT, AND A WHOLE LOT OF BUSINESS IS RELATED TO CONTRACTS. WE ARE GOING TO START BY TALKING ABOUT THE ELEMENTS OF A CONTRACT AND THEN FOCUS ON THE FIRST TWO ELEMENTS OF A CONTRACT AND TALK ABOUT THE OBJECTIVE THEORY OF CONTRACTS, AND WE WILL SPEND A LITTLE TIME ON E-CONTRACTS, CONTRACTS, SAME LAW, SOME ADDITIONAL LAW, TOO, THAT TAKE PLACE ON THE INTERNET. SO WE TALKED ABOUT DIFFERENT SOURCES OF LAW. A LOT OF LAW RELATED TO CONTRACTS IS COMMON LAW. COMMON LAW COMES FROM WHAT? SEEMS LIKE WE KEEP REVIEWING THINGS. WHERE DOES COMMON LAW COME FROM? WHAT'S THAT? >> LAWS OF THE PAST. >> SURE. WHERE DOES COMMON LAW COME FROM? WHAT IS ANOTHER WORD FOR COMMON LAW? YES, CASE LAW, GOOD. COMMON LAW COMES FROM CASES DECIDED OVER TIME, SO THERE IS A BIG BODY OF CASE LAW OUT THERE THAT DEALS WITH CONTRACTS AND THE PEOPLE THAT BREACH THEM AND THE REMEDIES THAT ARE AVAILABLE. NOW, THERE ARE SOME ATTEMPTS TO MAKE THE LAW MORE UNIFORM IN THE AREA, FOR EXAMPLE, CONTRACTS FOR THE SALE OF GOODS AND THE UCC, OR THE UNIFORM COMMERCIAL CODE, BUT GENERALLY IF IT IS NOT ADDRESSED BY THE UCC THERE IS A LOT OF COMMON LAW OUT THERE. CONTRACTS ARE REALLY IMPORTANT TO BUSINESS BECAUSE IT OUTLINES THE RIGHTS AND DUTIES OF THE PARTIES, AND AS A RESULT OF THAT PEOPLE CAN LOOK BACK TO THE CONTRACT, AND THAT MAKES IT MORE STABLE AND PREDICTABLE. IT MUST BE TRUE. IT'S ON THE SLIDE. IF YOU THINK ABOUT IT, IF PARTIES WERE LEFT TO THEIR MEMORY TO TRY TO RECALL WHAT THEY AGREED TO, IT WOULD BE A PROBLEM. THIS IS WHY YOU LIKE TO HAVE CONTRACTS IN WRITING. WHAT YOU FOUND IN THE CHAPTER IS NOT EVERY CONTRACT HAS TO BE IN WRITING TO BE ENFORCEABLE. HOW MANY OF YOU READ CHAPTER 8? OH, MY GOODNESS, LOOK AT ALL THE HANDS IN THE CLASS GO UP. THAT IS AMAZING. THANK YOU. THE PARTIES TO A CONTRACT. JUST LIKE OTHER PLACES IN THE COURSE, ORS ARE THE ONES USUALLY DOING IT AND EES ARE USUALLY THE ONES IT IS DONE TO. SO PROMISOR IS THE ONE MAKING THE PROMISE, AND PROMISEE IS THE ONE ACCEPTING THE PROMISE. SOME CONTRACTS THERE IS A MUTUAL EXCHANGE OF PROMISES. SOMETIMES ONLY ONE SIDE IS MAKING A PROMISE. THESE ARE THEIR OFFICIAL NAMES. THERE IS ALSO A PRESUMPTION THAT PARTIES MAKE THEIR PROMISE THEY ARE DOING IT IN GOOD FAITH IF WE ARE TALKING ABOUT COMMERCIAL AGREEMENTS. NOW, WHAT IS A CONTRACT? OOPS, DIDN'T MEAN TO DO IT THAT FAST. A CONTRACT IS MORE THAN AN AGREEMENT. WOULDN'T YOU AGREE? SEE WE AGREE AND THAT WASN'T A CONTRACT. SO NOT EVERY AGREEMENT YOU REACH IS CONSIDERED A CONTRACT. ONLY THOSE THAT ARE ENFORCEABLE IN COURT ARE GOING TO BE CONTRACTS. THEY INVOLVE TWO OR MORE PARTIES. A LOT OF TIMES WE WILL TALK ABOUT TWO PARTIES, BUYER AND SELLER, BUT THERE COULD BE MULTIPLE PARTIES. THERE COULD BE MORE THAN TWO. BUT YOU DON'T CONTRACT WITH YOURSELF. YOU MAKE PROMISES TO YOURSELF, LIKE I PROMISE FROM THIS DAY FORTH -- TODAY IS MY BIRTHDAY, BY THE WAY. PLEASE DON'T SING ME HAPPY BIRTHDAY. >> OKAY. >> SO I MIGHT SAY FROM THIS DAY FORWARD RIGHT AFTER I EAT MY BIRTHDAY CAKE, WHICH I HOPE TO GET, I WILL EAT BETTER. WHAT HAPPENS IF I DON'T DO THAT? WILL I SUE MYSELF FOR BREACH? NO. SO YOU NEED AT LEAST TWO PARTIES. FAILURE TO PERFORM WHAT YOU PROMISE IN A CONTRACT TO SOMEONE ELSE IS CALLED A BREACH OF THE CONTRACT. IF THE OTHER PARTY BREACHED AND YOU ARE THE INNOCENT OR NON-BREACHING PARTY YOU COULD SUE FOR DAMAGES, LIKE WE TALKED ABOUT BEFORE WHEN WE TALKED ABOUT DAMAGES, USUALLY TRYING TO MAKE YOU WHOLE OR WHAT YOU ARE OUT FOR AS A RESULT OF THE BREACH OF THE CONTRACT. THEN THERE IS A NEW IDEA OF THE OBJECTIVE THEORY OF CONTRACTS. BASICALLY COURTS -- BECAUSE THIS IS CASE LAW, WHEN THEY TAKE A LOOK AT BREACH OF CONTRACT ACTIONS THEY APPLY THIS REASONABLE PERSON STANDARD. THEY SAY WE ARE NOT REALLY CONCERNED ABOUT WHAT THE PARTIES MAY HAVE THOUGHT AT THE TIME. WE ARE CONCERNED WITH WHAT THEY DID AND WHAT THEY WROTE AT THE TIME. SO IF THE PRICE SAYS $10,000, WE DON'T WANT TO HEAR TESTIMONY ABOUT WHAT SOMEBODY THOUGHT WHAT THE PRICE REALLY WAS. WE CAN LOOK AT THE CONTRACT AND SEE WHAT THE PARTIES AGREE AND GIVE IT ITS OBJECTIVE PLAIN MEANING. OF COURSE, WE WILL LOOK AT WHAT THE PARTIES -- HOW THE PARTIES ACTED AS IF THERE WAS A CONTRACT OR MAYBE THERE WASN'T A CONTRACT. ALL RIGHT. TO HAVE A CONTRACT YOU NEED THESE FOUR ELEMENTS. AGREEMENT, CONSIDERATION, CAPACITY AND LEGALITY. WE WILL GO INTO SOME MORE DETAIL WITH EACH ONE OF THESE ELEMENTS, BUT GENERALLY ON THIS SLIDE, AN AGREEMENT HAS TWO PARTS. WHAT ARE THEY? ANYBODY PICK THAT UP? OFFER AND ACCEPTANCE. GOOD. SO ONE PRETTY MAKES AN OFFER, AND THE OTHER PRETTY ACCEPTS THAT OFFER, AND THEY ACCEPT EXACTLY WHAT WAS OFFERED. THEN THEY HAVE AN AGREEMENT. THE LAW LIKES TO CALL THIS THE MEETING OF THE MINDS, WHICH I ALWAYS PICTURE A COUPLE BRAINS GOING OUT AND SHAKING HANDS WITH EACH OTHER. BASICALLY YOU AND I, IF WE ENTER INTO AN AGREEMENT, WE ONLY HAVE AN AGREEMENT IF WE AGREE. IF WE ARE BOTH THINKING THE SAME THING WE ARE BOTH AGREEING TO THE SAME THING. THE SECOND ELEMENT IS CONSIDERATION. WHAT IS CONSIDERATION? ANYBODY PICK THAT UP FROM THE READING? RAISE YOUR HANDS. >> PROMISES MADE BY THE PARTIES IN THIS CASE SUPPORTED BY LEGAL SUFFICIENT AND BARGAINED FOR CONSIDERATION. >> OKAY. >> VALUE MUST BE PROMPT. >> YES,VALUE. SO CONSIDERATION IS BARGAINED FOR VALUE. NOW, WHAT DON'T THEY JUST SAY MONEY? >> BECAUSE IT IS NOT ALWAYS MONEY. >> IT IS NOT ALWAYS. SO IT COULD BE SOMETHING ELSE. IT COULD BE A SERVICE, COULD BE ANOTHER GOOD. SO BASICALLY YOU ARE NOT GIVING IT AWAY, YOU ARE GETTING SOMETHING IN RETURN. THE CAPACITY. CAPACITY ACTUALLY HAS A COUPLE ELEMENTS, AND I AM NOT SURE HOW CLEAR THE BOOK IS ABOUT THIS, SO THIS IS A GOOD ONE TO MAKE A NOTE OF. ONE THING CAPACITY HAS TO DEAL WITH IS YOUR MENTAL CAPACITY TO CONTRACT. IF YOU THINK ABOUT THAT, THERE ARE A NUMBER OF THINGS THAT CAN AFFECT YOUR MENTAL CAPACITY. LIKE WHAT? >>ARE YOU SANE ENOUGH TO MAKE THIS? >>ARE YOU ASKING ME IF I AM INSANE? NO, I AM NOT. >> MINORS. >> SO MENTAL CAPACITY CERTAINLY WOULD BE ONE. MINORS WOULD BE ANOTHER ONE. DO MINORS HAVE THE CAPACITY TO ENTER INTO CONTRACTS? GENERALLY THEY DO. A LOT OF PEOPLE THINK THEY DON'T. BUT A LOT OF CONTRACTS MINORS DO HAVE THE CAPACITY TO ENTER INTO. SOME CONTRACTS THEY CAN'T. WHAT? >> (INDISTINCT SPEAKING) >>SURE. WHY NOT? >> (INDISTINCT SPEAKING) >> US BUSINESS INSTRUCTORS DON'T KNOW WHAT THE HECK THEY ARE TALKING ABOUT. >> SAY YOU SELL A MOPED OR SOMETHING AND THE KID CRASHED AND DECIDED TO GET THEIR MONEY BACK. >> THAT'S A DIFFERENT ISSUE. >> YOU SOLD IT TO HIM. >> THAT'S RIGHT. THERE IS A CONTRACT. >> WHY -- >> YOU SOLD THEM A MOPED, IT'S THEIRS. THEY ARE DRIVING AROUND. YOU DON'T LIKE RIP THEM OFF OF IT AND GO GIVE ME THAT BACK, YOU ARE A MINOR, YOU CAN'T HAVE IT. >> NO. THE MINOR CAME BACK AND SAID GIVE ME MY MONEY BACK. >> YOU BET. THAT IS A DIFFERENT ISSUE. THERE WAS A CONTRACT. HERE IS THE DEAL. MINORS CAN CONTRACT BUT THEY CAN ALSO GET OUT OF THEM. >> WHAT'S THE POINT? >> THE POINT IS DON'T SELL TO MINORS. RIGHT? THINK ABOUT IT. HAS ANY OF YOU BEEN A MINOR AND ENTERED INTO A CONTRACT? >> YEAH. >> DID SOMEBODY AROUND HERE SAY NO WAY? >> MOW LAWNS. >> RIGHT. MY NEIGHBOR KID I TOLD I WOULD GIVE MONEY IF HE MOWED MY LAWN. HE COMES AND MOWS MY LAWN AND THEN LIKE LATER I AM HA, HA,YOU ARE ONLY 17, I AM NOT PAYING YOU. I HAVE A CONTRACT WITH HIM. NOW, TO YOUR POINT, DON'T GET THE TWO CONFUSED. MINORS CAN CONTRACT. IN FACT, THERE IS A SLIDE THAT COMES FROM THE TEXTBOOK THAT SAYS MINORS CAN CONTRACT FOR ANYTHING AN ADULT CAN. I DISAGREE WITH THAT. THERE ARE SOME THINGS MINORS CAN'T DO. MOST THINGS THEY CAN. WHAT COULD -- WHAT IS AGAINST THE LAW FOR A MINOR TO DO? SO THEY CAN'T BUY ALCOHOL. SO THEY CAN'T CONTRACT FOR THAT FOR THEMSELVES OR ON BEHALF OF SOMEBODY ELSE. THEY CAN'T BUY CIGARETTES, RIGHT? IT'S BEEN A LONG TIME SINCE I WAS A MINOR. I AM REFLECTING ON IT TODAY. SO WHAT OTHER TYPES OF THINGS WOULD BE ILLEGAL FOR A MINOR TO DO? >> (INDISTINCT SPEAKING) >>OKAY. LET'S NOT GO THERE. GOOD THING THE MICROPHONE DIDN'T PICK THAT UP. SOME OF THOSE THINGS ARE ILLEGAL EVEN AS AN ADULT TO CONTRACT FOR. (LAUGHING) SO, YES, MINORS CAN ENTER INTO A CONTRACT. THEY CAN IN MOST CASES GET OUT. THAT IS WHY IF YOU WERE A MINOR AND YOU CONTRACTED A LOT OF TIMES THEY DON'T WANT JUST YOUR NAME ON THE CONTRACT. THEY WANT SOMEONE ELSE ON THE CONTRACT WHO IS NOT A MINOR TO ENTER INTO THE CONTRACT, CO-SIGNERS. WHO HAD A CELL PHONE AS A MINOR? THEY DIDN'T MAKE CELL PHONES WHEN I WAS A MINOR. ACTUALLY, THEY DID. I HAD THIS REALLY COOL BAG PHONE. IT WAS AWESOME. EVER SEEN ONE OF THOSE THINGS? I THOUGHT I WAS COOL. SO SOMETIMES YOU ARE ACTUALLY ON SOMEONE ELSE'S PLAN, OR WHEN THEY HAD YOU GET THE CONTRACT THEY HAD YOUR PARENT OR SOMEBODY ON IT, BUT MINORS CAN CONTRACT. SO DON'T BELIEVE ANYTHING THOSE OTHER BUSINESS INSTRUCTORS TELL YOU. ALL RIGHT. SO CAPACITY.ONE IS INTOXICATION. WE LEARNED IN THE CRIMINAL AREA IT IS NOT USUALLY A DEFENSE TO ARGUE I WAS TOO INTOXICATED AND THAT IS WHY I MADE A BAD DECISION TO DRIVE, BUT IN THE CONTRACT, IF YOU COULD ACTUALLY ESTABLISH YOU WERE TO INTOXICATED TO KNOW WHAT YOU WERE DOING, THAT COULD AFFECT YOUR CAPACITY. WHAT WAS THE CASE IN YOUR CHAPTER? >> FARMER-- >> YEAH, THE DRUNK FARMERS, RIGHT? LUCY VERSUS ZEHMER. LUCY IS A GUY, BY THE WAY. >> (INDISTINCT SPEAKING) >> YOU DIDN'T? WHY NOT? >> BECAUSE THEY HELD HIM TO IT. >> YES,THEY DID. WHY? BECAUSE THE QUESTION IS NOT WHETHER YOU ARE DRUNK OR NOT BUT WHETHER YOU HAVE THE CAPACITY OR NOT. THE COURT SAID YOU ARE SAYING SUBJECTIVELY THAT YOU WERE KIDDING, YOU WERE BRAGGING, YOU WERE DRUNK, BUT OBJECTIVELY YOU WROTE IT OUT, YOU HAD A WITNESS, YOUR WIFE WAS THERE.THE CIRCUMSTANCES SAID YOU HAD ALL THE CHARMS, SO OBJECTIVELY, NOT BEING THERE, NOT BEING AT THE PARTY IT LOOKS LIKE YOU GUYS KNEW WHAT YOU WERE DOING AND NOW YOU JUST HAVE A LITTLE BUYER'S REMORSE. THAT IS HOW YOU GET THERE. SO IT IS NOT AN AUTOMATIC RULE IF YOU ARE DRUNK YOU CAN'T CONTRACT. THINK ABOUT HOW MANY THREE MARTINI LUNCHES THERE ARE OUT THERE. IF EVERY TIME YOU DRINK UP, SIGN, AND THEN SAY I WAS DRINKING, THE QUESTION IS DID YOU HAVE THE MENTAL CAPACITY AT THE TIME TO ENTER INTO THE CONTRACT, WHICH CAN BE A CHALLENGE TO PROVE WHETHER YOU DID OR YOU DIDN'T. IF YOU ARE SO DRUNK YOU DIDN'T KNOW WHAT YOU WERE DOING, HOW DO YOU RECALL WHAT YOU DID? THAT CAN BE A TOUGH ONE. MENTAL CAPACITY IS ONE. THE OTHER IS WHETHER YOU ARE THE RIGHT PARTY. ANYBODY NEED A NEW CAR IN HERE? YOU ARE ALL SET, HUH? OKAY. LET'S SAY OVER THE WEEKEND I FIND A NICE CAR. WHAT KIND DO YOU LIKE? >> ANYTHING THAT RUNS. >> ANYTHING THAT RUNS. LET'S SAY I FIND A BRAND-NEW MUSTANG BECAUSE I LIKE MUSTANGS, AND SO YOU COME INTO CLASS AND I SAY I GOT YOU A NEW CAR, AND YOU ARE LIKE THAT IS AWESOME, I NEEDED ONE, AND I SAY I DIDN'T BUY IT, I CONTRACTED FOR YOU,YOU HAVE TO PAY FOR IT. I DON'T HAVE THE CAPACITY TO CONTRACT ON ANYONE ELSE'S BEHALF UNLESS YOU GAVE IT TO ME. COULD I BE AN AGENT FOR ONE OF YOU? SURE. BUT OTHER THAN THAT I DON'T HAVE THE CAPACITY TO SIGN THINGS ON YOUR BEHALF AND ENTER INTO CONTRACTS FOR YOU. SO BEING THE RIGHT PARTY. IT IS LIKE SELLING YOUR CORPORATION. YOU HAVE TO MAKE SURE YOU ARE DEALING WITH WHO HAS THE AUTHORITY TO DO IT. FINALLY, LEGALITY. SOME CONTRACTS ARE NOT CONTRACTS BECAUSE THEY ARE ILLEGAL. LET'S SAY YOU ALL DECIDED YOU WERE UNHAPPY WITH THE QUIZ SCORE, WHICH I DON'T KNOW WHY, BUT LEST SAY YOU ARE. YOU CONTRACT TO HAVE ME KILLED. YOU POOL YOUR MONEY TOGETHER, YOU GET IT IN WRITING, YOU FIND ONE OF THE BEST CONTRACT KILLERS IN THIS AREA, AND YOU PUT IT ALL OUT, AND THE GUY SAYS I CAN DO THAT FOR FREE, BUT IF YOU HAVE TO PAY ME OKAY, AND THEN YOU SIGN IT, RIGHT, AND THEN HE TAKES YOUR MONEY, OR SHE, AND DOESN'T DO IT. NOW YOU ARE ALL UPSET BECAUSE IT IS A BREACH OF CONTRACT, RIGHT? SO YOU GO TO COURT AND SAY, JUDGE, ENFORCE THE CONTRACT. WELL, FOR THE JUDGE TO ENFORCE THAT CONTRACT, WHAT WOULD THE JUDGE HAVE TO MAKE HAPPEN? >> YOU BEING KILLED. >> I'D HAVE TO BE KILLED, AND THE COURT CAN'T DO THAT. SO IF A CONTRACT ISN'T AN ENFORCEABLE CONTRACT, THAT ONE ISN'T GOING TO WORK. IT IS ILLEGAL FROM THE START. IT IS A VOID CONTRACT, WHICH IS KIND OF AN OXYMORON. THAT DOESN'T MEAN THAT IS A BAD NAME IF SOMEONE CALLS YOU IT. THAT MEANS IT IS KIND OF CONFLICTING LIKE VOID CONTRACT REALLY MEANS NO CONTRACT. IT IS NOT A CONTRACT FROM THE START. NOW, THERE ARE SOME DEFENSES TO ENFORCE ABILITY OF THE CONTRACT, LOOKING AT THE FRONT END OF A CONTRACT. REMEMBER LIKE THERE WAS DEFENSES FOR TORTS, DEFENSES FOR CRIMES. NOW HERE WE ARE ON THE CONTRACT AREA. ONE IS THAT GENUINENESS OF ASSENT. WE DIDN'T HAVE A MEETING OF THE MINDS. WE DIDN'T HAVE THE AGREEMENT ABOUT THE SAME THING. LET'S SAY I SAY I WILL SELL YOU FLUFFY MY DOG OVER HERE IN THE CORNER. YOU ARE LIKE I WILL BUY FLUFFY. TURNS OUT FLUFFY IS DEAD. IT IS JUST KIND OF STIFF SITTING OVER HERE IN THE CORNER. I'M SORRY IF YOU HAVE A DOG NAMED FLUFFY. BUT NEITHER ONE OF US KNOWS THAT AT THE TIME. WE DON'T HAVE A MEETING OF THE MINDS. WE BOTH THOUGHT WE AGREED TO BUY A LIVE DOG, AND THE DOG IS NOT ANYMORE. NOW I AM GOING TO GET IN TROUBLE FOR USING ANIMAL CRUELTY IN MY CLASS. I WILL HAVE TO COME UP WITH SOMETHING ELSE. ANOTHER ONE IS FORM. NOT ALL CONTRACTS HAVE TO BE IN WRITING, BUT SOME CONTRACTS DO, AND THE FACT THEY ARE NOT COULD BE A DEFENSE. THE CONTRACT TO BUY REAL PROPERTY SHOULD BE IN WRITING. WHY? >> (INDISTINCT SPEAKING) >> RIGHT, ON THE ONE HAND YOU WANT TO MAKE SURE IT'S THE RIGHT PROPERTY. YOU WANT TO MAKE SURE IT IS NOT YOUR PROPERTY. IT IS LIKE CHAIN OF TITLE, WHO OWNS IT NOW. SO ONE ARGUMENT IS WE DON'T HAVE AN AGREEMENT BECAUSE THE AGREEMENT ABOUT REAL PROPERTY HAS TO BE IN WRITING, AND IT WASN'T. AS WE FORM A CONTRACT HERE IS A WAY OF LOOKING AT CATEGORIES OF CONTRACTS. I WILL GO INTO MORE DETAIL ABOUT EACH ONE OF THESE. ONE WAY OF LOOKING AT A CONTRACT IS BILATERAL VERSUS UNILATERAL. UNI MEANS WHAT? >>ONE. >> ONE. LIKE A UNICYCLE. BI MEANS TWO. TWO WHAT? THEY CAN'T HEAR YOU ON THE RECORDING. I WANT YOU TO ALL SHOUT OUT. TWO WHAT? >> PROMISES. >> PROMISES. GOOD. MY CLASS SAID PARTIES, SO WE ARE REDOING THE VIDEO. (LAUGHING) I AM GOING TO BE IN SO MUCH TROUBLE. SO A PROMISE FOR A PROMISE. SO YOU GO OUT AND BUY A CAR. YOU PROMISE TO BUY IT, AND THEY PROMISE TO SELL IT. THE MOMENT THE PROMISES ARE EXCHANGED THERE IS A CONTRACT. YOU FAIL TO PAY AND THEY FAIL TO DELIVER, BREACH OF CONTRACT. ANY OTHER PROVISION THEY PROMISED TO PERFORM AND THEY FAILED TO PERFORM IS CONSIDERED A BREACH. UNILATERAL CONTRACT WORKS A LITTLE DIFFERENTLY. I MENTIONED I WAS VACATIONING THIS WEEKEND. I DIDN'T GET A CHANCE TO MOW THE LAWN, SO ON THE WAY OUT THIS MORNING I YELLED OVER TO THE NEIGHBOR KID I WILL GIVE YOU FIVE BUCKS IF YOU MOW MY LAWN. HE IS ONLY FIVE. HE DOESN'T KNOW BETTER.HE WAS LIKE YAHOO. I SAID I WILL GIVE YOU FIVE BUCKS IF YOU WHAT? >> MOW THE LAWN. >> MOW THE LAWN. THAT IS AN ACT. WHAT IF HE YELLS OVER I PROMISE? IS THAT WHAT I WANT? >> NO. >>NO. YOU CAN ONLY -- I WOULD WRITE THIS DOWN SOMEWHERE IF I WERE YOU. YOU CAN ONLY ACCEPT AN OFFER TO ENTERING A UNILATERAL CONTRACT BY DOING. YOU CAN'T ACCEPT IT BY PROMISING TO DO SOMETHING. IT IS NOT THE SAME. I INVITED HIM TO MOW MY LAWN, NOT TO PROMISE HE WOULD MOW MY LAWN. WHY IS THIS IMPORTANT? I GET HOME AT THE END OF THE DAY. IT IS NOT MOWED. DID HE BREACH A CONTRACT? NO, HE DIDN'T, BECAUSE HE CHOSE NOT TO. WHAT IF I SAID I PROMISE TO GIVE YOU FIVE BUCKS IF YOU MOW MY LAWN BY 5:00? I GET HOME AT 5:01 AND THE LAWN IS NOT MOWED. DID HE BREACH THE CONTRACT? NO, HE DIDN'T. >> HE DIDN'T ACCEPT THE OFFER. >> HE DIDN'T ACCEPT. THAT'S NOT SUPPOSED TO BE A TRICK. YOU CAN ONLY ACCEPT BY DOING IT, AND YOU CAN CHOOSE NOT TO DO IT IF YOU WANTED TO. LET'S SAY HE STARTS DOING IT AND HE DOES A REALLY CRAPPY JOB BECAUSE HE IS FIVE AND HE CAN'T REALLY REACH THE HANDLE. I CAN SUE HIM. YOU GUYS CAN SEE ME SUING HIM, RIGHT, FOR NOT DOING A GOOD JOB? OR YOU GUYS WOULD PROBABLY SEE ME OUT THERE WITH A WRITTEN CONTRACT MAKING HIM SIGN IT. (LAUGHING) ALL RIGHT. FORMAL VERSUS INFORMAL. WE WILL GO INTO MORE DETAIL ABOUT BILATERAL AND UNILATERAL CONTRACTS. DON'T THINK FORMAL MEANS WRITTEN AND INFORMAL MEANS ORAL. A LOT OF PEOPLE THINK THAT. THAT IS NOT WHAT THAT MEANS. MOST CONTRACTS ARE INFORMAL, IMPLIED, ORAL AND WRITTEN. ONLY CONTRACTS THAT HAVE TO BE IN A SPECIAL FORM ARE FORMAL CONTRACTS. IF THERE IS A STATUTE THAT SAYS THIS IS NOT A CONTRACT UNLESS IT IS IN THIS SPECIFIC FORM -- AN EXAMPLE THEY GIVE YOU IS UNDER SEAL OR POSSIBLY THESE DAYS NOTARIZED. I'M NOT SURE HOW MANY WAX SEALS I HAVE SEEN ON CONTRACTS THESE DAYS. THAT DOESN'T MEAN ANY TIME YOU NOTARIZE A CONTRACT IT IS FORMAL. IF THE LAW SAYS IT HAS TO BE IN ORDER FOR IT TO BE A CONTRACT, THAT MAKES IT FORMAL.THEN OVER ON THE RIGHT, EXPRESS VERSUS IMPLIED. EXPRESS MEANS WHAT? >> (INDISTINCT SPEAKING) >> AND HOW COULD THAT BE? TWO WAYS THAT COULD BE. WORDS COULD BE WRITTEN OR ORAL.SO WHEN WE TALK ABOUT EXPRESS CONTRACTS WE ARE TALKING ABOUT ALL ORAL OR WRITTEN CONTRACTS. WHEN WE TALK ABOUT IMPLIED IN FACT CONTRACTS WE MEAN NOT A WRITTEN AGREEMENT, NOT AN ORAL AGREEMENT. WE MEAN IMPLIED FROM THE FACTS, THE CONDUCT OF THE PARTIES, THE FACTS SURROUNDING THE TRANSACTION. NOW DON'T GET ME WRONG. IT IS POSSIBLE IN THE CONDUCT OF CIRCUMSTANCES SURROUNDING THE TRANSACTION THAT SOMEBODY SAYS SOMETHING OR SOMEBODY WRITES SOMETHING. WHAT I AM SAYING FOR IMPLIED IN FACT CONTRACT THERE HAS TO BE -- THE AGREEMENT IS FORMED BY THE CONDUCT. SO LET'S SAY I WALK INTO THE COFFEE SHOP. I DID LAST NIGHT. I STOPPED INTO MEIJER. I LIKE TO GO THERE BECAUSE I CAN GET ME SOME STARBUCKS COFFEE ON THE WAY OUT. SO I SAID I WILL HAVE MINE, AND I GAVE THEM MY SPECIAL ORDER I ALWAYS GIVE THEM. THEY FIX IT, AND THEN I GRAB IT AND START WALKING OUT. NOTICE I SAID SOMETHING, AND I DID SOMETHING. ISN'T IT IMPLIED WHEN I ORDER THE COFFEE I AM GOING TO PAY FOR IT? I DIDN'T SAY I HEREBY OFFER TO PAY YOU THIS AMOUNT OF MONEY IF YOU MAKE ME THIS. I JUST WALKED UP AND ORDERED IT, AND THEY EXPECT I AM GOING TO PAY. TRY THIS IF YOU DON'T BELIEVE ME. GO TO MEIJER, WALK IN, PILE YOUR CART FULL OF STUFF, GO TO THE CHECK OUT, AND IF SOMEBODY TRIES TO TALK TO YOU JUST IGNORE THEM. YOU DON'T WANT TO DO ANYTHING TO MAKE THEM THINK YOU WANT TO BUY THIS STUFF. AFTER THEY RING IT ALL UP AND BAG IT ALL UP AND THEY ASK YOU THAT WILL BE $500 OR WHATEVER, THEN GO I NEVER SAID I WANTED IT. SEE WHAT THEY SAY. TRY IT. >> (INDISTINCT SPEAKING) >>RIGHT, RIGHT. WHY ARE YOU HERE? WHY DID YOU COME IN THE STORE? WHY DID YOU PUT ALL THE STUFF IN THE CART? WHY DID YOU WALK THROUGH HERE? THAT IS THE WAY IT WORKS. THIS WILL REALLY FLIP THEM OUT, TOO. PULL UP WITH YOUR CART AND GO I HEREBY OFFER TO PURCHASE THE GROCERIES IN THIS CART, AND SEE WHAT THEY DO. THEY WILL GO OKAY, AISLE ONE, GET SOMEONE DOWN HERE QUICK. OR BETTER YET, IF YOU WORK -- ANYONE WORK IN THAT TYPE OF ENVIRONMENT, LIKE RETAIL AT ALL? >> I WORK AT MEIJER. >> THERE YOU GO. AWESOME. IF SOMEBODY COMES UP, SAY WOULD YOU LIKE TO PURCHASE THAT TO THEM. THEY ARE LIKE,YEAH, THAT'S WHY I AM STANDING HERE. THEN RIP OUT A PIECE OF PAPER LIKE A WRITTEN CONTRACT. OKAY, THEN SIGN HERE. THAT USUALLY DOESN'T HAPPEN. MY POINT IS A LOT OF WHAT WE DO IS IMPLIED. WHEN I WALK UP TO A VENDING MACHINE I ALWAYS SAY I OFFER TO BUY COKE FROM YOU, BUT IT DOESN'T TALK BACK TO ME.ALL RIGHT. SO ONE MORE DETAIL ABOUT BILATERAL VERSUS UNILATERAL. I SAID EARLIER BILATERAL IS AN EXCHANGE OF PROMISES AND IT IS FORMED FROM THE MOMENT THE PROMISES ARE MADE. SO BACK TO THAT KID. LET'S SAY HE IS 18 AND I GET HIM TO SIGN A WRITTEN CONTRACT TO MOW MY LAWN ALL SUMMER. SO ANY TIME I DON'T PAY HIM OR HE DOESN'T MOW THAT IS A BREACH. WHEN I MADE THE OFFER TO PAY HIM FOR MOWING THE WHOLE SUMMER, I AM THE OFFEROR. I MADE THE OFFER TO HIM. HE IS THE OFFEREE. OFFEREES HAVE TO KNOW ABOUT OFFERS TO ACCEPT THEM. WE WILL GET INTO THAT IN A LITTLE MORE DETAIL. THEN UNILATERAL CONTRACTS. THIS PRETTY MUCH SAYS -- THERE ARE A COUPLE THINGS ON HERE THAT ARE NEW. THE FIRST IS LOTTERIES AS AN EXAMPLE OF A UNILATERAL CONTRACT. WHY IS A LOTTERY AN EXAMPLE OF A UNILATERAL CONTRACT? YOU ARE LIKE I DON'T KNOW,IT IS YOUR EXAMPLE, NOT MINE. >> YOU HAVE TO GET THE TICKET FIRST. >> RIGHT. THEY DON'T WANT YOU TO CALL AND SAY I WAS THINKING ABOUT PLAYING THE LOTTO, AND I THOUGHT OF THESE NUMBERS, WILL YOU PAY ME? THEY DON'T EVEN WANT YOU TO CALL AND SAY I GOT THE WINNING TICKET. THEY OFFER TO PAY THE PERSON WHO SHOWS UP IN PERSON WITH THAT WINNING TICKET AND DOES WHATEVER ELSE. SO SHORT OF THAT PERFORMANCE THERE IS NO AGREEMENT AND THEY DON'T HAVE TO PAY. WOULDN'T IT BE COOL IF YOU COULD WALK IN, BUY A LOTTO TICKET AND THEN SAY GIVE ME MY MONEY? IT JUST DOESN'T WORK THAT WAY. I NEVER PURCHASE A LOTTERY TICKET, BUT I ASSUME THAT. I KNOW I WOULD NEVER WIN. REVOCATION OF OFFERS. THE COMMON LAW VIEW IS YOU CAN REVOKE YOUR OFFER ANY TIME BEFORE SOMEBODY ACCEPTED IT. THAT MAY NOT MEAN A LOT TO YOU. LET'S TRY THIS ONE. LET'S SAY YOU DECIDED TO SELL YOUR CAR IN YOUR FRONT LAWN, PUT IT OUT THERE AND PUT A SIGN THAT SAYS FOR SALE. WHEN COULD YOU DECIDE NOT TO SELL IT? ARE YOU STUCK WITH IT? IF YOU PUT IT OUT THERE, ARE YOU STUCK SELLING IT? UNTIL SOMEBODY BUYS IT YOU COULD DECIDE NOT TO SELL IT. SO BEFORE SOMEBODY ACCEPTS THE OFFER YOU COULD REMOVE THE CAR, REMOVE THE SIGN, RIGHT? WHAT IF LIKE A WEEK LATER SOMEBODY SHOWS UP AND SAYS YOU KNOW THAT CAR YOU HAD FOR SALE, I WANT IT. SORRY. NOT FOR SALE. SOLD IT TO SOMEONE ELSE ALREADY. CAN'T HAVE IT. SO THAT IS THE COMMON LAW VIEW. YOU CAN REVOKE AN OFFER ANY TIME PRIOR TO ACCEPTANCE. THERE IS A LITTLE MODIFICATION TO THAT. NOTICE THE MODERN VIEW. LET'S SAY I GOT THE FIVE-YEAR-OLD NEXT DOOR MOWING MY LAWN, AND HE GETS ALMOST ALL THE WAY DONE, HAS ALL THE HARD PARTS DONE, AND I SAY I REVOKE MY OFFER. I CAN'T DO THAT. SO THE MODERN VIEW IN UNILATERAL SITUATIONS THAT ONCE THE OTHER PARTY HAS STARTED TO SUBSTANTIALLY PERFORM THEN THEY OUGHT TO BE ABLE TO FINISH. WHAT WOULD YOU THINK THAT WOULD BE IN THE CASE OF MOWING MY LAWN? HOW FAR WOULD THE KID NEED TO GET BEFORE HE HAS SUBSTANTIALLY PERFORMED? I DON'T KNOW IF HE HAS TO GET DONE. I MIGHT EVEN SAY LESS THAN THAT. IF HE GOES AND GETS GAS, GETS THE LAWN MOWER AND STARTS MOWING, AND I SAY I CHANGED MY MIND, I THINK HE OUGHT TO BE ABLE TO FINISH. FORMAL VERSUS INFORMAL WE TALKED ABOUT. EXPRESS VERSUS IMPLIED. WE DIDN'T TALK ABOUT THE DETAIL OF THIS ONE. WE DID, TRUST ME. WE DID TALK ABOUT IT. IMPLIED IN FACT CONTRACT YOU NEED THREE THINGS. IF YOU ARE LOOKING AT A SCENARIO AND ONE IS MISSING, NOT IMPLIED IN FACT. I HAD A BUDDY THAT WAS JOGGING WITH ME, AND HE SAID HE WAS AT WORK AND WHEN HE CAME HOME THERE WAS A BILL FROM TRUGREEN ON HIS DOORKNOB. HE SAID I DIDN'T ASK FOR IT. NOW, WHEN TRUGREEN SPRAYED HIS LAWN DO YOU THINK THEY MEANT TO PROVIDE THE SERVICE? YES. DO YOU THINK THEY EXPECTED TO GET PAID? I DON'T THINK IT WAS NATIONAL SPRAY EVERYONE'S LAWN FOR FREE DAY. SO WHAT IS THE PROBLEM? HE DIDN'T KNOW ABOUT IT, DIDN'T GET A CHANCE TO REJECT IT. IF WE DIDN'T HAVE A RULE LIKE THIS PEOPLE WOULD JUST RUN AROUND AND PAINT HOUSES AND THEN ASK FOR MONEY FOR IT. THAT CAN SOMETIMES BE A NEGATIVE THING. IS IT ALWAYS A GOOD IDEA TO GET YOUR LAWN SPRAYED? MAYBE NOT. OR YOUR HOUSE PAINTED. LET'S SAY YOU HAVE A BRICK HOUSE. THAT IS A BAD EXAMPLE. YOU MAY COME HOME AND SAY THAT IS UGLY, WHO DID THAT? THEY GO WE MESSED UP AND WENT TO THE WRONG ADDRESS. DO YOU THINK THAT HAPPENS? IT HAPPENED TO YOU? >> WE HAD TRUGREEN. >> THERE YOU GO. MAYBE THERE IS --I WON'T SAY ANYTHING DEFAMATORY ABOUT TRUGREEN. IT SEEMS LIKE IT COULD HAPPEN. THERE IS A LOT OF GREEN STUFF, AND YOU ARE NOT SURE WHERE YOU ARE SPRAYING. I HAD A CLIENT THAT CAME TO ME AND SAID I GOT MY DRIVEWAY PAVED. I WAS LIKE AWESOME, THAT IS GOOD. HE SAID I DIDN'T ASK FOR IT. SOMEBODY SHOWED UP. IT IS A GOOD IDEA TO MAKE SURE YOU ARE AT THE RIGHT PLACE BEFORE YOU START PAVING A DRIVEWAY. HE COULD SAY I DIDN'T WANT IT PAVED. I GUESS THAT WOULD BE NICE TO HAVE IT PAVED. I DON'T KNOW. WHAT IF THEY DO SOMETHING BAD TO YOUR HOUSE AND YOU DIDN'T WANT IT IN THE FIRST PLACE? SO YOU NEED TO HAVE THE OPPORTUNITY TO REJECT. NOW, WHAT IF MY BUDDY WAS SITTING ON THE FRONT PORCH AND WATCHED TRUGREEN PULL UP, SPRAY HIS WHOLE LAWN, AND THEN WHEN THEY BRING HIM THE BILL HE IS LIKE I DIDN'T ASK FOR THAT? THEN I THINK -->> HE DIDN'T STOP THEM. >> HE DIDN'T STOP THEM. I THINK THEN IN THAT CASE HE SHOULD HAVE TO PAY. HE WOULDN'T DO THAT. THAT CASE IS AN EXAMPLE OF IMPLIED IN FACT CONTRACT WHERE --SOMETIMES THE QUESTION IS CAN THERE BE CHANGES TO A CONTRACT. ONE COMMON SITUATION THAT COMES UP IS BUILDERS. THEY ARE BUILDING A HOUSE AND SOMEONE ASKS FOR A CHANGE. IS IT POSSIBLE YOU COULD DO SOME OF THE ORALLY? SURE. BUT IT'S A GOOD IDEA TO HAVE IT IN WRITING. LATER SOMEONE WILL SAY I DIDN'T WANT THAT OR I WANTED IT BUT DIDN'T THINK I HAD TO PAY FOR IT. >> MY PARENTS HAD A HOUSE THAT BURNED DOWN, AND THEY HAD A NEW HOUSE, AND THE BUILDER DECIDED IT LOOKED BETTER WITH A DECK ON THE BACK, SO HE PUT THE DECK ON THE BACK. >> AND CHARGED THEM MORE MONEY. >> YEAH, BUT THEY DID NOT PAY HIM BECAUSE IT WAS NOT DESIGNED TO HAVE THE DECK ON IT. BASICALLY THEY GOT A DECK FOR FREE. >> SOMETIMES THEY GET EXCITED. EXECUTED VERSUS EXECUTORY. EXECUTED MEANS ALL SIDES HAVE DONE EVERYTHING THEY ARE SUPPOSED TO. NOTICE IT SAYS BOTH SIDES, BUT I THINK THERE CAN BE MORE THAN TWO PARTIES. SO WHEN EVERYONE HAS DONE EVERYTHING. AN EXECUTED CONTRACT IS DONE. THERE IS NOTHING LEFT TO BE DONE. AN EXECUTORY CONTRACT IS ONE WHERE AT LEAST ONE PARTY HAS AT LEAST ONE THING LEFT TO DO. I WAS TELLING MY LAST CLASS BECAUSE I AM OLD I HAVE BEEN ABLE TO PAY OFF A COUPLE VEHICLES. I PAID ON THEM FOR A WHILE, AND AT THE END IT WAS STILL EXECUTORY BECAUSE THE OTHER SIDE STILL HAD SOMETHING THEY HAD TO DO. WHAT DID THEY HAVE TO DO? THEY HAD TO GIVE ME CLEAR TITLE. I WAS REMINDED OF THIS. I WAS LOOKING THROUGH IMPORTANT PAPERS FOR MY SON'S BIRTH CERTIFICATE. HE IS OURS. I SAW THE TITLES IN THERE AND WANTED TO HUG THEM.IT IS HARD GETTING OLD, BUT IT IS NICE IF YOU PAY SOMETHING OFF. ONE TIME I GOT TITLE TO A VEHICLE I WAS LEASING. YOU KNOW HOW LEASES WORK? IT IS SOMEONE ELSE'S PROPERTY, AND YOU PAY THEM AND HAVE TO GIVE IT BACK UNLESS YOU BUY IT. THEY SENT ME THE TITLE IN MY NAME. OH, THANK YOU. THEN THEY WROTE ME A LETTER THAT THEY MESSED UP. I GAVE IT BACK. ALL RIGHT. CONTRACT ENFORCEABILITY. YOU SEE THAT WORD IN THE CHAPTER AND WHETHER A CONTRACT IS ENFORCEABLE OR NOT. SO UNDER VALID CONTRACTS, CONTRACTS THAT HAVE ALL THE ELEMENTS, VALID CONTRACTS ARE ENFORCEABLE WHEN THERE ISN'T A LEGAL DEFENSE THAT CAN BE RAISED IN COURT. SO GO TO COURT, THE JUDGE SAYS WE CAN ENFORCE THIS CONTRACT, NO PROBLEM. AND UNENFORCEABLE CONTRACT IS A VALID CONTRACT, BUT THE COURT CAN'T ENFORCE IT. IT SAYS THERE IS SOME LEGAL DEFENSE. IT WAS IN WRITING-- IT WAS NOT IN WRITING WHEN IT SHOULD HAVE BEEN OR WHATEVER THE DEFENSE IS. WE MENTIONED GENUINENESS OF ASSENT IS ANOTHER ARGUMENT. THEN THERE IS THE MIDDLE, VOIDABLE. THIS ONE GETS PEOPLE ALL THE TIME. A VOIDABLE CONTRACT IS A VALID CONTRACT, BUT FOR SOME REASON ONE OF THE PARTIES CAN GET OUT OF IT. WHAT IS IT CALLED WHEN YOU TRY TO GET OUT OF A VALID CONTRACT USUALLY? WE ALREADY MENTIONED WHAT IT WAS. >> BREACH? >> YES, BREACH. IT IS CALLED A BREACH IF YOU TRY TO GET OUT OF A VALID CONTRACT. BUT, IF YOU HAVE A RIGHT TO GET OUT OF A VALID CONTRACT, IT MAKES A CONTRACT VOIDABLE. WHAT IS ONE THING WE MENTIONED AS AN EXAMPLE OF A SITUATION WHERE A PERSON COULD ENTER INTO A CONTRACT BUT THEN BACK OUT OF IT? BE A MINOR. ILLEGAL IS DIFFERENT. WE ARE GETTING TO THAT ONE IN A MINUTE. >> (INDISTINCT SPEAKING) >> RIGHT. YOU COULD HAVE A CONTRACT THAT IS VALID AND HAS A PROVISION IN IT THAT SAYS IF THIS HAPPENS ONE OF THE PARTIES CAN BACK OUT. THE OTHER PARTY DOESN'T PRODUCE ENOUGH, THE OTHER PARTY IS BANKRUPT OR WHATEVER IT IS. I HEARD THIS MORNING THAT BLOCKBUSTER IS GOING THROUGH BANKRUPTCY. I FOR YEARS HAVE BEEN LIKE HOW COME THEY HAVEN'T BEEN IN BANKRUPTCY? THEY ARE A LITTLE BEHIND THE TIMES. SO VOIDABLE MEANS IT IS A VALID CONTRACT. IT'S JUST ONE OF THE PARTIES CAN BACK OUT. MINORS IS AN EXAMPLE. CONDITIONS ON A CONTRACT IS ANOTHER EXAMPLE. AND THEN THERE IS VOID CONTRACTS, WHICH IS KIND OF A CONTRADICTION. VOID CONTRACT MEANS NO CONTRACT, NOT A CONTRACT TO START WITH. ILLEGAL CONTRACTS ARE ONE TYPE OF VOID CONTRACT. >> WHAT WOULD BE ANOTHER EXAMPLE? >> THAT IS PROBABLY THE BIGGEST ONE. THERE MAY BE SITUATIONS WHERE IT IS NOT AGAINST THE LAW TO DO IT BUT THE COURT WOULD SAY IT IS NOT A CONTRACT BECAUSE IT IS AGAINST PUBLIC POLICY TO ENFORCE THAT KIND OF PROVISION OR SOMETHING. >> (INDISTINCT SPEAKING) >> WELL, INSANITY I WOULD SAY THE ANSWER IS IT DEPENDS. BUT TO YOUR QUESTION, I AM DECLARED MENTALLY INCOMPETENT BY A COURT. I AM NOT. I AM JUST USING THIS AS AN EXAMPLE. SOME OF YOU HAVE QUESTIONED THAT ALREADY. LET'S SAY THAT I HAVE BEEN SUFFERING FROM DEMENTIA AND EVERY TIME SOMEONE CALLS ME AT HOME I BUY WHATEVER IT IS. I HAVE A BRICK HOUSE, AND THEY ARE SELLING SIDING AND THEY ARE LIKE OKAY. THEN FAMILY GETS TOGETHER AND SAYS THERE IS SOMETHING GOING ON HERE. THEY GO TO COURT AND GET A GUARDIAN ESTABLISHED OVER ME, AND THE COURT DECLARES I LACK THE CAPACITY TO ENTER INTO CONTRACTS. THEN FROM THAT TIME FORWARD, THAT IS A GOOD EXAMPLE IF I TRIED TO CONTRACT IT WOULD BE VOID. THE GUARDIAN COULD, BUT FROM THAT POINT FORWARD ANY CONTRACT I TRIED TO ENTER INTO WOULD BE VOID. WHY? WHAT IS IT MISSING? IT IS MISSING ONE OF THE ELEMENTS,WHICH ONE? CAPACITY. I LACK THE CAPACITY BECAUSE I AM INSANE. NOTICE THAT IS DIFFERENT THAN I AM INSANE AT THE TIME I AM CONTRACTED BUT I HAVE NOT BEEN DECLARED SUCH BY THE COURT. IS THAT POSSIBLE? LET'S SAY I CONTRACT TO BUY SIDING FOR MY BRICK HOUSE AND THEN AFTERWARDS THE COURT DECLARES I WAS INCOMPETENT AT THE TIME. THAT IS A VOIDABLE CONTRACT. I SEE SOME BLANK STARES. >> AS LONG AS IT WAS AT THE TIME, RIGHT? >> THE QUESTION IS ALWAYS AT THE TIME. THE QUESTION ALWAYS IS AT THE TIME I ENTER THE CONTRACT WHAT CAPACITY DO I HAVE. BUT THE DIFFERENCE IN THE EXAMPLE IS IN THE VOID CONTRACT EXAMPLE BEFORE I ENTER INTO THE CONTRACT I AM DECLARED INCOMPETENT. SO THEN ANY ATTEMPT TO ENTER INTO THE CONTRACT WOULD BE A VOID CONTRACT AND WOULDN'T BE A CONTRACT. BUT IN THE EXAMPLE I JUST GAVE YOU, I ENTER INTO THE CONTRACT AND THEN LATER THE COURT SAYS -- YOU ENTERED INTO A CONTRACT TO BUY ALL THE CARS ON THE CAR LOT BECAUSE YOU THOUGHT YOU WERE THE PRINCE OF WHATEVER. THEN THAT MEANS ANY CONTRACT AFTERWARDS WOULD BE VOID. ANY CONTRACT BEFORE THAT CAN BE ESTABLISHED AT THE TIME YOU LACKED THE CAPACITY WOULD BE VOIDABLE. VOIDABLE MEANS YOU CAN GET OUT OF IT, BUT IT MEANS YOU CAN ALSO STAY IN IT. IS IT POSSIBLE I MADE A GOOD DEAL WHILE I WAS LACKING MENTAL CAPACITY? YEAH. THINK ABOUT BEING INTOXICATED. IT'S POSSIBLE THAT LATER YOU COULD GO I WASN'T OF THE RIGHT STATE OF MIND, BUT IT LOOKS LIKE I DID PRETTY GOOD. SO THE QUESTION IS ALWAYS WHAT WAS MY CAPACITY AT THE TIME, AND WITH THAT CASE OF BEING DECLARED INCOMPETENT, DID IT HAPPEN BEFORE OR AFTERWARDS. SO THE THREE V'S AS A REVIEW, VALID, VOIDABLE AND VOID. VOID CONTRACT MEANS NO CONTRACT. VOIDABLE MEANS A VALID CONTRACT YOU CAN BACK OUT OF. AND VALID MEANS IT HAS ALL THE ELEMENTS. SOMEBODY GIVE ME AN EXAMPLE OF A VOIDABLE CONTRACT. VOIDABLE. >> LIKE YOU SAID, DEMENTIA. SOMEBODY LIVES AT HOME AND IS SUFFERING FROM DEMENTIA, AND SOMEONE COMES TO THE HOUSE AND SAYS YOU NEED A NEW ROOF, AND HE -- >> IF YOU SAY I DO, I DO. AND THEN LATER IT TURNS OUT AT THE TIME HE CONTRACTED HE DIDN'T UNDERSTAND. YEAH. THAT IS AN EXAMPLE. SO I ASKED FOR THAT BECAUSE NOW I WILL TALK ABOUT A SITUATION WHERE IT IS NOT A CONTRACT. SO QUASI CONTRACT IS A REMEDY YOU GET FROM A COURT WHEN THERE IS NO ACTUAL CONTRACT. WE HAVE BEEN TALKING ABOUT THE WAY CONTRACTS GET FORMED. THIS IS NOT A CONTRACT THAT GETS FORMED BY THE PARTIES. THIS IS A CONTRACT THE COURT WHIPS UP AFTERWARDS,AS IT SAYS ON THE SLIDE, TO AVOID UNJUST ENRICHMENT. IF YOU ARE WONDERING WHAT WOULD BE A GOOD EXAMPLE DON'T LOOK IN THE BOOK. THAT IS THE STUPIDEST EXAMPLE. NOT THAT MINE ARE MUCH BETTER. THE EXAMPLE IN THE BOOK IS VACATIONING PHYSICIAN DRIVING DOWN THE ROAD, SEES SOMEONE ON THE SIDE OF THE ROAD UNCONSCIOUS, RENDERS THEM AID, AND THEN SLAPS A BILL ON THEIR CHEST. I ADDED THE LAST PART. I THINK THE BETTER EXAMPLE IS HOSPITALS. THAT IS WHAT THEY DO. THEY TREAT PEOPLE WHO MIGHT BE UNCONSCIOUS AND THEY EXPECT TO GET PAID WHEN THEY DO IT. LET'S SAY I AM EXCITED ABOUT CONTRACT LAW, AS YOU ALL SHOULD BE, AND I START FLAILING AROUND UP FRONT HERE, AND I HIT THE WALL AND KNOCK MYSELF UNCONSCIOUS. BACK WHEN I WAS YOUNGER I USED TO FALL BACK AND DO THIS. I GOT IN TROUBLE ONE TIME BECAUSE I WAS ON THE FLOOR SCREAMING, AND SOMEONE CAME TO THE DOOR AND SAID WHERE IS YOUR INSTRUCTOR,AND THEY POINTED DOWN THERE. (LAUGHING) SO LET'S SAY I AM DOWN HERE ON THE GROUND. I WANT TO MAKE SURE THE RECORDING GETS THIS. AN I AM UNCONSCIOUS. I HAVE KNOCKED MYSELF OUT.WHAT ARE YOU GOING TO DO? >> CALL 911. >> (LAUGHING) ALL RIGHT. SO YOU TAKE MY WALLET. ONE OF YOU SAYS DO CPR AND THE OTHER SAYS HE IS DRINKING COFFEE, HE HAS BAD BREATH, SO YOU DECIDE TO TAKE ME TO THE HOSPITAL. IT IS RIGHT ACROSS THE STREET. YOU ROLL ME IN THERE, AND THEY ASK ME, SIR, WOULD YOU LIKE MEDICAL TREATMENT, AND I RESPOND WITH -- I AM UNCONSCIOUS. THEY ARE LIKE LET'S GET HIM TO SIGN SOMETHING.I CAN'T SIGN SOMETHING. I AM UNCONSCIOUS. THERE IS THIS LAW, LET'S WATCH HIM AND SEE IF HE ENGAGES IN ANY CONDUCT THAT IMPLIES HE WANTS TO ENTER INTO A CONTRACT. MAYBE I AM BLEEDING AND THEY ARE LIKE THERE IS CONDUCT. I AM NOT DOING ANYTHING . I AM UNCONSCIOUS. SO THEY RENDER ME TREATMENT, AND YOU ARE ALL ANXIOUSLY WAITING. THEN I COME TO AND SAY LET'S GET BACK TO CLASS, AND YOU ARE LIKE YAHOO, LET'S DO IT. THEY ARE LIKE, SIR, YOU HAVE TO PAY. I GO THIS IS A GOOD TEACHABLE MOMENT HERE. THIS IS MY CLASS AND I KNOW THE LAW. I DID NOT ENTER INTO A CONTRACT WITH YOU. I DON'T HAVE TO PAY. AM I RIGHT? I AM HEARING I AM RIGHT AND I AM WRONG. I SAID THERE IS NO CONTRACT, AM I RIGHT? NO, NOT YET. I HAVEN'T BEEN TO COURT. >> IT SOUNDS IMPLIED. >> NO. I JUST GOT THROUGH TELLING YOU THERE IS NO CONTRACT. IT CAN'T BE IMPLIED. I DIDN'T DO ANYTHING. I WAS UNCONSCIOUS. I DIDN'T SAY ANYTHING TO ENTER INTO CONTRACT, I DIDN'T DO ANYTHING, I DIDN'T WRITE ANYTHING TO ENTER INTO A CONTRACT. THERE IS NO CONTRACT. I AM RIGHT. >> THERE IS NO CONTRACT YET. >> THERE IS NO CONTRACT YET. YOU CAN ONLY GET A CONTRACT WHEN THE HOSPITAL TAKES ME TO COURT, AND I SAY, YOUR HONOR, THERE ISN'T ANY CONTRACT, AND THE COURT SAYS YOU ARE RIGHT, BUT THERE IS THIS REMEDY WE CAN PUT INTO PLACE WHERE WE WHIP UP A FICTIONAL CONTRACT BETWEEN YOU, AND THE REASON WE DO THAT IS TO PROTECT YOU AND THEM. WE PROTECT THEM BECAUSE THEY GET PAID, AND WE PROTECT YOU BECAUSE THEY DON'T HAVE TO WAIT AROUND FOR YOU TO COME TO. >> SO JUST TO THROW A TWIST IN THERE, WHAT ABOUT IF YOU SUFFER FROM NARCOLEPSY. >> GO ON. YOU ARE SAYING WHILE THEY ARE ASLEEP? >> EXACTLY. SUPPOSE YOU HAVE NARCOLEPSY. YOU FALL AND I TAKE YOU TO THE HOSPITAL. THERE IS NOTHING WRONG WITH YOU. >> YOU ARE SAYING THEY GIVE ME TREATMENT AND I DON'T NEED IT? >> YEAH. >> I DON'T KNOW IF THAT TWIST WILL HELP US UNDERSTAND THE IDEA OF QUASI CONTRACT. YOU CAN GET INTO CAN SOMEONE ELSE GIVE CONSENT FOR YOUR TREATMENT, DO YOU REALLY NEED THE TREATMENT, AND ALL THESE TYPE OF QUESTIONS. I MEAN, I THINK YOUR ARGUMENT GOES TO WAS I REALLY UNJUSTLY ENRICHED WHEN I GOT TREATMENT I DIDN'T REALLY NEED. I SUPPOSE THAT IS MY ARGUMENT THAT, COURT, YOU SHOULD NOT USE EQUITABLE POWERS HERE BECAUSE WE ARE NOT AVOIDING UNJUST ENRICHMENT, THEY DID SOMETHING TO ME THEY DIDN'T NEED TO DO. WHAT IF THEY MADE ME WORSE? THEY ARE LIKE WE NEED TO BE PAID. PAID FOR WHAT? YOU HARMED HIM. YOU DIDN'T HELP HIM. SO I SUPPOSE THAT COULD BE AN ISSUE. IF YOU SEE A SCENARIO AND IN THE SCENARIO THERE IS A CONTRACT, THEN YOU ARE NOT GOING TO GET QUASI CONTRACT, BECAUSE YOU ONLY GET QUASI CONTRACT FROM A COURT AFTERWARDS WHEN THERE WAS NO ACTUAL CONTRACT. ALL RIGHT. LET'S LOOK AT THE ELEMENTS OF A CONTRACT IN MORE DETAIL. AGREEMENT. AGREEMENT IS OFFER AND ACCEPTANCE. LET'S FOCUS ON THE OFFER FIRST. THE OFFER HAS TO BE SERIOUS AND OBJECTIVE. WE MENTIONED CASE 8.2, LUCY VERSUS ZEHMER, EARLIER. THE COURT IS GOING TO LOOK AT THE OBJECTIVE FACTS RATHER THAN WHAT ONE OF THE PARTIES SAYS TO TRY TO AVOID THE CONTRACT. SO YOU SAY YOU ARE INTOXICATED AND DIDN'T REALLY MEAN IT, BUT OBJECTIVELY IT LOOKS LIKE YOU DID. IS IT POSSIBLE TO AVOID A CONTRACT BY CLAIMING YOU WERE VOLUNTARILY INTOXICATED? YES. NOT SO MUCH WITH CRIMES, BUT IN CONTRACT LAW IF YOU CAN SHOW YOU WERE INTOXICATED AND THE REASON WAS BECAUSE YOU INTOXICATED YOURSELF, IF YOU CAN ESTABLISH YOU LACKED THE CAPACITY THE COURT MAY LET YOU OUT OF THE CONTRACT. >> IS THERE SUCH THING AS INVOLUNTARY? >> CLEARLY I THINK IF IT IS INVOLUNTARY -- YOUR QUESTION IS, IS THERE SUCH A THING. SURE. YOU COULD GET A BAD BROWNIE. YOUR DRINK COULD BE SPIKED WITH SOME KIND OF DRUG. YOU CAN BE FORCED TO DRINK. A LOT OF PEOPLE SAY THAT. I DON'T KNOW HOW OFTEN THAT HAPPENS,BUT IT DOES. SERIOUS INTENTION. THIS IS MORE A LIST OF THINGS THAT AREN'T. SO YOUR OPINION ISN'T AN OFFER. NEGOTIATIONS AREN'T OFFERS. EVEN AGREEING YOU WILL AGREE SOMETIME IN THE FUTURE ISN'T GOOD ENOUGH. THINK ABOUT AN AD IN A NEWSPAPER. LET'S SAY I WANT TO SELL MY JEEP FOR $5,000, AND THEN FIVE PEOPLE CALL ME BACK AND SAY I ACCEPT. DO YOU HAVE TO SELL IT TO ALL OF THEM? NO. YOU CAN ALL SHARE, EACH A DAY OF THE WEEK YOU GET TO DRIVE IT. SO IT IS AN INVITATION FOR SOMEONE TO OFFER ME, AND THEY CALL, AND I GET TO PICK WHO I SELL IT TO. AN OFFER HAS TO BE DEFINITE, MY JEEP FOR $5,000, DEFINITE FOR ANOTHER PARTY TO KNOW WHAT THEY ARE ACCEPTING, AND HAS TO BE COMMUNICATED TO THE OFFEREE, WHICH SEEMS LIKE A NO BRAINER, BUT LET'S GIVE AN EXAMPLE. LET'S SAY I HAVE A KID THAT LIKES TO WANDER AROUND, ALWAYS TAKING OFF, AND I PUT UP A REWARD, CAN'T FIND HIM, BEEN LOST FOR A FEW DAYS, PUT UP A REWARD, PLEASE RETURN MY KID AND I WILL GIVE YOU FIVE BUCKS. SOMEBODY SHOWS UP A FEW DAYS LATER WITH MY KID AND SAYS WE FOUND THIS KID WANDERING DOWN BY THE LAKE, DO YOU WANT HIM BACK, AND I SAY OKAY. SO THEY GIVE HIM BACK TO ME AND THEN LATER LEARN THERE WAS A REWARD AND COME BACK FOR THE REWARD. IF THIS SAYS THE OFFER HAS TO BE COMMUNICATED TO THE OFFEREE BEFORE ACCEPTING, WHEN THEY RETURN THE KID THEY WEREN'T ACCEPTING MY OFFER. THEY WERE JUST DOING IT PROBABLY BECAUSE THEY DIDN'T WANT HIM. HE IS EXPENSIVE TO FEED, DOES NOT GO TO SLEEP WHEN YOU TELL HIM TO. SO YOU CAN ONLY ACCEPT AN OFFER YOU KNOW ABOUT. ALL RIGHT. REVOCATION OF THE OFFER. REMEMBER EARLIER I WAS SAYING YOU CAN REVOKE AN OFFER ANY TIME TO IT BEING ACCEPTED, EXCEPT FOR THAT UNILATERAL CONTRACT SITUATION WE WERE TALKING ABOUT? UNLESS YOU PROMISE THAT YOUR OFFER WILL REMAIN OPEN. OPTION CONTRACTS IS AN EXAMPLE. YOU CAN PAY SOMEBODY TO AGREE TO SELL LAND TO YOU IF YOU WANT TO BUY IT AT SOME POINT IN THE FUTURE. YOU SEE A PIECE OF PROPERTY.YOU ARE NOT SURE YOU WANT TO BUY IT, BUT YOU WANT TO LOCK IT IN BY HAVING THE OTHER PARTY SELL YOU THE OPTION TO BUY IT WITHIN THE NEXT 90 DAYS. SO IF THEY ARE GOING TO SELL IT, THEY ARE GOING TO SELL IT TO YOU IN THAT TIME FRAME. THAT IS CALLED AN OPTION CONTRACT. MAYBE YOU SEE THAT WITH SECURITIES, REAL PROPERTY. >> SO WOULD THAT BE LIKE A DOWN PAYMENT ON THE -- >> THAT IS DIFFERENT USUALLY. USUALLY DOWN PAYMENT IS I AM CONTRACT AND AGREEING TO BUY THIS. THIS IS JUST MY GOOD FAITH INITIAL PAYMENT. >> LIKE A LAND CONTRACT? >> LAND CONTRACT COULD BE ANOTHER EXAMPLE OF A CONTRACT FOR REAL PROPERTY THAT INVOLVES PUTTING MONEY DOWN ON IT. I AM TALKING ABOUT SOMETHING DIFFERENT. I AM JUST TALKING ABOUT PAYING FOR THE RIGHT TO BUY IT IF YOU DECIDE TO. >> (INDISTINCT SPEAKING) >> YEAH, AND DON'T SELL IT TO SOMEONE ELSE. >> HOW LONG DO YOU HAVE? >> WHATEVER YOU AGREE WITH IN WRITING. THAT IS WHY THE STATUTE OF FRAUDS SAYS CONTRACTS WITH INTEREST IN LAND SHOULD BE IN WRITING TO BE ENFORCEABLE. ANYBODY HEAR A BUZZING, A PHONE GOING OFF? OKAY. SOMETIMES I HEAR THINGS IN MY HEAD AND IT IS NOT REALLY OUT THERE. JUST CHECKING. GOOD. ALL RIGHT. NOW THIS ONE GETS TRICKY. IT IS PRETTY CLEAR IF YOU MAKE AN OFFER -- IF I SAID TO YOU I WILL SELL YOU MY JEEP FOR $5,000 AND YOU SAID NO WAY, THAT WOULD BE A REJECTION, RIGHT? YOU CAN ALSO REJECT SOMEONE'S OFFER BY MAKING A COUNTER OFFER. IF I SAID I WILL SELL YOU MY JEEP FOR $10,000 AND YOU SAID I WOULD GIVE YOU FIVE FOR IT, THAT IS A REJECTION AND A NEW OFFER.YOU SEE THAT? I WILL SELL YOU MY JEEP FOR $10,000. I WILL GIVE YOU FIVE FOR IT. YOU ARE SAYING I WOULD NOT PAY YOU TEN BUT I WOULD PAY FIVE. THAT IS A REJECTION OF THE ORIGINAL $10,000 OFFER AND A NEW OFFER. SO IF I SAY I WILL SELL MY JEEP FOR $10,000 I AM THE OFFEROR TO YOU THE OFFEREE, AND YOU SAY I WILL GIVE YOU FIVE FOR IT. GUESS WHAT YOU BECOME?YOU ARE THE OFFEROR. YOU REJECT THE INITIAL OFFER AND NOW PRESENT A NEW OFFER AND ARE NOW THE OFFEROR AND I AM THE OFFEREE. WHY IS THAT SO IMPORTANT? LET'S TRY IT AGAIN. I WILL SELL YOU MY JEEP FOR $10,000. I WILL GIVE YOU FIVE FOR IT. THEN I RESPOND WITH NOPE, I AM NOT GOING TO DO THAT. GUESS WHAT? THE ORIGINAL OFFER IS NO LONGER ON THE TABLE. THAT IS WHY IT IS IMPORTANT TO KNOW THE COUNTER OFFER IS A REJECTION OF THE ORIGINAL OFFER. SO YOU ARE LIKE OKAY, I WILL GIVE YOU TEN. TOO LATE, NOT THERE ANYMORE. >> SO DOES THE COUNTER OFFER AUTOMATICALLY GET RID OF THE FIRST OFFER? >> THE COUNTER OFFER IS A REJECTION OF THE ORIGINAL OFFER AND A NEW OFFER. ANOTHER THING TO TALK ABOUT IN THAT CONTEXT IS THE MIRROR IMAGE RULE. SO WHAT IS AN ACCEPTANCE AND WHAT IS A REJECTION AND COUNTER OFFER? THE MIRROR IMAGE RULE SAYS THE ACCEPTANCE MUST MIRROR THE OFFER. IF I SAY I WILL SELL YOU MY JEEP FOR 10,000 AND YOUR RESPONSE IS I WILL BUY YOUR JEEP FOR 10,000, THAT IS AN OFFER AND ACCEPTANCE AND WE HAVE AN AGREEMENT. WHAT IF I SAY I WILL SELL YOU MY JEEP FOR 10,000 AND YOU RESPOND I ACCEPT FOR FIVE? THAT IS NOT MIRRORING THE OFFER, IS IT? WOULDN'T THAT BE COOL IF YOU COULD TRICK PEOPLE AND SAY I ACCEPT FOR $1. YOU CAN'T DO THAT. THAT IS NOT REALLY AN ACCEPTANCE, EVEN IF YOU USE THE WORD I ACCEPT. ALL RIGHT. SO SOMETIMES EVEN THOUGH THE PARTIES DON'T REJECT THE OFFER THE LAW MIGHT TERMINATE THE OFFER. THE LAW STEPS IN. I WAS TRYING TO SELL MY HOUSE IN KALAMAZOO. IN CONTRACTED WITH A REAL ESTATE AGENT WHO DIDN'T KNOW WHAT THEY WERE DOING. ACTUALLY I CONTRACTED WITH A REAL ESTATE AGENT WHO DID KNOW WHAT THEY WERE DOING, AND THEN THEY PULLED THEIR MOTHER INTO IT. HER MOTHER WAS NEWLY LICENSED SO I THOUGHT I WAS CONTRACT WITH ONE PERSON TO DO IT, AND THEY SAID I AM GOING TO HAVE MY MOM PRACTICE ON YOU GUYS. SO I TERMINATED THAT RELATIONSHIP. BUT IT WAS FOR A SIX-MONTH PERIOD OF TIME. IF THEY COULDN'T SELL MY HOUSE WITHIN THAT SIX MONTHS, THE LAW WOULD TERMINATE THAT. THERE WASN'T ANY AGREEMENT BETWEEN US. OR I MIGHT HAVE THE OFFER OPEN FOR A PERIOD OF TIME. OR LET'S SAY I OFFER TO SELL YOU MY HOUSE BUT IT BURNS DOWN. I AM LIKE I ACCEPT. I DON'T HAVE A HOUSE TO SELL YOU ANYMORE. SO WHATEVER IT IS THAT IS THE SUBJECT OF THE OFFER COULD BE TERMINATED. OR THE DEATH OR INCOMPETENCY OF A PARTY. I OFFER TO DO SOMETHING FOR YOU,BUT I CAN'T DO IT NOW, I AM DEAD. IT'S HARDER TO DO THINGS AFTER THAT, UNLESS IT IS IRREVOCABLE. NOW YOU HAVE A SITUATION WHERE THE ESTATE IS RESPONSIBLE FOR IT. GENERALLY IF I CAN'T PERFORM IT THEN I CAN'T. THAT COULD HAPPEN WITH INCOMPETENCE OR INCAPACITY OF THE PARTY, TOO. SUPERVENING ILLEGALITY OF A CONTRACT. I OFFER TO DO SOMETHING WITH YOU THAT SUBSEQUENTLY BECOMES ILLEGAL TO DO WITH YOU, SELL YOU SOME CHEMICALS OR SOMETHING THAT NOW ARE ILLEGAL TO SELL. THEN ACCEPTANCE. VOLUNTARY ACT. MIRRORS THE TERMS OF THE OFFER. THE ONE THING ON HERE WE DIDN'T TALK ABOUT IS SILENCE. SOMETIMES WHEN PARTIES ACT LIKE THERE IS A CONTRACT THEN THERE IS. I OFFER TO SELL MY JEEP TO YOU, AND YOU GIVE ME THE MONEY AND TAKE THE JEEP. THAT IS A GOOD INDICATION YOU ACCEPT. USUALLY AN OFFER CAN BE ACCEPTED BY ANY REASONABLE MEANS. EXAMPLES UP THERE, THE MAIL, FAX, EMAIL. MAIL PRESENTS AN INTERESTING RULE. NOTICE THE MAILBOX RULE UP THERE. YOU CAN ACCEPT AN OFFER BY PUTTING SOMETHING IN THE MAIL AND THE ACCEPTANCE IS EFFECTIVE AS SOON AS YOU PUT IT IN THE MAIL. THINK ABOUT WHAT THAT MEANS. THAT MEANS WHOEVER EXTENDED THE OFFER MAY NOT KNOW IT HAS BEEN ACCEPTED BECAUSE IT HASN'T GOT TO THEM YET. HOW WOULD YOU GET AROUND THAT, ACCORDING TO THIS SLIDE? YOU COULD SAY I WANT IT RECEIVED THIS WAY. THERE ARE OTHER WAYS YOU COULD CONSIDERATION OF YOUR ACCEPTANCE. YOU MAY SAY I DON'T WANT YOU TO SEND IT TO ME IN THE MAIL. I WANT YOU TO DO ONE OF THESE OTHER THINGS. THAT IS ONE OF THE EXCEPTIONS HERE. IF IT NEVER GETS PUT IN THE MAIL, IF THE OFFEROR SAYS I WON'T ACCEPT IT BY MAIL, OR THE OFFEREE REJECTS. THEN ALL THE STUFF WE HAVE BEEN TALKING ABOUT, ONLINE, E-CONTRACTS. A LOT OF THINGS WHERE YOU ARE TALKING ABOUT A PAPER WRITTEN CONTRACT, AN ORAL CONTRACT, AN E-CONTRACT, YOU ARE GOING TO WANT THESE THINGS IN YOUR CONTRACT. REMEDIES, STATUTE OF LIMITATIONS, HOW PEOPLE ARE TO PAY. SOME MIGHT BE DIFFERENT.REFUND OR RETURN CAN BE DIFFERENT ONLINE. NOTICE THE LAST ONE. ANYONE EVER SIGNED UP FOR SOME FREE SERVICE? HOW MANY OF YOU ARE ON FACEBOOK? COME ON, DON'T BE AFRAID TO RAISE YOUR HAND. SO MOST OF YOU. YOU PROVIDE THEM WITH INFORMATION ABOUT YOURSELF. ONE OF THE BIG ISSUES WITH FACEBOOK HAS BEEN WHAT CAN THEY DO WITH THAT INFORMATION. THEY HAVE TRIED TO DO LOTS OF DIFFERENT THINGS WITH IT. BUT YOUR FRIEND IS BUYING A COKE RIGHT NOW AND HAVING THAT SHOW UP ON YOUR WALL OR WATCHING THIS MOVIE OR WHAT THIRD PARTY APPLICATIONS HAVE ACCESS TO YOUR INFORMATION. I MEAN YOU USUALLY AGREE WHEN YOU USE THESE APPLICATIONS THEY CAN HAVE ACCESS TO THIS INFORMATION. THERE IS A BUNCH OF DEVELOPERS OUT THERE DEVELOPING APPLICATIONS FOR FACEBOOK SO THEY CAN GET YOUR INFORMATION. SO WHENEVER YOU BUY SOMETHING ONLINE, ONE OF THE ADDITIONAL QUESTIONS YOU HAVE IS WHAT DO THEY DO WITH THE INFORMATION YOU PROVIDE TO THEM? OR EVEN IF YOU DON'T BUY IT AND THINK THIS IS A FREE SERVICE, SOMETIMES YOU SHOULD BE CONCERNED WITH WHAT THEY DO WITH THE INFORMATION THEY COLLECT. I AM NOT SAYING THIS JUST HAPPENS ONLINE. MY WIFE ALWAYS GIVES ME THESE TAGS I AM SUPPOSED TO USE WHEN I GO INTO MEIJER OR A STORE, SCAN THOSE. DO YOU EVER NOTICE THE COINCIDENCE WHENEVER YOU DO THAT THAT YOU GET ALL KINDS OF MAIL TARGETED TO THAT? GO TO THE STORE TO BUY DIAPERS,AND YOU WILL GET A COUPON, ALL KINDS OF KIDS STUFF. SO THEY DO STUFF WITH YOUR INFORMATION. ALSO, A LOT OF DISPUTES WILL BE SETTLED. ON THE INTERNET, THE QUESTION CAN BE WHICH LAW-- WHICH STATE'S LAW APPLIES, OR COUNTRY, WHERE DO WE GO IF WE HAVE A DISPUTE. I MAY HAVE MENTIONED EBAY BEFORE TO YOU. EBAY IS LIKE GO TO SOME THIRD PARTY AND HAVE IT RESOLVED ELECTRONICALLY. THE OTHER ISSUE THAT COMES UP IS A LOT OF ONLINE SERVICES DON'T WANT YOU TO HAVE TO READ THROUGH A WHOLE BUNCH OF STUFF BEFORE YOU BUY THEIR PRODUCT. THINK ABOUT AMAZON. JUST CLICK, YOU GOT IT. THEY HAVE YOUR INFORMATION STORED IN THERE. THE LAW SAYS AS LONG AS THEY HAVE A HYPERLINK OR SOME WAY FOR YOU TO SEE ALL THE TERMS YOU DON'T ACTUALLY HAVE TO ACTUALLY READ THEM ALL AND AGREE TO THEM. IF YOU HAVE THE OPPORTUNITY TO THAT IS GOOD ENOUGH. HOW MANY PEOPLE ONLINE WHEN THEY BUY SOMETHING THEY READ THROUGH ALL THE TERMS BEFORE THEY BUY IT? YOU SEE THEM,MAYBE. YOU WILL SCAN THEM. LIKE WHO IS PAYING FOR SHIPPING,WHAT OTHER COSTS ARE ASSOCIATED WITH THIS. BUT A LOT OF PEOPLE ARE LIKE PRICE IS RIGHT, CLICK THE BUTTON, DON'T READ THROUGH ALL THE TERMS. A LOT OF TIMES SOME OF THE TERMS SAY YOU GO TO ARBITRATION INSTEAD OF SUING US OR YOU COME HERE UNDER OUR LAWS, NOT WHERE YOU ARE AT UNDER YOUR LAWS. SO HERE IS AN EXAMPLE. ONE OF THE ADDITIONAL THINGS THAT COMES INTO PLAY WHEN WE ARE TALKING ABOUT DOING THINGS ONLINE IS HOW YOU INDICATE YOU ACCEPT THE TERMS OR YOU AGREE TO BUY IT. IN A WRITTEN CONTRACT MAYBE YOUR SIGNATURE. WHAT DOES THAT LOOK LIKE ONLINE? HERE IS AN EXAMPLE OF WHERE THERE IS SOME KIND OF PICTURE OR TEXT AND YOU ARE SUPPOSED TO TYPE IN WHAT YOU SEE TO PROVE YOU ARE A HUMAN BEING AND NOT A ROBOT.SOMETIMES THEY HAVE LIKE ANIMALS OR WHATEVER. ANYBODY EVER SEEN A KITTEN CAPTION? LIKE THEY HAVE DIFFERENT PICTURES OF DIFFERENT ANIMALS AND SAY IDENTIFY THE KITTEN IN THE PICTURE OR WHATEVER. SO SOMETIMES IT IS CHARACTERS OR SOMETIMES SOMETHING ELSE. THE WHOLE IDEA IS TO SAY, YES, THIS IS THE PERSON, THEY ARE A PERSON AND NOT JUST A ROBOT OR SOMEONE ELSE, SO SOME ENCRYPTION KEYS, SOME WAY OF VERIFYING YOUR IDENTITY, SOME PIN CODE. ANYBODY DO YOUR TAXES ONLINE? LIKE YOU GET TO THE END AND THEY SAY WHAT WERE YOUR TAXES AND PICK THIS PIN AND ALL THESE TYPE OF THINGS. EVERYBODY PICKS, ONE, TWO, THREE, FOUR. SHRINK-WRAP AGREEMENT. HOW MANY PEOPLE BUY SOFTWARE IN BOXES? THERE WAS ONE STUDENT IN THE LAST CLASS. THERE ARE TWO IN THIS ONE. A LOT OF PEOPLE TRY TO GET SOFTWARE FOR NOTHING OR DOWNLOAD IT ON THE INTERNET. NOT THAT MANY PEOPLE -- WHAT'S THAT? >> I SAID LEGALLY. >> YES, LAWFULLY. SOME DO IT ILLEGALLY, BUT WE ARE TALKING ABOUT CONTRACTS HERE. SO THERE IS A TERM OR CONTRACT OR AGREEMENT INSIDE THE BOX. SO SOME PEOPLE CHALLENGE THAT. HOW CAN I AGREE TO SOMETHING I DON'T KNOW YET? THE COURTS HAVE SAID YOU CAN OPEN IT AND SEE IT BEFORE YOU INSTALL IT AND ACCEPT IT AND THEREFORE GOOD ENOUGH. THE HITCH IS IF YOU BUY SOFTWARE FROM A STORE AND YOU TAKE IT BACK OPENED THEY USUALLY SAY CAN'T BRING IT BACK. BUT IN TERMS OF THE SHRINK-WRAP AGREEMENTS MOST COURTS SAY THESE ARE LAWFUL. YOU HAVE A CHOICE. YOU CAN DECIDE NOT TO INSTALL SOFTWARE. WHEN I BUY SOFTWARE I LOOK AT IT AND GO IF I AGREE TO IT I GET IT AND IF I DON'T AGREE TO IT I DON'T GET IT. THEN I READ EVERYTHING IN THERE. ALL RIGHT. E-SIGNATURES. THIS IS BACK TO THE IDEA THAT THERE HAS BEEN SOME LAWS THAT SAY PRETTY MUCH WE WILL GIVE FULL FORCE AND EFFECT TO ELECTRONIC CONTRACTS AND SIGNATURES. IF YOU HAVE SOME SYSTEM FOR NOTARIZING OR PROVIDING ENCRYPTION KEYS OR SOME WAY OF IDENTIFYING THE PERSON AS THE PERSON GOOD ENOUGH. WE WILL TAKE AN E-SIGNATURE AS WELL AS WE WILL TAKE A PHYSICAL SIGNATURE. THEN UETA. THE PURPOSE TO UETA IS NOT TO CREATE THE SEPARATE CATEGORY OF E-CONTRACTS TO TREAT IT DIFFERENT THAN ANYTHING ELSE, BUT INSTEAD TO GIVE FULL FORCE AND EFFECT TO ELECTRONIC RECORDS AND ELECTRONIC SIGNATURES, TO REMOVE BARRIERS THAT ARE IN PLACE IN ELECTRONIC COMMERCE.USED TO BE PEOPLE WOULD SAY WON'T ACCEPT IT, IT IS DIGITAL,OR WON'T ACCEPT IT, IT IS NOT AN ACTUAL SIGNATURE. NOW IT IS PRETTY COMMON PLACE TO HAVE CONTRACTS DONE ONLINE. THIS IS KIND OF REVIEWING THE FACT THERE IS MULTIPLE LAW THAT RELATES TO THAT. CONSIDERATION. WE ALREADY MENTIONED CONSIDERATION IS ABOUT EXCHANGING SOMETHING OF VALUE,SOMETHING THAT IS BARGAINED FOR. SO YOU HAVE TO HAVE BOTH THOSE ELEMENTS. LEGALLY SUFFICIENT VALUE BARGAINED FOR EXCHANGE. BUT THE NEW THING THIS SLIDE ADDS IS COURTS USUALLY DON'T GET INVOLVED IN IF IT IS ENOUGH OR NOT. SO LET'S SAY YOU PAY TOO MUCH FOR YOUR CAR. YOU GO BACK TO THE DEALER AND SAY I THINK I PAID TOO MUCH. WHAT WILL THEY SAY? OH, WELL. THAT MEANS WE MADE MORE MONEY OFF OF YOU. THE COURTS AREN'T GOING TO SAY YOU COULD HAVE GOT IT BETTER SOMEWHERE ELSE SO WE WILL GIVE YOU THE DIFFERENCE. THEY DON'T GET INVOLVED TOO MUCH IN ADEQUACY CONSIDERATION, UNLESS IT IS TOTALLY ONE SIDED AND THE COURT DOESN'T WANT TO ENFORCE IT. BUT TYPICALLY THEY WON'T GET INVOLVED. SO SITUATIONS THAT LACK CONSIDERATION. IT SOUNDS LIKE CONSIDERATION, IT LOOKS LIKE CONSIDERATION, BUT IT IS NOT REALLY. LET'S SAY I CONTRACT TO HAVE MY HOME BUILT AND THE BUILDER COMES TO ME AND SAYS I NEED $10,000 MORE FROM YOU. I SAY FOR WHAT? HE SAYS JUST BECAUSE I NEED MORE MONEY. HE ALREADY HAS A PRE-EXISTING DUTY TO DO IT. WE HAVE ALREADY CONTRACTED FOR IT. HE CAN'T CHARGE ME MORE TO DO THE SAME THING. SO THAT WOULD BE UNSUPPORTED BY CONSIDERATION. THAT COULD COME UP. THAT HAPPENED WITH MY BUILDER. MY BUILDER SAID THE PRICE OF TRUSSES HAS TRIPLED. YOU HAVE ASKED FOR TRUSSES A CERTAIN WAY, AND HE PULLS UP THINGS THAT HAPPENED DOWN SOUTH AND THE AVAILABILITY OF WOOD, THEY HAVE JACKED UP THE PRICES OF TRUSSES. AND I SAID BUMMER. I WASN'T GOING TO AGREE TO GIVE HIM -- IF HE HAD SAVED MONEY, DO YOU THINK HE WOULD HAVE GIVEN ME THE DIFFERENCE? NO. THAT IS A NORMAL RISK ASSOCIATED WITH DOING THAT KIND OF STUFF. I AM SURE HE DID OKAY ON BUILDING MY HOUSE. PAST CONSIDERATION. THINGS THAT HAVE ALREADY TAKEN PLACE IN THE PAST. LET'S SAY I DID PAY SOMEBODY AND THEY COME BACK AND ASK FOR THE SAME THING. NOT GOING TO WORK. WHAT IF MY NEIGHBOR WHO IS A POLICE OFFICER COMES TO ME AND SAYS PAY ME A THOUSAND DOLLARS AND I WILL GUARD YOUR HOUSE. THAT IS A PRE-EXISTING DUTY, RIGHT? HE ALREADY HAS A DUTY. ACTUALLY, HE DOESN'T, HE IS IN A DIFFERENT COUNTY. LET'S SAY HE DID. OR AND ILLUSORY PROMISE.IT SOUNDS LIKE A PROMISE BUT IT IS NOT REALLY. I PROMISE TO BUY YOUR PROPERTY IF I WANT TO. I USE THE WORD PROMISE, BUT IT IS STILL NOT ENOUGH. THEN SETTLEMENT OF CLAIMS AND ACCORD AND SATISFACTION. I COULD SAY -- LET'S SAY I OWE $10,000 ON MY CREDIT CARD. I CAN'T PAY IT. I CONTACT MY CREDIT CARD COMPANY AND SAY I WILL GIVE YOU $5,000 RIGHT NOW. THEY HAVE SOME CHOICES. THEY CAN SAY WE WILL TAKE IT BECAUSE WE DON'T THINK WE WILL GET MORE. THAT WOULD BE DIFFERENT WHAT I ORIGINALLY AGREED TO PAY THEM. WHAT IF I SEND THEM $5,000 WHAT WILL THEY DO? THEY WILL SAY THANK YOU, HERE IS THE BILL FOR THE REST, YOU OWE US FIVE MORE. SO AN ACCORD IS WOULD YOU TAKE SOMETHING DIFFERENT THAN WHAT WE AGREED, AND THE SATISFACTION IS AHH, YES, WE WILL. OR MAYBE IT IS A RELEASE.MAYBE YOU COULD BRING A LEGAL CLAIM OR HAVE SOME TYPE OF LEGAL ACTION YOU COULD BRING BUT DECIDE TO GIVE UP THAT RIGHT. THEN THE LAST ONE I THINK IS KIND OF A CHALLENGE AND ONE YOU WILL NEED FOR THE GROUP ACTIVITY IS CALLED PROMISSORY ESTOPPEL. SO, PROMISSORY ESTOPPEL MEANS YOU ARE STOPPED FROM GETTING OUT OF YOUR PROMISE. YOU MAKE A PROMISE TO SOMEONE WHEN YOU DIDN'T HAVE TO, BUT AS A RESULT OF THAT PROMISE THEY RELY ON IT TO THEIR OWN DETRIMENT. THEN IT IS UNFAIR FOR YOU TO BACK OUT. LET'S SAY I PROMISE MY SON THE LAND NEXT DOOR TO OUR HOUSE. DID I HAVE TO DO THAT? NO. I JUST SAID I AM GOING TO GIVE YOU THAT LAND. THEN HE DIGS A HOLE AND STARTS BUILDING ON IT, AND I AM LIKE YOU DIDN'T GIVE ME CONSIDERATION FOR IT. I WAS ONLY GIFTING IT FOR YOU. I TAKE IT BACK. THIS LAW WOULD SAY TOO LATE. IT IS UNFAIR FOR YOU TO BACK OUT OF YOUR PROMISE BECAUSE HE HAD DONE WHAT? HE HAS RELIED ON IT. HE HAS ALREADY ACTED AND CAUSED SOME DETRIMENT IN TERMS OF INVESTING MONEY INTO THE PROPERTY. SO YOU NEED THOSE THINGS LISTED DOWN THERE. THERE IS A CLEAR AND DEFINITE PROMISE. WHEN THE PROMISE IS MADE THEY EXPECT THE OTHER PARTY WILL RELY ON IT. THE OTHER PARTY DOES TO THEIR DETRIMENT. AND THE COURT'S GOING TO MAKE THE PARTY FOLLOW THROUGH WITH A PROMISE TO PREVENT INJUSTICE OR UNJUST ENRICHMENT. DOES THAT MAKE SENSE?