COR - Contractual Relationship (Module Overview)

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Contractual Relationship

Introduction

As people go through life, they most likely will enter into some sort of contract, or more than likely into numerous contracts. When an individual purchases a car, generally he or she will finance the car which requires a contract between the buyer and the seller as well as with the finance company. The same holds true in the purchase of a home. It is important in many aspects of our lives as well as in business that we understand the elements of a contract and the essential provisions necessary to create an enforceable contract.

In this module you will be introduced to the understanding of contractual relationships. We will look at the following:

  • Elements of a contract
  • The types of contracts
  • Various characteristics of a contract
  • What constitutes a breach of contract
  • Remedies for and defenses to breach of contract
  • Types of warranties

Key Terms

  1. Contract – any agreement enforceable by law
  2. Statute of Frauds – the law that requires certain types of contracts to be in writing
  3. Offer – a proposal by one party to another intended to create a legally binding agreement
  4. Acceptance – a final and unqualified expression of consent to terms of an offer
  5. Consideration – something of value promised in exchange for a specified action or nonaction
  6. Agreement – mutuality; the parties of a contract understand and agree to the terms of the contract
  7. Capacity – legal ability to enter a contract
  8. Legality – contract actions must be legal; cannot enter into contracts to commit illegal acts
  9. Implied contract – the conduct of the parties indicates that they consented to be bound
  10. Express contract – promises are communicated by language, either oral or written
  11. Unilateral contract – a person accepts an offer by performing a requested act
  12. Bilateral contract – a person accepts an offer by promising to do the requested act; contains two promises
  13. Breach of contract – a failure, without legal excuse, to perform any promise that forms all or part of a contract
  14. Express warranty – a warranty that is clearly stated or expressed, either verbally or in writing
  15. Implied warranty – automatically covers most consumer goods valued over a certain amount; unspoken and unwritten promises made by a seller to a buyer that the product being sold works
  16. Implied warranty of merchantability – the promise that the product sold is in good working order and will do what it is supposed to do
  17. Implied warranty of fitness for a particular purpose – the promise that the seller’s advice on how to use the product will be correct; is made when a seller selects goods for a particular purpose for the consumer

Module Lessons Preview

In this module, we will study the following topics:

Elements of an Enforceable Contract
What makes a contract actually enforceable? In this lesson, we will look at the different elements of a contract that make it enforceable by law. As you move into the lesson, take a moment to consider what you think might be included in those elements.

Characteristics of a Contract
There are different types of contracts and there are differing characteristics of contracts. In this lesson, we will identify those characteristics.

Breach of Contract
If a contract is enforceable, it can be breached. But in what ways can a contract be breached? What does it mean if it is breached? What are some remedies and defenses to breach of contract? In this lesson, we will answer these questions.

Types of Warranties
Included in many contractual relationships are warranties. There are many different types of warranties and complexities within the contractual relationship. In this lesson, we will look at different types of warranties!

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