VALID CONTRACTIntroduction to Business &

Marketing

Contract Contract: “legally enforceable agreement

between two or more parties.”

Contracts can be: Written Verbal Handshake

Four Elements Of A Valid Contract Four Elements: 1. Agreement – initial step in forming a contract

2. Consideration – something of value exchanged by each party

3. Capacity- having the legal and mental ability to enter into a binding contract

4. Legality – subject matter of the contract must not be against the law

Four Elements

Written v. Unwritten Contract

Written Contract: Formal, easier to use as evidence Clearly highlights guidelines, conditions, and

infractions of contract Must be signed by all parties to become valid

Unwritten Contract: Informal, becomes “my word v. your word” Conditions are vague; speculation Only becomes valid through recording or video

evidence

Examples Of Contracts Lease – Property borrowed in exchange for money.

Payments made monthly – failure to pay = fines & loss of property.

Credit Card – Agreement between you & the credit card company. Minimum payment will be noted on bill.

Employment Agreement – Agreement between employer & employee. Include salary, hours, dress code, and infractions resulting in disciplinary actions.

Purchase Agreement (or receipt) – Agreement between company & customer. Proof of a purchase and return policy.

Sample Lease Agreement

Sample Credit Card Statement

Sample Employment Agreement

Sample Purchase Agreement

Violations of Contracts Lawsuits

Eviction

Fines or enforcement of payment

Removal from company or workplace

Jail time

Scenarios Nike Employment Agreement states that employees must wear

Nike apparel at all times. However, Eric shows up wearing Adidas shoes. What could happen?

Part of the Employment Agreement states that all teachers must be at work by 8:45am. However, Mr. T showed up at 9:08am this entire week. What could happen to him?

The Wright family signed an apartment Lease that requires $1800 rent due on the 5th every month. Mr. Wright has been late paying his rent for the past 2 months. If he is late for the 3rd month, what could happen?

Deena received a Credit Card Statement showing a $50 payment due by April 30th. If it is not paid by then, what is the punishment?

Class Activity Complete the Matching Activity

Answer the following questions:1. What is considered a valid contract?2. What are the requirements of a valid

contract?3. How can a valid contract be enforced?