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In this presentation we will discuss written contracts. At the end of this we will be able to:
• List and describe contracts that must be in writing
• Discuss the kind of information that must be in writing
• Discussed the standard of construction rule and
• Discuss issues related to the e-commerce
As we've discussed in prior presentations there are four elements necessary in order to create a valid legal contract, those being mutual assent, consideration, capacity, and legality. Note that neither none of them none of them require the contract to be in writing. However, under the statute of frauds there are certain contracts that are required to be in writing. The statute of frauds is going to give us a list and give us some examples or explain out what type of contracts were going to need to have in writing.
Contracts that need to be in writing include contracts that cannot be completed within a year, contracts transferring real property rights, contracts for the sale of goods of $500, or more certain contracts entered into by executives or administrators, contracts in consideration of marriage, and contracts by one party to pay a debt of another party.
When considering contract law, it's important for us to note what constitutes a contract and what does not and when they need to be in writing so that we are better equipped both to know when we get into a contract and when we're not going into a contract. We also want to understand the legal circumstances for the need to have a contract in writing, but also keep in mind that the not needed a contract to be in writing does not mean it is not a best practice to put a contract in writing. A written contract helps to put the ideas in a format that everyone involved can understand and refer back to, a valuable tool whether required or not.
We generally need to put a contract in writing when transferring real property. Real property typically means the sale of land.
When we hear that something needs to be in writing due to a contract involving an executor or administrator that typically means a term where there is a deceased individual and we need to distribute the goods of the estate, meaning we're going to gather up all the estate, all the assets, minus the liabilities, of the deceased individual and then we're going to have to administer that in some way. The process of distribution the estate is typically done with an executor if the person who is deceased named an executor in a will. If the person who was deceased does not name an executor then the court may have to assign one, assign an administrator, which will basically take do the same type of task as the executor and take the estate, take the assets of the estate, and distribute them. Normally the executor or administrator are not going to be personally liable for the estate. They're going to be in charge as an agent of the estate.
When considering contracts are in consideration of marriage we're typically talking about contracts before marriage and the most common one would be a type of prenuptial agreement. The idea is that when we are get married most states would say that we have combined property in some way. That would be the normal condition of marriage. If we then have a prenuptial agreement then we're basically making a contract before the marriage takes place for the purpose of saying that the property distribution is going to be somewhat different than it would normally be under the normal marriage law and so that type of agreement would be something that would typically need to be in writing.
When constructing a written contract there are a few elements that we want to make sure that we have laid out in order to be sure that the written contract is complete and sufficient in to a certain degree. We want to have the terms. What are the terms of this agreement within the contract. We want to understand what the subject matter is within the contract and make sure that that's clearly identified. There's going to be some type of consideration and remember that the consideration is going to be mutual. There's got to be consideration on both sides, that being one of our four elements of a standard contract. Therefore, we want to know a statement of what the consideration is. We want a name the person's, identify the persons. that are going to be obligated under the contract. We need a signature we need a signature from the party sought to be bound to the agreement.
When interpreting contracts there are a few rules that we typically assume are going to be present that are going to be guidelines for the interpretation of the contract. One is going to be the standard construction rule and two is going to be the parol evidence rule.
The standard construction rule states that the first goal when we try to interpret the contract is to look for the principal goal, that principal objective that the contract was built in order to achieve. Once we know what that goal is. Once we have determined the principal goal and objective, we can then read the rest of the contract with that aim in mind, with that lens in looking at how to interpret the rest of the contract.
We also know that if there's any kind of slang or any language that is unclear that we're going to use the most everyday type of definition or the definition that is most common to the profession that were engaged in within the contract. Also if something's not stated that we need to assume in the contract then we would want to be able to assume whatever we would think would be the best practice within whatever profession the contract is related to. In other words, if the contract is missing some key term that needs to be in place within the contract in order for it to make sense, if those assumptions that are being involved in terms of processes that are not worded out explicitly, then we would have to say okay well what's the normal standard within this situation and within this industry and apply that.
The parol evidence rules states that if there are any oral agreements that are made prior to the contract they're not going to be included in the interpretation of the contract, the thought process there being that even if an oral contract can be binding, the assumption is that once everything was worked out and there is a written contract then it was all worked out and put into the written contract and therefore we shouldn't have we should be able to assume that there's no type of oral contract that would be made that was over and above that happened before the writing of the contract. If there were any agreement that was made in relation to the contract it should be in writing within the contract.
We also have a few rules that will typically apply and will be followed with the enforcement of the contract, including the best evidence rule and the equal dignity rule. As the name suggests the best evidence rule is looking for the best evidence of the contract and typically that means that we would like to, when evaluate in a contract, look at the original contract, not a copy of the contract. The reason for this rule to reduce the amount, or the ability. for a contract be tampered with.
The equal dignities rule has to do with assigning an agent. If an agent enters in a contract that typically needs be in writing, we would typically want to see then the agency agreement to be in writing as well. In other words, the agreement or the contract or agreement to have an agent acting in the interest of the principal to be in writing in order for that agent then to create a contract that needs to be in writing on behalf of the principal.
If we're talking about an agent that is entering a contract that does not necessarily be need to be in writing, it's an oral contract, then it may be more possible or plausible to have an agent representing the principal who does not have a written contract with the age into that agent agreement but possibly at just an oral agreement. Again, when we think about these terms we also want to the law from best practice. They're not the same thing. If we are to hire an agent to represent us and in any way, even if they're not representing us with written contracts and we don't necessarily need to have a written contract with the agent, it probable is a good idea to have a written contract with any agent who is representing us in just about any way so that we can define the terms.
We've talked about the minimum that would be required in order to have a contract that would be necessary to be a written contract but we also want to know that of course when we actually perform a contract and put together a written contract that we want to include anything that would be necessary in order to have best practices for that contract within whatever industry or whatever contract form that we are putting together. For example, best practices would want to have signatures rather than just one. It is possible to have a contract completed with just one signature but if only one signature is on the contract only the signer would be obligated of the contract. Also when we do sign the contract we want to typically be signing with the normal type of process that we would be using for our signature. However it is possible for any mark to be used, and it may even be possible to use a name that's not our normal as long as we are expecting or to the contract by the signature. However, best practices typically we would want two signatures on the contract and for both for all the parties involved to sign the contract and we would want that signature to be in the normal format of a signature for the people that typically would be used when we assign for obligations.
There are some contracts that would be in writing and also requires some type of witness and acknowledgement by another third party, the idea being that the witness would then be able to observe the process and make sure that the people signing actually have signed the document and have done so of their own free will. For example, if we had a certificate of title for a car or some type of motor vehicle or a deed to property real property such as land, these are areas where we typically have a notary republic that would be a required. The would act as third party. typically a neutral third party, or a trusted third party, that can then witness the signing process have an acknowledgement of the signing process. Then they can sign off that they were present through the process as well as give a seal of approval in order to give some added assurance and authority that the contract was indeed signed by the two individuals indicated on the contract and done so of their own free will.
When we move to the world of cyber commerce, we still have the same basic rules of contracts, the ideas of what makes up a contract but putting those rules together in practice can cause some problems. We know that some of the main type of online practices would be buying and selling online such as is done by companies like Amazon. We also have business models where the online company is really looking to put together a buyer and seller. try to find a way that people go on a platform and put together a buyer and seller.
There's going to be some added problems when we look at an online transaction. Ane is just to be able to identify who we're actually dealing with when we deal with an online transaction. Who is the person who is actually making the offer? Who is Amazon dealing with on the other side? it's difficult to have security on the identity, especially when we're not meeting face to face and we don't have the documentation that we would typically be using, or signature that we would use in a face-to-face transaction.
The second hurdle that needs to be overcome when we talk about e-commerce is going to be just the paper trail. It's possible when we do something in a computer that we don't say have that same paper trail. E-commerce is working around these problems in order to have better ways to identify individuals in a cyber world that have really come a long way and have done very well in terms of how can we make up a process so that we can see a trail, a digital trail of the process being handled so that we do have some type of audit trail as we go through the process of e-commerce.
When considering the problem of verification, verifying the individual that will be involved in the contract. For example, if we're Amazon how do we verify the other individual in a contract or if we're in any business how do we verify the contract information in an online transaction. One possible way is that we can actually make a contract to delay the completion of the contract until some verification has been made in some other way. Of course, that's not going to be sufficient for someone like Amazon because they're going to want to process the transactions as fast as possible and would like to have some way to process the transactions in real time
Another type of solution to verification would be to have some type of digital signature and the digital signature being some process that we can put together that would act like a signature. The Uniform Electronics Transaction Act defines a dignity digital signature as an electronic sound, symbol, or process attached to or logically associated with record or executed or adopted by a person with the intent to sign the record. If we can put together some type of digital signature that would act in the same format that would really standardize the process and make it much easier and faster. Notice we're always talking about the give-and-take, when we get into these types of issues, between speed versus risk. We want a faster process and e-signature make the process much faster so that we can have more trade but be can give up some security in term of verification which can lead to problems like identity theft.
When making online contract we want to make sure that there's a copy of the contract available, typically in a PDF format, that can then be downloaded and to have a physical copy.
Within the contract we would want to have certain conditions addressed including a refund policy, return policy, a limitation on the remedies that can be used by the parties, the payment procedures, provisions for relating to the offerees manner of acceptance, ability of cyber signatures to be within the contract, and dispute settlement instructions
The E-Sign act is going to be a very important act for e-commerce. The E-Sign Act is basically saying that if two parties have entered into agreement with an e contract that that contract is as legally binding as a normal paper contract.
The Uniform Electronic Transactions Act is another act that really is a pro for e-commerce in that it's focusing in on the similarities between a paper contract and an e-contract, focusing in on the idea the if we are entering into a contract in an e-format that that contract will be similarly binding as a paper contract. Tt's not adding any new guidelines that would be really required for an electronic contract, rather it be focusing in on those things that are going to be the same, the similarities between a paper contract and an e contract and focusing in on the binding of a contract.
The Uniform Computer Information Transaction Act (UCITA) focuses on the same type of principles as the E-Sign Act and the Uniform Electronic Transactions Act but it involves these concepts in terms of specific types of transactions including the sale or lease of computer software, computer databases interactive products, or multimedia products.
Th Fair and Accurate Credit Transactions Act the FACT Act is going to be an Act that's addresses the identity theft problems, specifically with regard to credit card. As transactions get more convenient in terms of speed, especially transactions online, cyber transactions, we often increase concerns related to identity theft. The Fair and Cccurate Credit Transaction Act is going to prohibit the merchant, the sellers, to use credit card receipts that we're going to receive once making a purchase that has more than just the last four digits of the credit card number. In other words, when we make a transaction and we get a receipt from the vendor the receipts not going to list our entire credit card on it the idea being is that it's going to be less easy for individuals to then get that receipt that we may put in the trash and use it and have the entire credit card number making the process of identity theft that much easier.
The Act requires the removal of the expiration date from the credit card receipts as well and that's another kind of fact that would be necessary when making ecommerce transactions, or any type of transaction using the credit card. Removing this information from the receipt can make theft identity theft more difficult.