*Offer and Acceptance. Central Properties, Inc., entered into a contract with Robinson and Westside (Westside), a real estate development company to purchase sixty acres of land. The contract included a "right of first refusal" to purchase the water and sewage system on the remaining property of Westside. (This means Westside must offer to sell water and sewage system to Central first, and only when Central refuses to buy, then Westside may sell it to other parties.) Westside wanted to sell the sewage system to Central and over the course of three months exchanged letters with Central asking whether it wished to exercise its "right." Central Properties never affirmatively accepted in any of its responses but requested different terms, price, and so on. Central now wishes to hold Westside to a contract for the system. Westside states that no contract was formed. Discuss who is right.

The following list briefly describes the four requirements that must be met for a valid contract to exist. If any of these elements is lacking, no contract will have been formed. (Each item will be explained more fully in subsequent chapters.) 1. Agreement. An agreement to form a contract includes an offer and an acceptance. One party must offer to enter into a legal agreement, and another party must accept the terms of the offer. 2. Consideration. Any promises made by the parties must be supported by legally sufficient and bargained-for consideration (something of value received or promised to convince a person to make a deal). 3. Contractual capacity. Both parties entering into the contract must have the contractual capacity to do so. The law must recognize them as possessing characteristics that qualify them as competent parties. 4. Legality. The contract's purpose must be to accomplish some goal that is legal and not against public policy. An agreement to form a contract can modify the terms of a previous contract. When a dispute concerns whether this has occurred, the offer and acceptance of both agreements can be reviewed to determine their effect. If the terms are ambiguous, evidence outside the expression of an agreement can be considered to determine what the parties intended at the time. Of course, as in every case involving a contract, the parties' subjective beliefs with respect to the terms are irrelevant, particularly in the absence of any evidence to support those beliefs. In the following case, the court applied the objective theory of contracts to determine the intent of parties who had agreed to a promissory note for the repayment of a student loan.10-3c. Contract Enforceability A valid contract has the four elements necessary to entitle at least one of the parties to enforce it in court. Those elements, as mentioned earlier, consist of 1. an agreement (offer and acceptance 2. supported by legally sufficient consideration, 3. made by parties who have the legal capacity to enter into the contract, 4. for a legal purpose. As you can see in Exhibit 10-2, valid contracts may be enforceable, voidable, or unenforceable. Additionally, a contract may be referred to as a void contract. We look next at the meaning of the terms voidable, unenforceable, and void in relation to contract enforceability.Av9id_a_ble____co_ntra_ct is a valid contract but one that can be avoided at the option of one or both of the parties. The party having the option can elect either to avoid any duty to perform or to ratify (make valid) the contract. If the contract is avoided, both parties are released from it. If it is ratied, both parties must fully perform their respective legal obligations. For instance, contracts made by minors generally are voidable at the option of the minor (with certain exceptions). Contracts made by incompetent persons and intoxicated persons may also be voidable. Additionally, contracts entered into under fraudulent conditions are voidable at the option of the defrauded party. Contracts entered into under legally dened duress or undue inuence are also voidable. Unenforceable Contracts An unenforceable contract is one that cannot be enforced because of certain legal defenses against it. It is not unenforceable because a party failed to satisfy a legal requirement of the contract. Rather, it is a valid contract rendered unenforceable by some statute or law. For instance, some contracts must be in writing. If they are not, they will not be enforceable except in certain exceptional circumstances. Void Contracts Avoid contract is no contract at all. The terms void and contract are contradictory. None of the parties has any legal obligations if a contract is void. A contract can be void because one of the parties was previously determined by a court to be mentally incompetent, for instance, or because the purpose of the contract was illegal