CONTRACTS: THE FUNDAMENTAL BUILDING BLOCKS OF COMMERCE--MEETING OF THE MINDS & CONSIDERATION, by Henry J. Fasthoff, IV

Houston Business Show legal commentator Hank Fasthoff, of Stumpf Craddock Massey & Farrimond, provides weekly information on our show about business law issues. He can be reached at 713.871.0919.

Perhaps the most fundamental concept in business and commerce is the contract, a legally binding relationship between two or more parties that requires each side to the contract to render something of value to the other party. In general, contracts can be either verbal or written. But, some contracts are required by law to be in writing, such as real estate contracts, contracts that cannot be performed within one year, some leases, copyright transfers, and various other contracts that exceed the scope of this article.

Elements of a Contract

The elements of a contract are (1) an offer; (2) acceptance of the offer in strict compliance with the terms of the offer; (3) a meeting of the minds with respect to the subject matter and essential terms; (4) consideration, e.g., something of value; and (5) communication of each party’s consent to the agreement.

Meeting of the Minds

The key question of whether a binding contract was entered into depends on the intention of the parties. If, at the time of contracting, the parties intended to perform the promises they made in the contract, there was a meeting of the minds. What would a court look at to determine whether there was a meeting of the minds? It would look within the “four corners” of the contract document. In other words, the court would look at the wording of the document itself to ascertain the parties’ intentions. The parties may also testify regarding their intentions as expressed in the contract, but they cannot use extemporaneous documents or information to explain their intentions. For example, a party to a contract would not be able to escape legal liability under the contract by saying that the other party made certain promises not contained within the contract.

Consideration

“Consideration” is a legal term of art that roughly translates to “something of value.” Consideration frequently includes money, but it could also include the promise not to exercise a right, or to release a right (such as promising not to sue and releasing rights to sue in exchange for money); the assumption of a new legal responsibility; and numerous other forms.

HOUSTON BUSINESS BRIEFS

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15th Annual Entrepreneurial Workshop from the Services Cooperative Association. Houstonians are looking forward to the 15th Annual Entrepreneurial Workshop from the Services Cooperative Association, a major business event that will help entrepreneurs get a handle of the current business environment and will help people understand the forces that are driving Houston businesses. Several of Houston’s leading business and city leaders have been invited to speak at the event. Kevin Price, host of the Houston Business Show and Editor of the Houston Business Review will be speaking at the breakfast on the topic of the “Houston Business Climate.” In anticipation of the event, Kevin Price said “I’m very optimistic about Houston and its economy and I look forward to bring information to this audience to spur people on to pursue the American Dream in this great city.” The Services Cooperative Association web site says that “more than 42,200 companies have attended SCA Business Building Breakfast Meetings, more than 28,000 referrals for new business items have been generated, multiple SCA Chapters have operated throughout Houston and the cooperative has received national and international acclaim for its accomplishments in economic development and entrepreneurship education.”

Local Housing Market Shows No Signs of Slowing. Mike Inselmann, President of Metrostudy, a Houston-based real estate firm, told an audience at the Greater Houston Builder’s Association forecast luncheon that the Houston housing market is in a position to continue to expand in the next several years. Of great concern of those industry is supply out weighing demand for houses. Inselmann assured the audience that such wasn’t the case and that there is a healthy balance between both demand and supply.

The concern over the eventual rise of interest rates is being buffered by the economic recover and job growth. The recovery will produce higher incomes which will lead to people upgrading the homes they are in, while long term job stability will lead to new home buyers. Houston area homes have enjoyed a 3.8% increase in value each year. This will make many see a home as a solid investment. New construction continues at an incredible pace with 40,000 new single-family homes going under construction in Houston over the past year. Reports like those by Inselmann should only further fuel the enthusiasm for new home construction.

Magnum Staffing Named 5th Largest Temp Firm in Houston. Magnum Staffing recently was named 5th largest temporary placement firm in Houston by the Houston Business Journal, moving up three spots from its “8th largest” ranking in 2003. This prestigious list names only top-grossing national and independent businesses operated in Houston...

Visit the Media Room to read the full release.

Cashflow Houston Helps People Pursue the American Dream. CashflowHouston was founded in April 2003 and is based on the principles taught by Robert Kiyosaki, author of Rich Dad Poor Dad. Mr. Kiyosaki has been a guest on the Houston Business Show several times and is considered an extremely influential author. The book has dominated best seller lists for several years. The group has grown from a handful of people to more than 170 members. The moderators of the group are Jake Morvant and Israel Silva, but there are several facilitators (board holders) that hold Cashflow 101 or 202 games. Mr. Silva states that the games depend on these facilitators and “without them the group would not be the rich resource that it has become.” Their mission statement is “to create a forum to play Cashflow 101 and 202 that empowers our members with the essential financial education to escape the ‘Rat Race’ by applying the Cashflow lessons, networking with other like-minded people, and by exchanging ideas and services about business, real estate, stocks and planning for success.”

CashflowHouston meets several times a month to play Cashflow 101 and 202, which is the game created by Robert Kiyosaki to teach the principles of becoming rich. Although Cashflow 101 and 202 can be very entertaining, the greatest benefits of playing the game are the people you meet, the education you gain, and vision you create for yourself.

The CashflowHouston Club has a Yahoo! Groups site that contains the schedule for the games to play for the month. In addition to the games played, CashflowHouston is a great source for exchange of information, such as real estate calculators, goal planning worksheets, electronic books, business planning files, and much more. The CashflowHouston Group also has a Success Planning Session that goes over goal setting, planning, and encouragement to reach your goals.

CashflowHouston and its members have created a forum for exchange, support, encouragement, and is a guide to finding an exit to the Rat Race. The Rat Race is generally defined as the perpetual process of working to earn money and spending it on your needs and desire for “doodads.” The key to getting out of the Rat Race is the investment of your earned money into assets that produce more income. These concepts and ideas are lessons that have to be absorbed through repetition before the exit to the Rat Race becomes a reality. CashflowHouston is a great group that helps you in the entire process of learning, planning, and achieving your goals and vision.

Check out the website for the CashflowHouston Yahoo! Group. Approval is required to join the group to deter spam and unwanted advertisements. However, once approved you are free to post your messages, add your record of attendance to the next game, and download files from the files library. One lesson you will quickly learn is that the path to getting out of the Rat Race starts with your decision to take action and control of your life. The games were designed for the purpose of reaching that goal.

Clear Lake Chamber of Commerce Monthly Luncheon. The Clear Lake Chamber of Commerce is one of the Houston area's most active business organizations. It has one of the city’s largest chamber memberships and has a very active membership. Recently, U.S. Congressman Tom DeLay spoke about the impact of Washington on local business, and on June 30th Kevin Price will be speaking at their monthly luncheon, which will be held at the Lakewood Yacht Club located at 2425 NASA Road 1.

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ON FUTURE SHOWS AND NEWSLETTERS

Coming up on future shows and in future newsletters:

All Star Game’s Economic Influence. There is a lot of excitement about Major League Baseball's 2004 All Star Game that is coming to the Bayou City. Sports fans are thrilled and store owners are salivating. The question is, what kind of impact will it have on the city? That will be the focus of an upcoming show.

More Reasons to Rent HoustonBusiness.com™ Billboards. Business leaders have been enjoying the value of our billboards for years, but with cross-promotion through HoustonBusiness.com’s™ partners, these billboards are a better value now than ever before. We are offering special promotions for businesses that rent multiple days of their boards. Future articles and shows will discuss this.

Trade Deficits: Indicator of Poverty or Prosperity. Most people tend to believe that trade deficits mean that a country is in trouble. They conclude that since the country is importing more than it is exporting, it must be in serious trouble. In an upcoming program we will examine what kind of economic indications trade deficits reflect.

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