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Contract Law

Agreement supported by consideration between 2 or more persons with competent capacity for legal purpose


Sources of Contract Law

Article 2 of UCC (SALES)
Common LAW


Distinctions between UCC and Common Law

2 sources govern different types of contract subject matter:
UCC is codified as statutory form and common law is developed in judicial decisions
Common law requires more details and percision for formation, terms and damages
UCC requires less detail from parties to a contract and terms that apply if parties fail to agree on those terms.



article 2 applies to contracts that involve sale of goods--- tangible personal property
can have blended contracts--sale of goods and providing servies- have to look at primary purpose
Common law applies to service and real estate contracts-


Express Contract

contract formed wholly by oral or written words


Implied or implied in fact contract

formed at least in part based on conduct of parties or factual circumstances.

--doctors- not all costs are up front and clear


quasi contract or implied in law contract

imposed by courts or by law when some performance has gone forward, even though there is no express or implied contract. prevents unjust enrichment of one party by the other.


bilateral contract

both sides make a promise- offer to sell car in exchange for monthly payments


unilateral contract

one side makes promise in exchange for action or performance by the other
mow my yard and i'll pay $50 bucks


executed contract

fully performed contract by both parties


executory contract

not yet fully performed by involved parties


partially executed contract

performed in part. one side has performed


Valid contract

legally formed and meets necessary requirements for formation


void contract

lacks legal purpose or is in violation of law. cannot be enforced by courts bc enforcement would violate public policy


voidable contract

otherwise valid contract that can be set aside because one party has protection under the law and right by choice to be relieved of liability under contract.


unenforceable contract

cannot be enforced because of statutory or legal defence- still can be honored if both parties choose.


Requirements of a contract

1. offer
2. acceptance
3. consideration
4. no defenses


Requirements of a valid offer

1. Present intent- offer must be made with serious intent
---advertisements are not offers but an invitation to make an offer---unilateral offer
-$50 if you find my dog--this is valid contract
2. Definite terms-- must be definite enough to cover minimum formation for legal purposes
---common law require identification of parties, price time and subject matter
---UCC relaxed on requirements-subject matter identification only
3. Communication of offer- communicated to offeror and received by offeree


Termination of Offers

Revocation-an offer can be revoked at any time prior to acceptance
--effective when received so must be communicated.
--must be RECEIVED prior to acceptance by offeree

Revocation of irrevocable offers- option and merchant's firm offers

Rejection- offer is terminated at any time prior to acceptance by oferee saying no thanks,
--inquiry is not a rejection
---effective when received

Counteroffer- made at any time prior to acceptance is form of rejection. when changed the terms.
--can be considered new offer too



through lapse of time
through operation of law- death or insanity, destruction of subject matter or illegality of subject matter


Acceptance- bilateral

Language of acceptance
-common law and mirror image rule- any deviation is counted as a counteroffer for real property and services

UCC language-
-merchants and nonmerchants definite expression of acceptance that does not change any terms resuts in a contract
-for nonmerchants- if additional terms are added its still acceptance but without the additional terms
-for merchants if definite statement and additional terms
unless they are material, offer specificallly states or offeror rejects within a reasonable time.


Acceptance- unilateral

acceptance takes place upon completion of act required b offer. no notice is required unless required by law



required along with acceptance for formation of contract-


Preexisting duty and consideration

one that exists under valid contract or perhaps by law. enforceable obligation.
police officer cant get paid extra to arrest someone.


Exceptions to preexisting duty`

mutual recission and new contract
UCC modification for contracts for sale of goods- permitted to modify the contract even without additional consideration on both sides
unforeseen hardship-


Past Consideration-- unenforceable

Promise to pay for an act already completed is without consideration.


Exceptions for consideration requirement

estoppel- legal principle that bars a party from denying a certain fact owing to that party's previous conduct or denial.
promissory estoppel-induces another party to rely on promise and results in party materialy changing their position,


Statute of Limitations

4 years- UCC


Statute of Frauds

requires certain types of contracts to be in writing to be enforceable.
1. guaranty of debt contracts
2. contracts involving an interest in real property
3. contracts impossible to complete within a year
4. contracts for sale of GOODS over $500
5. promises of executors for personal liability of debts of estates


Contracts that promise to pay a debt of another

must be in writing
promisor to pay is not the original person who borrowed in the first place- think guaranteer of debt or collateral


Contracts involving real property

real property purchase contracts
LEASES of real property (more than one year)
real property mortgages
creation of any other real property interest
real estate broker contracts
-exception to writing contract- parties have behaved in a way and provided evidence beyond their own words that there was some kind of contract relationship between them... partial payment, buyer is in posession of land or buyer has made valuable improvements


Contracts that cannot be performed within a year

- any contract objectively impossible to perform within ON year from date of contract formation must be in wrting
- if it COULD be performed in less than a year, it doesn't have to be in writing.
date of acceptance to completed performance date


Contracts on sale of goods

UCC- contract of goods for MORE than $500 must be in writing
-exception between merchants if oral agreement is followed by written documentation and not rejected within 10 days after receipt.
-special order goods must be in writing


Parol Evidence

ambiguous terms- can be introduced only to clean up ambiguity. or obvious clerical error
incomplete contracts- cannot be admitted to fill in gaps of contract terms

fully integrated (non ambiguous, complete and without defenses) cannot be contridicted varied or altered by evidence of parties prior to negotiations, prior agreements, contemporaneous oral agreements.


Five defenses to formation

1. mistake
2. fraud
3. duress
4. undue influence
5. illegailty


types of capacity required for formation

1. must be of legal age 18
2. each party has to have metal capacity to enter into contract



express- minor notifies other party that the intend to honor the contract after reaching age of majority
implied- continues to perform on the contract


Requirement for mental capacity

1. mental incompetent persons- void-adjucated mentally inable voidable- not adjudicated mentally inable
2. intoxicated persons- can avoid any contract made while intoxicated


bilateral mistake

both parties are misstaken then contract cannot be enforced


unilateral mistake is enforceable unless

obvious math error
taking advantage


Fraud in the formation

can claim punitive damages


Undue influence

special relationship like pastor taking advantage of old lady



physical force or threats
threats to disclose private information
economic pressure (ruin biz or something )