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1
Q

Sources of Contract Law

A
  1. Common Law
  2. Uniform Commercial Code
2
Q

Common Law

A

we spend a lot of time in the common law. The majority of courts across the US use common law. “Black letter” rules.

3
Q

Uniform Commercial Code (UCC)

A

UCC, uniform laws are generally put together at the federal level even though they are state laws. A federal committee gets together and pulls the common rules from all of the states and uniform

4
Q

Uniform law is presented to state legislatures, the states can adopt…

A

all, part, or none of the law

5
Q

The Function of Contract Law

A
  1. Contracts create expectations as to how parties to agreements will conduct themselves in the future.
  2. If a party to a valid contract does not carry out a promise, a court will enforce the contract and provide some form of relief or remedy to the non-breaching party.
  3. Contract law provides stability and predictability and is the foundation upon which more specialized areas of the law are built.
6
Q

Breach of contract usually results in…

A

money damages

7
Q

Contracts

A

An agreement that is enforced by law between two or more parties who promise to perform or refrain from preforming some act now or in the future.

8
Q

Are all agreements enforceable by law?

A

No

9
Q

A breach of the promises leads to liability because…

A

the parties have duties to each other prescribed by the terms of the agreement.

10
Q

Objective theory of Contracts

A

“Standard on which to measure by.”

The apparent intention of a party to enter into a contract is determined by the objective, outward manifestation of his or her assent as it would be interpreted by a reasonable person.

11
Q

Objective theory of Contracts - Objective factors include:

A
  1. words (spoken and written)
  2. actions
  3. circumstances
12
Q

What are the 4 required elements of a contract?

A
  1. Agreement
  2. Consideration
  3. Contractual capacity
  4. Legality
13
Q

Agreement

A

the mutual assent and agreement of the parties must be evidenced by an offer and an acceptance.

14
Q

Consideration

A

legally sufficient and bargained-for consideration must be exchanged for contractual promises. “the price of the promises, what each party is receiving.”

15
Q

Contractual capacity

A

each party to a contract must be recognized as being legally competent to enter into contracts.

16
Q

Contractual capacity is usually…

A

presumed, the law if you have a contract then you had capacity

17
Q

If you want to argue that you didn’t have capacity…

A

You have the burden of proof

18
Q

Legality

A

the purpose and subject matter of the contract must not be contrary to law or public policy. To agree to commit a crime is illegal.

19
Q

What are the defenses to enforceability of a contract?

A
  1. Voluntary consent
  2. Form
20
Q

Voluntary consent

A

if voluntary consent is lacking…contract allegedly formed based on fraud, mistake, undue influence or duress

21
Q

Form

A

not all contracts have to be written, but some do have to be written in order to be enforced by the court of law. And they have to be signed by the party being sued. Really a procedural issue (could be statute of limitations)

22
Q

Bilateral v. Unilateral Contract

A

Focused on the nature of the promises themselves. Any time you have a contract there is an offeror and offeree.

23
Q

Who is in control of the contract?

A

The offeror - whether it is a bilateral or unilateral contract

24
Q

Bilateral Contract

A

Reciprocal promises are exchanged by the parties so that the promise of one party is exchanged for the promise of the other. “promise for a promise”

25
Q

“I’ll sell you my watch for $100” “Sure, I’ll buy your watch for $100”

A

This is a bilateral contract. There is no PERformace (actual exchange of watch for money), only just the formation of a contract.

26
Q

Unilateral Contract

A

One party makes a promise in exchange for the other party’s actually performing some act or refraining from performing some act. “promise for an act.”

27
Q

“After you build my fence, I’ll pay you $1000.”

A

SO to agree you have to build the fence. Saying “you will build the fence, yes, okay, I’ll come Saturday,” ISNT acceptance.

28
Q

What makes sense for unilateral contracts?

A

Lotteries and contests

29
Q

Suppose there is a $500 poster for a lost dog. This poster is located in your neighborhood. Bob is the owner of the dog and his address/phone number are on the poster.

What must you do to obtain the $500

A

Find the dog.

30
Q

Suppose there is a $500 poster for a lost dog. This poster is located in your neighborhood. Bob is the owner of the dog and his address/phone number are on the poster.

What happens if no one finds the dog and returns it to the owner?

A

No one gets the money.

31
Q

Suppose there is a $500 poster for a lost dog. This poster is located in your neighborhood. Bob is the owner of the dog and his address/phone number are on the poster.

Can Bob sue his neighbors when no one returns the dog (if no one performs the act)?

A

NO! This is a unilateral contract, there is no action of another party.

32
Q

I’m the offeree, Hailey the offeror. I show up to build the fence and I decided this is way too much work and I walk away. Can Hailey sue me?

A

No.

33
Q

Traditional view on revocation

A

offeror can revoke an offer at any time prior to completion of full performance.

34
Q

Modern view on revocation

A

offer becomes irrevocable once performance has been substantially undertaken (However, courts differ on what “substantially undertaken” means.)

What will be tested…not traditional view

35
Q

Formal Contracts

A

a special formality is prescribed for their creation or formation. “contract under seal”

36
Q

Informal Contracts

A

simple contracts, for which no special formality is required. (pretty much everything we do) – Informal doesn’t mean that it is not a complicated contract

37
Q

Formal v. Informal Contracts

A

Are there statutory requirements for the formation?

38
Q

Express Contract

A

The terms of the agreement are fully and explicitly stated in oral or written words.

39
Q

Implied Contract

A

The terms of the agreement are inferred from the conduct of the parties. Lack of words, but presence of circumstances.

40
Q

What are the 3 Requirements to establish an implied contract?

A
  1. Plaintiff furnished some good or service;
  2. Plaintive expected to be paid and defendant should have known that; AND
  3. the plaintiff had a chance to reject the goods or services but did not1
41
Q

What is the classic example of an implied contract?

A

Going to the doctor/urgent care

42
Q

You live in a house and under the contract you are required to mow the lawn. Someone who lives up the street is mowing your lawn, an hour later the lawnmower asks you for $35. Is there a contract?

A

YES, implied contract, you owe him $35

43
Q

Quasi-Contract

A

Done in the interest of fairness, to provide an equitable/ethical solution to the harsh contract law.

44
Q

Quasi-contracts usually involve…

A

avoiding the unjust enrichment of one party at the expense of another.

45
Q

Quasi-contracts are viewed as…

A

“implied in law” or fictional contracts that courts can impose on the parties “as if” the parties had entered into an actual contract.

46
Q

Limitation on the doctrine of quasi-contract:

A
  1. The person receiving the benefit is not liable in quasi-contract when the benefit was conferred unnecessarily or conferred because of misconduct or negligence.
  2. The doctrine is not applied if there is a contract (either express or implied). If a contract already exists then any unjust enrichment is handled in a breach of contract lawsuit. Only needed when there is an unfair result from the lack of an express or implied contract.
47
Q

A doctor is vacationing in Hawaii. He sees someone on the side of the road, he needs someone to save him. The doctor sends a bill for his services rendered. Is the doctor entitled to the money?

A

In many states, the doctor would be entitled to the money.

48
Q

Executed vs. Executory Contracts

A

where we are in the PERformance of an agreement

49
Q

Executed Contracts

A

those that have been completely performed by all parties. Fully performed

50
Q

Executory Contracts

A

those that have not been fully performed by one or more parties. Any point after the contract is formed and after the contract is fully performed.

51
Q

Enforceability

A

Valid, voidable, unenforceable, or void contracts

52
Q

Valid Contracts

A

all elements that are necessary to form a contract are present. Agreement, consideration, capacity, and legal purpose.

53
Q

Voidable Contracts

A

A valid contract exists but one or more of the parties has the option of avoiding his or her contractual obligation.
The party with the option can elect to void the contract or ratify it.

54
Q

Unenforceable Contracts

A

a valid contract that cannot be proven in the manner required by law. Form, voluntary concede.

55
Q

Void Contracts

A

Agreement has no legal effect and is not really a contract.
No legal obligation exists on the part of either party.

56
Q

The “Plain Meaning” Rule (written contracts)

A

When the words used in a writing are plain, clear, unequivocal, and unambiguous, their meaning will be determined from the face of the written document alone.

57
Q

Interpretation of Abiguous Terms (written contracts)

A
  1. The interpretation which results in a reasonable, effective, and legal contract is preferred over one which results in an unreasonable, ineffective, or illegal agreement.
  2. Courts may interpret the ambiguity against the drafting party. Courts may also consider extrinsic evidence.
  3. A writing will be interpreted as a whole; all writings that are part of the same transaction will be interpreted together; and words will not be taken out of the context in which the words are used. Addendums are included in the whole contract, and all of it is considered.
  4. A word will be given its ordinary, commonly accepted meaning, and a technical term will be given its technical meaning, unless the parties clearly intended something else.
  5. Specific terms will be given greater consideration than general language.
  6. Handwritten words prevail over typewritten words, and typewritten words prevail over preprinted words. Most recent changes are the handwritten words.
  7. When multiple meanings of language are possible, the language will be interpreted most strongly against the party who chose the words by drafting the agreement.
  8. The court will admit evidence of usage in trade, prior dealings, and course of performance.
  9. Standardized terms that were not negotiated are given less meaning than terms that were the subject of separate negotiation.
  10. Express Terms are usually given the most weight.
58
Q

What is extrinsic evidence?

A

ANYTHING not in that original writing that is relevant to the situation. Could be discussions, other documents, witness statements.

59
Q

Can courts consider extrinsic evidence when no ambiguity exists?

A

No.

60
Q

Everett McCleskey, a local business person, is a good friend of Al Miller, the owner of a local candy store. Every day on his lunch hour, McCleskey goes into Miller’s candy store and stays about 5 minutes. After looking at the candy and talking with Miller, McCleskey usually buys one or two candy pars. One afternoon, McCleskey goes into Miller’s candy shop, looks at the candy, and picks up a $1 candy bar. Seeing that Miller is very busy, he waves the candy bar at Miller without saying a word and walks out. Is there a contract?

A

Contract is formed.

Informal
Implied
Bilateral
Executory – to be executed, Miller has to pay for the candy bar