contract
agreement upon sufficient consideration to do or not to do a particular thing.
promise
element common to all contracts. A manifestation of the intention to act or refrain from acting a specified manner. promise creates intent. A legal relationship that consistes of rights and duties of agreeing parties
express contract
if there is written or oral expression of intent by parties to enter into a legally binding agreement
implied contract
arises from the actions rather than the expressions of the parties. Court infers that a contract exists based on actions. Ex. At check out counter at grocery store.
freedom of contract
there are responsibilities to those who create binding relationships . the law imposes some limitations on choices parties can make.
Contract Law
Common law- judge made law. Primarily state common law. Each state differs. there is uniformity about general contract principles that run throughout most state's laws.
Lex mercatoria (law merchant)-
)- English courts. Commercial rules that marchants devised over centuries of doing business across national boundaries. Roman law of contracts.
Uniform Commerical Code
all states have adopted it except louisanna . we don't use code law but many other counties do.
offer
a promise to do something or to refrain from doing some specific thing. Person making the offer is the offeror and the offeree is the party to whom the offer is made.
To be An effective Offer .....
i. Must be clear intent by the offeror to become contractually bound (manifestation of intent)
ii. Basic terms and conditions of the offer must be clear and certain (definite)
iii. Offer must be properly communicated (communication)
Manifestation of intent-
must have intent. Prelmimary negotiations are not offers, haggling a car salesman is not an offer but negotiation. Making things for sale does not mean its an offer. You can put something for sale on auction but if you don't like the highest offer then yo
definite
terms of an offer must be sufficient so that each party's promises are reasonably certain. Offer w/ unclear major terms, or missing important terms cannot be basis for a contract. Some terms are presumed - ex. That computer will be packed property if orde
communication
acceptance requires knowledge of the offer by the offeree. Ex. If a dog is returned to owner and then the returner learns of a reward after returning it then communication failed and a property acceptance did not take place.
Termination of the Offer
can occur by the action of the parties or by the operation of law. can occur through revocation or rejection
Revocation
withdrawing by the offeror. Must be communicated before acceptance.
Rejection
rejecting offer by offeree. OR counter offer. Original offer is terminated by counteroffer.
Also, time
Offer can be rejected through lapse of time if no one makes moves. If time constraint is not outlined in offer then after a reasonable length of time after offer is made it will terminate
Option contract
a binding promise to keep an offer opening for a specific period of time. Ex. Paying $100 to keep have an option to buy a house for $200,000 anytime in the next 5 days.
termination by operation of law
when a court decision or legislation makes an offer illegal. Also, an offer is terminated if subjecet matter is destroyed (I try to sell you my car but then I crash it). OR if mental or physical incapacity or death of the offeror or offeree is present the
ELEMENTS OF A CONTRACT
1. An Agreement Through
--offer
--acceptance
2. Consideration
3. Contractual Capacity
4. Legality
5. Genuine Consent
6. Writing
Acceptance
an offeree's expression of assent or agreement to the terms in an offer.
For an acceptance to be effective it must be:
i. Unconditional
ii. Unequivocal
iii. Properly legally communicated
Unconditional
- acceptance must be mirror image of offer. Any acceptance that adds conditions to the original offer is a counteroffer
Parker V. Glosson
court dismissed the suit. Appeals court affirmed. Bc wife did not sign contract so therefore it was never a contract, it was incomplete.
Unequivocal
- must be definite. Say I offer to sell you my car for 10,000 and you answer with "I see" or "what a good idea" - that is NOT an acceptance. "I accept" is clear but also any words or conduct that express offeree's intent to accept is effective. Silence is
Properly Legally Communicated
3 important factors
i. Method of acceptance- accept based on how the offer was made to you, unless it is specified which form of communication you should use
ii. Timeliness of acceptance
iii. Performance as acceptance (if needed)
Bilateral Contracts
when there is an exchange of promises. A promise in exchange for a promise.
Unilateral Contracts
acceptance by performance. You say I will pay you $30 to mow your lawn and you say nothing but the next day you mow the law.
Consideration
something of value or something bargained for in exchange for a promise-. Both parties to a contract get something and give up something. The element of a contract that keeps it from being a gift.
Legal Detriment
an act or a promise to act or the refraiing from an action such as givng up a legal right. Ex. You get hit by a bus and accept an out of court settlement of $20,000 you give up the right to sue for damages.
Caley v. Culstream Aerospace corp
culfstream adopted dispute resolution policy and said that by continuiting to work for them that you would accept this as their new policy. Caley sued saying that's not an offer. They argue that theres no consideration bc got nothing in return. But the co
2. Enforceable Promises without Consideration
consideration is not required by the courts for the promise to be enforceable in some situations. Called Promissory Estoppel.
Promissory Estoppel
provides justice for promisee's whose reasonable realiance on good faith of promisor's promise. The promisor is prevented from denying a promise. Example about bert asks joe to paint a scene for his movie and he will give him profits from the movie but in
Hinson v. N&W Construction
Hinson promised to do plubming work for N&W for 92000 and so when it came time N&W contacted him but then he refused to do it so they had to use someone else who was 47000 more. N&W sued. Courts held that Hinson has to pay 47000 to N&W.
Contractual Capacity
legal ability to create a contract. A party's abitlity to perform legally valid acts, aquire legal rights, and incure legal liabilities. Minors, intoxicated persons, and mentally disabled have limited capacity to contract. Party claiming incapactity has t
Void Contract
a contract that does not exist at law and cannot be enforced. It is also void if it concerns an illegal subject matter
Voidable Contract
when one party to the contract has the right to avoid a legal obligation ex. Contracts w/ minors or limited mental capacity. If someone is so stoned they cant remember they signed a contract then later he might have the right to have contract declared voi
Minors
under 18. Minors can enter into contract but contracts are voidable at the option of the minor. If minor has received benefits and contract is not fulfilled then restitution must be paid by minor for value of benefit received, even if the minor is not lia
Minors and contracts
i. Once a minor reaches legal age contracts can be ratified called a Ratification- may be epressed through words, writing or implied by conduct. But some may not be dissafirmed- marriage contracts, educational loans, insurance loans, enlistment contracts,
Legality
subject matter must be lawful. Contract will be unenforceable if its subject matter vilolates a state or federal statute, law, or is contrary to public policy.
Illegal aggrements
promises that vilate the law. Not recognized by courts. Courts may strike entire bargain as unenforceable or only part that concerns illegal subject matter
Usury
b. Some states have laws on interest rates that can be charged on loans and if it is charged above max.
Unenforcable contracts
contracts that were legal and enforceable when they were made but a change in the law makes them unenforceable.
Contrary to Public Policy
unenforceable bc it is contrary to public policy. Contract may not violate statues but may injure public welfare.
Exculpatory Agreements
releases one party from the consequences brought about by wrongful acts or negligence. = contracts written to escape liability.
Unconsionable contracts
if a contract is grossly unfair to an innocent party, courts will not enforce it. = unequal bargaining power by person in strong position.
Williams vs. Walker Thomas Furniture
store sold many items to a unsophisticated low income person and said under contract that unless every item was paid for they don't get to keep it. The guy didn't pay it all and the store repossessed. Courts said no that the contract was unconscionable.
Contracts in Restraint of trade
contracts that restrain trade or are unreasonably strict are considered contrary to public policy and are not enforced.
Covenant not to Compete
may be unenforceable if it does not meet certain guidelines. Seller agrees not to compete w/ the buyer. Except if lmited by time and territory
DCS Sanitation Management v. Castillo
somethinga bout the guy said he wouldn't work anywhere else when he left dcs but then he worked for a competitor. District court held for Castillo.
Reality of Consent
if a person enters into a contract w/ out knowning key information and the real nature of the transaction. w/ out knowledged there is no consent.
Mistake
unilateral mistake is when one party to a contract enteres into it w/ false information or accidently makes an error in a significant matter. Accidently listing a house at 20000 when its supposed to be 200000. Contract is usually avoided.
b. w/ out this e
Fraud/Misrepresentation
Person who agrees to a contract due to fraud, misrepresentation, duress, or undue influence has the right to disaffirm the contract b/c there was not genuine consent. Duress- when someone is forced (at gunpoint?).
Misrepresentation
can be intentional so it would be like fraud OR it can be negligence - made out of ignorance
Statutory Exceptions
- home solicitation statues allow contracs to be cancelled if the buyer entered into the contract under the pressure by a salesperson.
Statute of Frauds
evolved from An Act for the Prevention of Frauds and Perjuries. Purpose is to prevent parties from claiming that a contract existed when in fact it did not. To reduce such fraud, the statute requires that for certain contracts to be enforceable they must
These contracts must be in writing ......
a. Contracts for the sale of real property
b. Contracts that cannot be performed w/ in one year
c. Promises to pay the debt of another, including the debts of an estate
d. Promises made in consideration of marriage
Writing must include .....
writing must give the material terms of the contract and be signed at least by the defendant. Must include:
a. Name of parties
b. Consideration
c. Subject matter, etc
d. Invoices, emails, sales orders, checks, may satisfy this requirement.
Parol Evidence Rule
restricts the use of oral (parol) statements in a lawsuit when the evidence is contrary to the terms of a written contract. Negotiations usually come before a contract is made and therefore some things said in negotiating may not make it to the contract.
Substaintial performance
completeing most of the contract except a few things. performance is in some way deficient, through no willful act by the contractor, yet is so nearly equivalent that it would be unreasonable for the owner to deny the agreed upon payment. If a contractor
Material Breach
a breach serious enough to destroy the value of the contract and to give a basis for an action for breach of contract. damanges due to non breaching party.
executed contract
A contract that has been completely performed by both parties.
executory contract
A contract that has not as yet been fully performed. if partial delievery of products, buyer need not pay full contract price.