Business Law Ch 10

Definition of a Contract

contract as "an agreement, upon suffiecient consideration, to do or not to do a particular things.

Elements of a Contract

A contract fives parties confidence that bargained-for exchanges will be enforceable.

Offer and Acceptance

The offer is a promis to do something or to refrain from doing some specific thing. The agreement

Key elements of a contract

A. Offer and Acceptance: An agreement
B. Consideration
C. Contractual Capacity
D. Legality
E. Genuine Consent
Reference to the cow case must be in writing

Manifestation of Intent

To make an offer, the offeror must have the intent to be bound to the contract, and theat intent must be clearly expressed or manifested.

Definite Terms and Conditions

It has to be definite.

Communication of the Offer

can occur by the action of the parties or by the operation of law. The parties can terminate an offer by withdrawing it, rejecting it, or through lapse of time.

Termination by the Parties

Offerors can terminate most offers by withdrawing the offer before it has been accepted by the offeree. The withdrawal fo the offer by the offeror is a revocation.

Counter offer

example if Johnny Depp offers to buy Brad Pitt's computer for $500, and Pitt says that he will sell it for $600, a counteroffer has been made. The original offer by Depp is terminated by the counteroffer.

Termination by the Operation of Law

An offer can be terminated by law if the subject matter is destroyed. Suppose Sharika offers to sell Duff her car. If the car is wrecked the offer is terminated. If Sharika had offered to sell Duff a type of car rather than a particular car, rather than a

The Acceptance

is an offeree's expression of assent or agreement to the terms of an offer. To be effective, an acceptance must be unconditional, unequivocal, and properly communicated.

Bilateral Contract

A promise for a promise

Unilateral Contract

when there is acceptance by performance. Example I will pay you $30. to mow my lawn

Parker v. Glosson

offered to sell 36 acres that included a truck shop, warehouse, and office. Douglas Glosson and Parker agreed on terms and signed the agreement. Sandy Glosson did not sign and the deal fell through. Parker sued for breach of contract. He requested specifi


Acceptance must be unequivocal or definite. Suppose an offeree receives an offer to buy a car for $10k .If the offeree says, "I see" or "What a good idea," either expression fails the unequivocal test. There is no acceptance.

Must be unconditional

it must be the mirror image The common law rule is that a supposed acceptance that adds conditions to the original offer is a counteroffer. By changing the terms of the offer, or not following the rules set for acceptance, there is not unconditional accep

Must be properly communicated

3 factors: 1. the method of acceptance, 2. the timeliness of acceptance, and 3. in some cases, performance as acceptance


something of value or something bargained for in exchange for a promise, that is both parties to a contract get something and give up something. If consideration is absent neither party can enforce the promise or agreement.

Adequacy of Consideration

Courts support contracts that are bargained for, even if the consideration is not related to market value. The main concern for the courts is to to see that there was a trade of mutual promises and obligations as discussed in the Caley case.

Capacity to Contract

legal ability to create a contract. Minors, intoxicated persons, and the mentally disabled have limited capacity to contract.

Voidable Contract

is when one party to the contract has the right to avoid a legal obligation. For example when a minor or someone who is intoxicated enters into a contract that is not capable of such a contract


is a person under the legal age of 18. The general rule is that a minor may enter into contracts but the contracts are voidable at the option of the minor.

Unenforceable Contracts

Some contracts were legal and enforceable when they were made, but a change in the law makes them unenforceable.

Exculpatory Agreements

releases one party from the consequences brought about by wrongful acts or negligence.

Unconscionable Contracts

The courts usually don't concern themselves with the fairness of a bargain struck by contracting parties. but in some cases, if a contract is grossly unfair to an innocent party, the courts, in equity, will not enforce it.

Contracts in Restraint of Trade

Contracts that restrain trade or unreasonably restrict competition are considered contrary to public policy and are not enforced by the courts.

Covenant Not to Compete

TN will not uphold that. employee works for a company and decides he wants to go out on his own in the same type of business

Fraud and Misrepresentation

a person who agrees to a contract due to fraud, misrepresentation, duress, or undue influence has the right to disaffirm the contract because there was not genuine consent. Duress occurs when someone is forced to sign a contract, this is, the contract is

Contract is Writing and the Statute of Frauds

must be evidenced in writing to be enforced by a court in the event of a dispute.
1. contracts for the sale of real property land.
2. contracts that cannot be performed within one year.
3. promises to pay the debt of another, including the debts of an est

Sufficiency of the Writing

For a writing to be sufficient under the statute of Frauds, it must give the material terms of the contract and be signed by at least the defendant. The writing need not look like a contract emails, sales orders, and even checks may satisfy the sufficienc

Parole Evidence Rule

restricts the use of oral (parol) statements in a lawsuit, when the evidence is contrary to the terms of a written contract. Oral evidence cannot contradict, change, or add terms to a written contract. Parol evidence may be introduced when the written con

Performance Discharge, and Breach of Contracts

Eventually all contracts end. When the obligations have been performed, the contract is terminated or discharged.


Most contracts come to an end by the complete performance of the parties obligations under the contract.

Assignment and Delegation

a contract may be performed by a third party. a transfer of contract rights to another party is assignment; a transfer of contractual duties to a third party is a delegation.

Discharge by Breach

When a party to a contract does not perform as required, there is a breach of contract. If one party prevents or hinders the other party to a contract from performing her duties, then a breach occurs. The party injured by the breach may be entitled to a r

Material Breach

If the performance provided by a party is substantially less than the requirements of the contract, there is a material breach.

Discharge by Agreement of the Parties

Just as parties have the freedom to contract, they are also free to agree to modify or to terminate that is, discharge their obligations under the contract. discharge by agreement between the parties can take various forms. Among the most important are re


occurs when both parties agree that the contract should be terminated without performance. A rescission discharges the obligations of both parties under the contract.


all the parties agree to discharge one party from the contract and create a new contract with another party, who becomes responsible for the discharged party's performance. Example J.Lo and Beyonce

Accord and Satisfaction

Another way parties may agree to discharge their duties to one another under a contract is through accord and satisfaction. An accord is an agreement by the parties to offer and accept some performance different from that originally bargained for. Satisfa

Discharge by Impossibility, Impracticability, or Frustration

The doctrine of impossibility of performance is used to end the obligations to a contract when an event occurs that makes performance impossible. Impossibility occurs when a party who was to provide services dies or is incapacitated, a law is passed makin

impracticability or frustration

may be applied because of extreme or unreasonable difficulty, expense, injury or loss. The concept may be applied to wartime shortages, crop failures, or loss of needed supplies due to international embargos.


If circumstances are such that the legal remedy of monetary damages is inadequate, the court may grant the injured party an appropriate equitable remedy.

Compensatory Damages

or actual damages these damages, in contract cases, are to allow the party suffering the breach to recover costs incurred due to relying on the promise of the other party.

Expectancy damages

What about lost profits? These damages are to cover the profits you reasonably expected to make if the contract had been fulfilled.

Mitigation of Damages

When a breach of contract does occur, the injured party is required to take reasonable efforts mitigate, or lessen, the losses that may be incurred.

Specific Performance

is an order by the court requiring the party who created the wrong to perform the obligations promised in the contract. Contracts for the sale of a particular piece of real property land or of a unique good, such as a piece of art, are the types of contra


The remedy of restitution may be used to prevent unjust enrichment. That is, if one party has unjustly enriched himself received a benefit not paid for at the expense of another party, the court can order payment to be made or the goods involved to be ret