Contract | Business Law

CONTRACT

promissory set of promises for law to enforce, provide a remedy for its breach.

Key Elements of Contract:

1. mutual assent = offer and acceptance
2. consideration
3. parties must have legal capacity
4. must be a legal objective or there cannot be a prohibition by law on whatever the subject matter of the contract is.

Expressed contract

done by words

Implied contract

agreement is formed by virtue of conduct as to express words

Quasi contract

Not a contract at all, constructed by courts to make restitution - has the defendant pay restitution.

Bilateral Contracts

a promise for a promise. [each party is both a promisor and promisee] . The offeror is a loud to revoke the offer until that get that notice of acceptance. (Need notice of acceptance)

Unilateral Contracts

a promise for an act. [unilateral offers must be accepted by doing an act] (Don't need notice of acceptance. Offeree can do that act. Unless the offeror is unlikely to know that the offeree is doing that act then need notice of acceptance.)

Output Contracts

For you that's an output contract. You're giving me all of your output and I am in fact taking that. That's a contract. You're giving me all your output and I am in fact taking that. That's a contract that is called an output contract on your side.

Requirement Contracts

- A promise to purchase all the buyers requirements for a particular goods for or from a particular seller

CONSIDERATION

bargained for legal detriment
� The legal detriment is the thing what is given for the promise.
� The other aspect of consideration is bargain. It's the process.

LEGAL DETRIMENT

aspect of consideration what we're referring to is the promisee giving or doing one of the following: The promisee must:
1. Do an act; or
2. Promise to do an act; or
3. Forbear; from doing an act; or
4. Promise to forbear.

Adequacy v. Sufficiency

� Courts do not look at the adequacy of the consideration
� But it looks at the sufficiency of the consideration, that it was actually bargained for in exchange.

Is it always necessary for the promisor to benefit?

It is not necessary that the promisor actually derive any benefit from the promise or from the act. That is not a necessary aspect of consideration. So the courts will enforce promises even if the promisor receives no benefit from their promise.

A contract requires two things:

1. Legal Detriment
2. Bargain

Gratuitous Promises:

? Something voluntarily given and acquired without a bargained-for exchange.
� A gift is just a gift;
� All gifts have the condition that you must accept.
� Contract v. gift with condition upon it.
� Intent and motivation help to determine the two.

FORBEARANCE FROM SUING ON A CLAIM

A promise not to prosecute or not to sue somebody is enforceable. It will in fact be consideration. The difficulty arises when the claim becomes invalid. One of the cases study is Feige. It's a situation where this woman is pregnant and she believes a cer

RECITAL OF CONSIDERATION

That language is evidence that consideration was paid. It is not per say consideration. So the parties can go in and they can challenge whether the consideration was in fact ever paid. So just because you say for good and other valuable consideration does

NOMINAL CONSIDERATION

The court does not look into the adequacy of consideration only the sufficiency. Nominal consideration is not sufficient consideration.

PAST CONSIDERATION

- If something happened in the past it cannot be consideration for a present promise. This is the traditional view. And the reason this is so is because the bargain aspect talked about earlier is missing. If it's past consideration it's not bargained for

Illusory Promise

Is not a contract. (E.g., I promise to sell you my car next week, If I feel like it)

PREEXISTING DUTY RULE

An act that is promised or performed as consideration must be something the person otherwise is not obligated to do.

Restatement of Contracts (current view of preexisting duty rule and Majority Jurisdiction)

? When you agreed to a modification, even if there is NO new consideration, BUT there are unanticipated difficulties or circumstances, and the agree modification IS fair, equitable and voluntary; then the court will look into enforcing the contract. The r

Payment of debt with lesser amount:

? Example 1 - If I say to you I will pay you $1000 if you stop trespassing across my yard, my driveway. That would not be an enforceable promise. Why? You have a preexisting duty not to trespass across my yard. So there is no good consideration to support

Massachusetts and preexisting duty rule

: does not follow pre-existing duty rule. Mass. finds that there is consideration for a promise to perform what one is already legally obligated to do because the new promise is given in place of an action for damages to secure performance.

Good Faith Dispute under the preexisting rule:

good faith dispute about the amount of the indebtedness. . .
? Example: Suppose Mass. Electric Company sends a bill for $1000 bill for the
month of February. Well, I know it was cold but I also know that in my whole lifetime I have never paid more than $8

Modification can be enforced on one of the following grounds to avoid the preexisting rule:

1. In some jurisdictions, Rescind old contract and form a new contract
2. In some jurisdictions, Something different promised or done
3. Unforeseen hardship (restatement view - Angel v. Murray)
� unforeseen hardship
� voluntarily it agree to
� if it's a f

MORAL OBLIGATION

[1] Standing alone is not valid consideration.
[2] When you have moral obligation and material benefit, you have sufficient consideration, although there was no original duty - [minority view]. Webb v. McGowin
[3] Moral obligation and Material benefit do

What happens with contracts in the past?

If something happened in the past it cannot be consideration for a present promise. This is the traditional view. And the reason this is so is because the bargain aspect talked about earlier is missing. If it's past consideration it's not bargained for be

PROMISSORY ESTOPPEL

Promise without consideration, but the promisee has relied on the promise. A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or the third party and which does induce action or forbearance is

Promises may be enforceable under:

1] Consideration
2] Reliance
3] Promise in writing and under seal
4] Unjust enrichment

Doctrine of Promissory Estoppel under the Restatement (Second) of Contracts [Section 90]:

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promise or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.

Debt Paying:

Promise to pay debts that are bared from the statute of limitation. A promise to pay a debt that is bared from the statute of limitation IS ENFORECABLE, EVEN IF THERE IS NO CONSIDERATION, because it rests on a legally obligation.
Hypo: I owe the dean $10,

STATUTE OF FRAUDS

a defense against contract formation or mechanism of enforcement.

Elements for the statute of frauds

1. Identify subject of contract
2. Agreement made
3. Essential terms
4. Signed by the party to be charged

There are 2 major issues when you look at the Statute of Frauds

1. Whether the contract must be in writing?
2. If the contract must be in writing, is the writing sufficient to satisfy the Statute of Frauds?

6 types of contracts must be in writing: M Y L E G S

1. Marriage - a promise in consideration of marriage [ex: pre-nuptial]. Mutual promises do not require writing.
2. Year - a service contract not capable of being performed within a year from the time of the making of the contract. One year starts from the

If we have a contract, the writing is sufficient when it:

1. Reasonably identifies the subject matter of the contract
2. Sets forth the material terms [who & what]
3. It must be signed by the party to be charged

Under the UCC, a signature is any mark that is intended to authenticate the writing.
Memo requirements under the UCC:

1) Need a writing signed by the party to be charged containing the essential terms of the deal.
For a sale of good:
-Indicate a contract has been made
-Identify the parties to the contract
-Specify the quantity
-Signed by the party against whom the contra

CONTRACT REMEDIES:

You may have a party that repudiates on a promise or you may have a party that is preventing the other side from completing their contractual duty. In most cases, that would be in bad faith. In each one of those, a non-breaching party has options:
1. Mate

EXPECTANCY damages

compensating plaintiff for expectation, putting plaintiff in POST-CONTRACT position. Putting plaintiff in benefit of bargain.

RELIANCE damages

reimbursing plaintiff for lost cause by plaintiff reliance. Act as if contract never happened [PRE-CONTRACT POSITION]

RESTITUTION damages

the court restore to plaintiff an benefit that was conferred to the other side. [PRE-CONTRACT position]

LIMITS TO RECOVERY

Plaintiff must prove damages with reasonable certainty. Plaintiff in a duty to attempt to mitigate damages. Failure to do so bars recovery

7 Basic Remedial Policies:

1) Material breach vs. Non-material breach
2) Compensation, not jail
3) Recovery of loss from breach
4) Recovery for party's loss vs. punish breacher
5) Translating losses from breach into $
6) Parties can discuss recovery and remedies
7) Recover interest

Measuring And Compensating Loss Resulting From A Breach
2nd Restatement states the "purposes" of contract remedies:

(a) His "expectation interest," which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed
(b) His "reliance interest," which is his interest in being reimbursed f

Mailbox rule:

o Once you say I accept and you put that acceptance letter out of your reach into the mailbox or outbox, that's a valid acceptance. Adams v. Lindsell
o The moment of acceptance is when you put it in the mail.

Mirror Image Rule

o Once you say I accept and you put that acceptance letter out of your reach into the mailbox or outbox, that's a valid acceptance. Adams v. Lindsell
o The moment of acceptance is when you put it in the mail.

OPTION CONTRACTS

Irrevocable Offer
Under the Restatement 25 - "An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer"
We said that offers are generally revocable at any time by the o

What is a firm offer?

o UCC 2-205 states "it is a signed writing by the offeror to buy or sell goods. It is a promise that is irrevocable for a period not to exceed 90 days.
o Firm offer rule ONLY APPLIES WHEN THE OFFEROR IS A MERCHANT!
� Meaning, if I try to sell my car to yo

Whether silence can operate as acceptance?

o The general rule says that silence normally does not operate as acceptance.
� Hypo: I sell you my car for $10,000. Is it reasonable for me to walk away and think we have a contract? NO!!!!!!!!

Exception(s) to silence cannot operate as acceptance

Silence can be acceptance where the offeree takes the benefit of the offer with a reasonable belief by the offeror that that would constitute an acceptance. That would be a valid acceptance.
2. Also where the offeror has stated or given the offeree reason

There are four key elements to acceptance

1. It must be the party to whom the offer was made. The offeree can accept nobody else.
2. The acceptance must be in the terms of the offer.
3. The offeree must know about the offer to accept it.
4. It must be communicated.

ACCEPTANCE

is the assent by the offeree to the proposal that has been made by the offeror. Once again, it is assent by the offeree to the deal that is on the table.

AUCTIONS

The auctioneer invites offers from bidders.
WITH RESERVE ? may withdraw goods at any time until the completion of the sale is announced.
WITHOUT RESERVE ? auctioneer calls bids on an article, that article cannot be withdrawn unless no bid is made within a

REWARDS ARE OFFERS!!

The person has to know about the reward before getting the reward. If you for example, help the cops out and you found out later there was an award for that information. It is to late. (Private rewards).