Law 1

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contract

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a legally enforceable promise or set of promises; a promise that the law will enforce; exist to make business matters more predictable

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agreement

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one party must make a valid offer, & the other party must accept it

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consideration

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there has to be bargaining that leads to an exchange b/w the parties

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legality

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the contract must be for a lawful purpose

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capacity

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the parties must be adults of sound minds

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4 elements of a contract

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agreement; consideration; legality; capacity

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judicial activism

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the willingness shown by certain courts (& not by others) to decide issues of public policy, such as constitutional questions (free speech, equal protection, etc.) & matters of contract fairness (promissory estoppel, unconscionability, etc.); “in contract law, this means that a court will ignore certain provisions of a contract, or entire agreement, if judge believes that enforcing the deal would be unjust” – makes the law more flexible but less predictable

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judicial restraint

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) a court’s preference to abstain from adjudicating major social issues and to leave such matters to legislatures; “even if the contract results in serious harm to one party, a court will generally enforce it” – makes the law less flexible but more predictable

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bilateral contract

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) a contract where both parties make a promise (to do something); a binding agreement in which each party has made a promise to the other;

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unilateral contract

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a contract where one party makes a promise that the other party can accept only by doing something specific; a binding agreement in which one party has made an offer that the other can accept only by action, not words; less common

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express contract

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a binding agreement in which the parties explicitly state all important terms;

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implied contract

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a binding agreement created not by explicit language but by the informal words and conduct of the parties; the words and conduct of the parties indicate that the parties intended to make an agreement

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executory contract

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a binding agreement in which one or more of the parties has not fulfilled its obligations

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executed contract

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an agreement in which all parties have fulfilled their obligations

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unenforceable agreement

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a contract where the parties intend to form valid bargain but a court declares that some rule of law prevents enforcing it

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voidable contract

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an agreement that, b/c of some defect, may be terminated by one party, such as a minor, but not by both parties

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void agreement

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an agreement that neither party may legally enforce, usually b/c the purpose of the bargain was illegal or b/c one of the parties lacked capacity to make it

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promissory estoppel

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a doctrine in which a court may enforce a promise made by the defendant even when there’s no contract, if the defendant knew that the plaintiff was likely to rely on the promise, the plaintiff did in fact rely, & enforcement of it is the only way to avoid injustice

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promissory estoppel cases

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the defendant made a promise that the plaintiff relied on (ex. House fire, insurance expired, agent help…)

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plaintiff may use promissory estoppel to enforce the defendant’s promise if he can show that

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1. The defendant made a promise knowing that the plaintiff would likely rely on it,
2. The plaintiff did rely on the promise, &
3. The only way to avoid injustice is to enforce the promise

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quantum meruit

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“as much as he deserves;” the damages awarded in a quasi-contract case; court is awarding $ that it believes that plaintiff morally ought to have, even though no valid contract entitling her to it

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Uniform Commercial Code (ucc)
(sources of Contract Law)

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a. Business methods changed quickly during first half of last century […] body of law needed for commercial transactions that reflected modern business methods & provided uniformity in US […] thus, in 1952 the Uniform Commercial Code (UCC) was created […] intended to facilitate the easy formation & enforcement of contracts in fast-paced world
b. “For our purposes in studying contract, the most important part of the Code is Article 2” – governs the sale of goods
c. goods (def) are things that are movable, other than money & investment securities & certain legal rights; goods do not include land or house b/c neither is movable, nor do they include stock certificate
d. “In a mixed contract, Article 2 governs only if the primary purpose was the sale of goods”

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Restatement(2nd) of Contracts
(sources of Contact Law)

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a. “In 1932, the American Law Institute (ALI), a group of lawyers, scholars & judges, drafted the Restatement of Contracts, attempting to codify what its members regarded as the best rulings of contract law. In 1979, the ALI issued a new version, the Restatement (Second) of Contracts. Like its predecessor, the Restatement (Second) is not the law anymore, and in this respect it differs from the common law and the UCC. However, judges often refer to the Restatement (Second) when they decide cases…”

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Meeting of the minds

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o This requires that they: (1) understand each other & (2) intended to reach an agreement
o A judge will make an objective assessment of any disagreements about whether a contract was made—whether or not a reasonable person would conclude that there was an agreement, based on the parties’ conduct

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offer

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in contract law, an act or statement that proposes definite terms & permits the other party to create a contract by accepting those terms

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problems with intent

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• An invitation to bargain is not an offer.
• An advertisement is generally not an offer.
• A letter of intent may or may not be an offer, depending on the writer’s intent

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revocation

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in general, offeror may revoke offer anytime before it’s accepted; effective as soon as offeree receives it

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rejection

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if an offeree rejects an offer, the rejection immediately terminates the offer

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counteroffer

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if an offeree counteroffers, it is a rejection that immediately terminates the offer

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destruction

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destruction of the subject matter terminates offer

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acceptance

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o The offeree must say or do something to accept…
o When the offer is for a bilateral contract, the offeree generally must accept by making a promise
o When the offer is for a unilateral contract, the offeree must accept by performing

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 Under UCC S.2-207, an acceptance that adds additional or different terms may form a contract for sales of goods in certain cases:

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• For a sale of goods, the most important factors is whether the parties believe they have formed an agreement
• New terms added by the offeree do not void the agreement if accepted by the offeror
• If terms are changed, a court will rely on general principles of the UCC to create a fair contract
• If a party wants to contract only on his terms, the agreement must clearly state that

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consideration

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bargaining that leads to an exchange b/w the parties; bargaining indicates that each side is obligating itself in some way to induce the other side to agree;

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things that can be bargained

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(a) another promise; (b) an action w/o a promise; or (c) a promise to do something or a promise to refrain from doing something

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illusionary promise

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If one party’s promise is conditional, the other party is not bound to the agreement….