Chp 8: Nature And Classification(Key Concepts)

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Promise

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A declaration that binds the person who makes it(the promisor) to do or not to do a certain act.

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Promisor

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A person who makes a promise

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Promisee

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A person to whom a promise is made.

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Contract

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A set of promises constituting an agreement between parties, giving each a legal duty to the other and also the right to seek a remedy for the breach of the promises or duties.

Disputes generally arise from a promise of future performance, in which a party may not fulfill the promise and is thus subject to pay monetary damages or to perform the promised act(rare).

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Objective Theory of Contracts

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The view that contracting parties shall only be bound by terms that can objectively be inferred from promises made.

Element of intent is of prime importance and objective intent is determined by this by interpreting objective facts through the perspective of a reasonable person and objective facts include:

1. What the party said when entering into the contract.

2. How the party acted or appeared

3. the circumstances surrounding transactions

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Offeror

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A person who makes an offer

Also the promisor

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Offeree

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A person to whom an offer is made.

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Bilateral contract

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A type of contract that arises when a promise is given in exchange for a return promise; promise for a promise.

Comes into the existence the moment promises are exchanged

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Unilateral Contract

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A contract that results when an offer can be accepted only by the offeree's performance.

Contract formed when contract is performed.

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Formal Contract

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An agreement that by law requires a specific form for its validity; require a special code and language to be formed

ex: negotiable instruments: checks, drafts, promissory notes, and certificates of deposit

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Informal Contract

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A contract that does not require a specific form or method of creation to be valid.

Based on substance rather than form; some of these types of contracts are required to be in writing.

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Express Contract

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A contract in which the terms of the agreement are stated in words, and written.

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Implied contract

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A contract formed in whole or in part from the conduct of parties.

Differs from express contract in that the conduct of the parties, rather than the words, creates and defines at least some of the terms of the contract.

Requirements:

1. The plaintiff furnished some service or property

2. The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected(based on the objective theory of contracts)

3. The defendant had a chance to reject the services or property and did not.

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Exectued contract

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A contract that has been fully performed by both parties.

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Executory contract

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A contract that has not yet been fully performed.

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Valid Contract

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Has the 4 elements necessary for contract formation:

1. An agreement(offer and acceptance)

2. Supported by legally sufficient consideration

3. for a legal purpose

4. made by parties who have the legal capacity to enter into the contract.

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Voidable contract

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A contract that may be legally avoidable at the option of one or both of the parties.

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Unenforceable contract

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A valid contract rendered unenforceable by some statute or law.

ex: If contract is required to be in writing but is not.

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Void contract

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1. A contract having no legal force or binding effect.

2. Is no contract at all.

3. The terms void and contract are contradictory

4. None of the parties have legal obligations under a void contract

5. Ex: Contract can be void if the contract had illegal purposes

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Quasi Contract(implied-in-law contract)

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An obligation or contract imposed by law(a court), in the absence of an agreement, to prevent the unjust enrichment of one party.

Equitable and fictional contracts that courts can impose on the parties "as if" the parties had entered into an actual contract.

Plaintiff may recover a quantum meruit(the extent of compensation due to plaintiff under the quasi contract).

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Enforceable Contract

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A valid contract that can be enforced because there are no legal defenses against it.