LSB 3213 1st Edition Lecture 9 Schedule Today finish chapter 11 Next week chapters 12 and 13 What is a contract A promise carrying an enforceable legal duty and an enforceable legal remedy for breach Four Elements of a Contract Agreement Consideration Capacity Legality Defenses to Formation of Contract Jack and Jill return o Voluntary consent Fraud Misrepresentation Mistake In writing o Five types of contracts Scenario 1 Jack agrees to pay 200 for tickets that Jill claims are on the fifty yard line but Jill knows that they are actually on the back row Jack sues for fraud because Jill intentionally misrepresented what she is selling Damages o If he had went to the game and then sued Jack could have sued for the difference in dollar amount Jill would owe Jack the difference between what Jill paid and what Jack paid her for the tickets or Rescission o If Jack had sued before the game then he could have sued for rescission Means that the deal gets taken back pretend it never happened These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Scenario 2 Jack and Jill make a written contract to buy tickets for 200 00 but forgot the decimal and wrote 20000 Jill sues Jack for 20 000 o Jack is not liable because Jill knew it was a mistake Scenario 3 Jack offers to pay 2 000 for the tickets thinking that the tickets are close to the field Can Jack get his money back damages or rescission o No this was a unilateral error that happenedwithout Jill s knowledge Scenario 4 You agree to buy house on a ranch property for 50 000 and shake on it o Then you change your mind about the deal Cannot be forced to buy unless real estate contract was in writing Must be in writing for a lease of 1 year or more less than that does not need to be in writing Scenario 5 Compare Tickets to next year s game vs Sell hot dogs during next year s games Analysis humanly possible to perform within one year o If it is humanly possible it does not need to be in writing the game tickets o If it will take more than one year must be in writing selling hot dogs Scenario 6 Keith Urban and Nicole Kidman prenup During marriage limit on no of movies concerts If divorce Kidman pays Urban 640K per year they weremarried unless Urban relapsed into drug use at any time during their marriage Analysis a written prenup is enforceable If prenupis not valid not in writing then each spouse can claim half of assets Scenario 7 Promise to pay someone else s debt Joe asks his wealthy uncle to help him pay to start Joe s construction company The uncle agrees but asks Joe s dad to cover the debt that Joe owes his uncle if the company isn t successful Joe s dad agrees o This is called a guarantor contract The company is not successful so the uncle takes Joe s dad to court to pay Joe s debt Analysis promise by Joe s dad is an enforceable contract only if it is in writing Contracts in Writing Land and lease of at least one year Cannot possibly be performed in one year Marriage prenuptial agreements Guarantor contracts UCC contracts Example merchant sale of goods over 500 Pan Handle Realty Case Answers the question how do courts interpret contracts A family moves from Florida to Connecticut and want to lease a luxury home negotiate lease for 138 000 per year Can tenant get out of the contract o If the tenant finds another property and changes their mind o If the tenant realizes that they can t afford to pay for the home o If the tenant s daughter has brain cancer and has to leave so that their daughter can be treated Court Looks at the plain meaning of the contract not subjective intent o The court does not care just cares about what the contract says Objective Theory of Contracts Outward objective intent is primary Internal subjective thoughts not relevant Draft your escape clause into the contract Extrinsic Evidence Outside Evidence Evidence outside the contract like conversations only relevant for 3 reasons o Ambiguity terms of contract are unclear confusing etc can be taken to court and use outside evidence o Mistake Fix mistake in court with extrinsic evidence o Fraud misrepresentation Prove this with outside evidence Example contract for weekly deliveries to gym by Gatorade dealer o In conversation discuss having deliveries made every Monday or Tuesday morning deliveries instead come on Tuesday evenings o Can t use this in court Enforceability Enforceable valid contract Unenforceable contract exists but valid defense stops judge from enforcing contract Voidable a party can get out if it wants one or both parties has the option to get out of it Void no contract lacks one of four elements Schedule Next week chapters 12 and 13