LSB 3213 1st Edition Lecture 11 Schedule- Today: finish chapter 11- Next week: chapters 12 and 13What is a contract?- A promise carrying an enforceable legal duty and an enforceable legal remedy for breachFour Elements of a Contract- Agreement- Consideration- Capacity- LegalityDefenses to Formation of Contract- Jack and Jill returno Voluntary consent Fraud / Misrepresentation Mistake- In writingo Five types of contractsScenario 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- Damageso 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 ticketsor- Rescissiono If Jack had sued before the game, then he could have sued for rescission Means that the deal gets taken back, pretend it never happenedThese 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 $20,000o 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 ito 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 writingScenario 5:- Compare:Tickets to next year’s gamevs.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 ticketso If it will take more than one year, must be in writing- selling hot dogsScenario 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 eachspouse 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 agreeso 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 $500Pan 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 mindo If the tenant realizes that they can’t afford to pay for the homeo 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 intento The court does not care, just cares about what the contract saysObjective Theory of Contracts:- Outward, objective intent is primary.- Internal, subjective thoughts not relevant.- Draft your escape clause into the contractExtrinsic 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 evidenceo Mistake: Fix mistake in court with extrinsic evidenceo Fraud / misrepresentation: Prove this with outside evidence- Example: contract for “weekly” deliveries to gym by Gatorade dealero In conversation, discuss having deliveries made every Monday or Tuesday morning, deliveries instead come on Tuesday eveningso Can’t use this in courtEnforceability:- 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