LSB 3213 1st EditionExam # 2 Study Guide Chapters: 11-17CHAPTER 11:Promisor/Offeror:- Person/party in the contract that is offering a service/good Promisee/Offeree:- Person/party in the contract who is receiving the service/goodContract Definition:- A promise carrying an enforceable legal duty with an enforceable legal remedy for breachObjective Theory of Contracts:- The intent to form a contract will be judged by outward, objective facts (what the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transaction) as interpreted by a reasonable person, rather than by the party’s own secret, subjective intentions- Outward, objective intent is primary.- Internal, subjective thoughts not relevant.- Draft your escape clause into the contractFour Requirements of a valid contract:- Agreement: meeting of the minds”; “reasonable person standard”; Would a reasonable person think there was an agreement, a meeting of the minds?; Would two reasonable people reading the contract be in agreement of what the contract means; an offer by one party to form a contract, and an acceptance of the offer by the person to whom the offer is made.o Jack and Jill: Jack says he will pay $200 for the football tickets and will bring Jill the money for the tickets tomorrow, Jill does not say yes or no. AGREEMENT from Jack but not from Jill- Consideration: “skin in the game”, both parties have to exchange something- money for object in the contract, must be something of legally sufficient value and bargained for.o Jack and Jill: Jill says have the tickets, I’m going to the beach anyways. Jack says great, takes the deal and doesn’t pay for anything. This would be considered a gift, and gifts are not considered a contract. If Jill had instead said if you buy my $2 coffee, I will give you the tickets that are worth $100; Because Jill put a value on it, the exchange is not considered a gift- Capacity: both parties have the physical and mental capacity/ability to make decisionso Jack and Jill: Jack and Jill meet at a restaurant to discuss the deal over dinner. After a long dinner with lots of wine, Jack pays $1,000 for the tickets and Jill writes the deal on a napkin and both of them sign it. Jack was incapacitated and Jill KNEW that he was incapacitated, meaning that the contract was not valid- Legality: the contract cannot involve legal activityo Jack and Jill: Jack pays agrees to pay $100 for the tickets. Jill then says that she is having car problems and needs to get her car fixed. She tells Jack that she has an insurance policy that means that if someone just randomly came and destroyed her car, they would pay to replace it. So, Jack goes to Jill’s house and destroys hercar and brings $100 to Jill the next day for the tickets, but she decides to not takethe deal. Jack sues Jill and wins because the contract involved illegal activityDefenses to formation of a valid contract:- Lack of voluntary consento Fraud/Misrepresentation: intentionally misrepresented what was being offered Jack and Jill: 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.o Mistake: either party in the contract made a mistake- mutual and unilateral Jack and Jill: 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. Jack is not liable because Jill knew it was a mistake. Jack and Jill again: Jack offers to pay $2,000 for the tickets thinking that the tickets are close to the field. This was a unilateral error that happened without Jill’s knowledgeo Undue Influence/Duress: unlawful pressure brought to bear on a person, causingthe person to perform an act that he or she would not otherwise perform When one party uses undue influence, fraud, or duress to induce anotherparty to enter into an illegal bargain, the second party will be allowed to recover for the performance of it value- Lack of correct formo These contracts must be in written form: Land (and lease of at least one-year) Cannot possibly be performed in one year Marriage (prenuptial agreements) Guarantor contracts UCC contracts 2- Example: merchant sale of goods over $500Bilateral contract- Most common- promise given in exchange for return promise- Example: If you drive my car from New York to California, I will pay you $1,000Unilateral contract- One party makes an offer that can only be accepted by the offeree’s performance- Example: If you paint my house while I am out of town, I will pay you $5,000 when I get backExpress Contracts- Contract in which the terms of the agreement are fully and explicitly stated in words- oral or written- Words of the contractImplied Contracts- Contract formed in whole or in part from the conduct of the parties- conduct, not wordso Example: someone mows your lawn every Saturday for years and you pay them $15 each timeo This is implied as the conduct is repeated and so that makes a contractEnforceable Contracts- valid contractUnenforceable, voidable and void contracts- 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)Plain meaning rule for contract interpretation- The words- and their plain, ordinary meaning- determine the intent of the parties at the time that they entered into the contract. A court is bound to give effect to the contract according to the intent Extrinsic Evidence- Evidence outside the contract itself, like conversations or testimony, that are generally not allowed except for 3 reasons:3o 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 evidenceCHAPTER 12:Three requirements of an offer:- Intention: There is a serious intent to make the offer or contract- Definiteness: How concrete/specific is the agreemento Example of contract that is not definite: “I’ll buy your house for a fair price.” “You’ve got a deal.”o Key items to look for: Subject matter Quantity Price Timing- Communication: The agreement has to be communicated to the other person; in writing, orally, etcThree ways for an offer to be terminated by