Schedule Today finish chapter 11 Legal issues in the news 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 Voluntary consent Fraud misrepresentation Mistake In writing Five types of contracts Scenario 1 Jack pays 200 for back row tickets Jack sues for fraud misrepresentation Damages Difference in dollar amount or Rescission Scenario 2 Written contract to buy tickets for 200 00 Forgot decimal and wrote 20000 Jill sues for 20 000 Jack not liable Jill knew it was a mistake Scenario 3 Jack pays 2 000 thinking the tickets are close to the field Can Jack get his money back damages or rescission No unilateral error without Jill s knowledge Defenses to a Valid Contract Scenarios 1 3 Misrepresentation and mistake Scenarios 4 7 When must a contract be in writing Scenario 4 You agree to buy house on ranch property Change your mind Result cannot be forced to buy unless real estate contract was in writing One year lease vs construction contract Scenario 5 Compare Tickets to next year s opening game vs Sell hot dogs during next year s home games Analysis humanly possible to perform within one year Scenario 6 Keith Urban and Nicole Kidman prenup During marriage limit on number of movies concerts If divorce Kidman pays Urban 640K per year married unless Urban relapsed into drug use Analysis written prenup enforceable If prenup not valid then each spouse can claim half of assets Historical rule e g Smith and Davis families Scenario 7 Promise to pay your own debt vs someone else s debt Joe s construction company Loan from wealthy uncle guaranteed by Joe s dad Analysis Joe s oral promise to pay debt is enforceable Promise by Joe s dad must be in writing Contracts in Writing 1 Land and lease of at least one year 2 Cannot possibly be performed in one year 3 Marriage prenuptial agreements 4 Guarantor contracts 5 UCC contracts Example merchant sale of goods over 500 Current Events Legal issues in the news Pan Handle Realty Case How do courts interpret contracts Lease agreement for luxury home 138 000 per year in CT Can tenant get out of the contract Changes his mind Business has declined and can t afford it Employee stole tenant s funds Daughter has brain cancer Court tenant cannot get out of the lease Objective Theory of Contracts Plain meaning of the contract Outward objective intent Not relevant internal subjective thoughts or changed circumstances Not court of mercy Draft your escape clause into the contract Interview question at law firms If no escape clause need legally significant reason to get out Fraud Mistake Must be in writing Extrinsic Evidence Plain meaning rule 4 corners Evidence outside the contract like conversations only relevant for 3 reasons Ambiguity Mistake Fraud misrepresentation Example contract for weekly deliveries Enforceability Enforceable valid contract Unenforceable contract exists but valid defense stops judge from enforcing contract Voidable a party can get out if it wants Void no contract lacks one of four elements Schedule Next week chapters 12 and 13