ScheduleWhat is a contract?Four Elements of a ContractDefenses to Formation of ContractScenario 1Scenario 2Scenario 3Defenses to a Valid ContractScenario 4Scenario 5Scenario 6Scenario 7Contracts in WritingCurrent EventsPan Handle Realty CaseObjective Theory of ContractsExtrinsic EvidenceEnforceabilityScheduleSchedule•Today: finish chapter 11•Legal issues in the news?•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 return•Voluntary consent•Fraud / misrepresentation•Mistake•In writing•Five types of contractsScenario 1•Jack pays $200 for back-row tickets•Jack sues for fraud (misrepresentation)•Damages•Difference in dollar amountor•RescissionScenario 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 mistakeScenario 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 knowledgeDefenses 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 contractScenario 5•Compare:Tickets to next year’s opening gamevs.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 writingContracts in Writing1) Land (and lease of at least one year)2) Cannot possibly be performed in one year3) Marriage (prenuptial agreements)4) Guarantor contracts5) UCC contracts Example: merchant sale of goods over $500Current EventsLegal 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 leaseObjective 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” deliveriesEnforceability•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