Chapter 9 Intro Contracts 11 13 2012 Nature of Contracts legally enforceable promise or set of promises Functions of Contracts ability to enter into afreements with others that we can call on the laaw Evolution of Contract Law central principle is freedom of contracts each person enters in contract by own free will o Allows courts to create pure contract law consiting of precise Methods of Contracting oral contract is just as enforceable as clear rules written one o Most common use is standardized form of contracting Basic Elements of Contract o Agreement made from offer and acceptance o Made voluntarily o Consideration to support each partys promise o Capacity to contract o Legal purpose CASE Lambert v Barron o Barron asked Lambert to help with services he flew and helped him o Barron paid him what he was willing to owe but Lambert thought he deserved more up to 34 000 o Barron denied this sent a letter back and was sued by Lambert for breach of oral contract o Trial court dismissed Lambert and appeal was upheld Basic Contract Concepts and Types Bilateral and Unilateral Contracts o Unilateral contracts only one party makes a promise E g Coffee shop gives free coffee every 10 cups o Bilateral contracts both parties exchange promises Coffee shop will pay promise mall for use of kiosk promise Valid Contract one that meets all of legal requirements for bidning contract Unenforceable Contract meets basic legal requirements but may not be enforceable because of some other legal rule Voidable Contract one or more parties have legal right to cancel their obligations under contract Void Contracts contracts that create no legal obligation Express and Implied contracts o Express contract agreement of parties manifested by words o Implied contract agreement not shown by words but acts written or oral and conduct o Difference between express and implied relates to manner of providing existence of contract not effect Sources of Law Governing Contracts Two bodies of law Article 2 of UCC and Common Law of Contracts Uniform Commercial Code all states have adopted except Louisiana o Purpose was to establish uniform set of rules o UCC in in process of changing because of technology and business transactions Article 2 expressly applies to contracts for sale of goods o Goods are tangible movable personal property o Does not apply to sale of services intellectual property stocks real estate Law governing hybrid contract asks which elemtn goods or services predominates in the contract o Personal skill and judgment probably don t fall under Article 2 Relationship of UCC and Common Law important qualifications o Code does not change all of traditional contract rules When no traditional code rule exists common law o Courts demonstrate tendency to apply Code contract concepts by analogy that arent technically covered under Differences between Article 2 and Common law o Article 2 is generally more flexible than common law of applies Article 2 contracts Code gives less weitght to technical requirements such as consideration o Code is more concerned with practical rules o Code requires fair dealings honesty in fact o Code recognizes Unconscionable Contract one that is grossly unfair or one sided o Code holds merchants to higher standard Noncontract Obligations some law that enforces an obligation to pay for losses Quasi Contract a person does a service but has no contractual obligation to pay for them o Jones paints smiths house by mistake smith knows hes making painting the wrong house but does not infom him court cant hold smith liable o Represents an obligation imposed by law to avoid injustice o Smith probably has to pay Jones for paint job Promissory Estoppel a person relys on someone who made a promise but the promisor believes no verbal contract was issued o Forseeable reliance on the conrtract CASE Aceves v US Bank o Aceves had a 30 year mortgage but she couldn t pay some fees o Filed for bankruptcy and bank said they would help her out they never did and sold her house on auction o Sued under promissory estoppal trial court ruled in favor of the bank but overturned in appeal 11 13 2012 11 13 2012
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