Chapter 9 Contracts o Not every promise is legally enforceable o When a set of promises has the status of contract a person injured by a breach of that contract is entitled to call the courts to force the breaching party to honor the contract o Contract law is ancient law but has evolved to reflect social change Elements of a contract o Agreement made an offer and an acceptance o Made the agreement voluntarily o Supported by consideration o Between parties with capacity to contract o Made for a lawful purpose Contract Concepts and Types o Bilateral contracts Two parties make promises to one another o Unilateral contracts One party makes a promise Frequent buyer cards are offers for unilateral contracts Acceptance by performance gaining points on the cards constitutes acceptance of the offer and creates a contract Binding and enforceable agreement o Valid Contract o Voidable contract o Void Contract Agreement otherwise binding but due to circumstances surrounding execution or lack of capacity may be rejected at the option of the party disfavored by the circumstances Agreement without legal effect because prohibited by law Agreement of parties manifested by words written or oral o Express contract o Implied contract Agreement not shown by words but by acts and conduct of parties Sources of Governing law o Article 2 of Uniform Commercial Code UCC Statutory law in every state but common law of contracts is evolving Contains nine articles o Article 2 expressly applies to contracts for the sale of goods Goods are tangible movable personal property Doesn t apply to the sale of services or intangible property stocks intellectual property real estate If a contract involves both goods and services courts test which element goods or services predominates in the contract o Compensatory damages are the typical remedy Plaintiff receives monetary equivalent o UCC vs Common Law If sale of goods use UCC Remedies Contract Law for Loss in value Consequential Damages Incidental damages Plaintiff can recover damages for breach of contract only if The plaintiff can prove with reasonable certainty The costs and losses were foreseeable to the defendant at the time of the contract The plaintiff could not reasonable avoid without risk burden or humiliation Liquidated Damages If parties agreed to the amount in advance of the breach The amount specified is reasonable as an estimation of probable actual The liquidated damages are the exclusive remedy for the plaintiff o Equitable remedies not monetary Used when compensatory damages would be an insufficient remedy o Specific performance party is ordered to perform according to contract terms parties o Reformation court rewrites contract to reflect intention of o Rescission cancellation of the contract o Restitution recovery of the value bestowed International Contract Law Contracts for the International Sale of Goods CISG o Body of contract rules that harmonizes and contract principles from many legal systems o CISG automatically applies unless the parties expressly opt out of the CISG in their contract Quasi Contact Theory Obligation imposed by law to prevent unjust enrichment of one party under certain circumstances o A painter who does work and then the other party denies the existence of contract o A company overstating average revenues and convincing one party to enter into a contract Remedies of Quasi Contract o Plaintiff recovers either the reasonable value of the benefit reasonable price or value of labor quantum meruit o Promissory Estoppel A court may apply this doctrine when one party relies upon another parties promise to his or her detriment but there is no contract Court forces promisor to fulfill promise or pay compensation Contract and Noncontract Theories of Recovery Review o Contract Remedy Enforce Promise o Quasi Contract Remedy Reasonable value of services o Promissory Estoppel Remedy Enforce promise or recover reliance losses Example of this would be if an employer promises to pay one party for the duration of their retirement and then cuts said party off
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