Grade for Quiz 2 28 30 93 10 24 12 Contract Law Ch 2 Next quiz Friday November 9th 2012 Abbreviation for contracts K Agreement between 2 parties entered upon on their own free will They have equal bargaining power Come at the agreement at arms length meaning both want the most value for their own self Will negotiate compromise to meet in the center Use contracts every day Outline Page 223 in textbook Definition a promise or set of promises under which the law recognizes a duty to perform and for which if breached the law gives the aggrieved party a remedy Formation 243 245 Express contract in words orally or in writing recommended Writing is easier to prove the existence of the contract Implied contract office etc Conduct gas station implied that you will pay etc Grocery store doctor s By law quasi contract court created contract courts are reluctant to create contracts rewrite them Circumstances someone will get enriched unfairly if there is no Sources of Contract Law 239 241 contract etc Common Law whole body of contract law was developed from a series of court cases over the years Contract law is based in state law each state has it s own body of contract law Article 2 of the Uniform Commercial Code UCC Contracts for Sale of Goods Only applies to certain types of contracts Drafted in the 1950s by scholars Might deviate from common law Classification of contracts 224 Valid 245 246 what you aim for has to have five elements 1 Offer 2 Offer acceptance 3 Legal capacity to contract for the contracting parties 4 Legal Subject Matter can t contract to do something illegal 5 Consideration Void not a contract Voidable contract that is able to become void at the option of one of the contracting parties avoid contract or disaffirm the contract not everyone can do this underage minors have capacity to contract however the law protects them in the contract area by letting them avoid or disaffirm risk in contracting w minor Require adult cosigner Minors cannot disaffirm for necessaries food shelter clothing medical don t necessarily have to pay contract price but a reasonable price A minor can contract w a minor and can disaffirm but will have to give everything back Can t disaffirm after the reasonable period of time Unilateral 242 243 one side making a promise for the other side to do something act Promise for an act I promise to pay you 30 when you wash my car have to wash car before getting money Reward offer will pay x amount of money for any information that leads to an arrest etc Bilateral Both parties make a promise Promise for a promise Performance occurs later in time I promise to buy your house for x amount of money you promise to sell it to me for x amount of money Executed 246 performance by both parties has been complete Executory the performance has yet to occur ex bilateral example of promise to buy sell house Will become executed once transaction has occurred 10 26 12 Is there a valid contract Are all 5 elements present Does an offer exist 247 248 Person making the offer offeror has to have a serious intent to make an offer all material terms have to be in the offer master of the offer can dictate the terms Person receiving the offer offeree How long does the offer exist An Offer Can Cease to Exist 247 sidebar 8 3 Lapse of Time Specified time by the offeror Reasonable amount of time depends on the nature of what you are contracting about Rejection of the offer by the offeree Acceptance of the offer by the offeree offer merges into the contract 248 250 Counteroffer by offeree Mirror image rule 226 249 250 any deviation from the terms of the original offer becomes a counter offer switch roles and offeree becomes the offeror with a new offer counteroffer Can go back and forth negotiating Revocation by offeror the offeror can take his offer back anytime prior to acceptance Option contract makes an offer on the 2nd potential contract irrevocable Subject matter becomes illegal subject matter is destroyed Mental capacity to contract insanity of offeror or offeree Bankruptcy of offeror or offeree Death of offeror or offeree however if the offer is accepted death does not terminate the contract unless it is a contract for unique personal services then there s no one else who can perform those services Is the contract enforceable Has the contract been breached Is this a unique circumstance where the courts will say there is a legally recognized excuse for breach Sidebar 8 5 on page 250 Acceptance of Offer 248 250 Silence on part of offeree cannot be deemed acceptance 249 Automatic renewal provisions have to notify to terminate The Timing Rules 227 of outline Established by court cases To protect the offeree because of the mirror image rule offeror is master Dispatched when acceptance is put in a means of communication beyond the offeree s control aka the mail pg 250 Capacity of Contracting Parties Insanity no capacity to contract 254 Minors have capacity to contract but contracts can be voidable 254 Intoxicated have capacity if you understand the terms of the contract 254 10 31 2012 Quiz 3 next Friday November 9th Contract projects the week after quiz weds 14th friday 16th Legal Subject Matter pg 228 of outline pg 255 256 Can t contract to do anything illegal Seek services from someone who must be licensed to practice in that state you don t have to pay him for services on the way out don t have a contract it s illegal for him to contract services without a license Usury laws maximum rate of interest that can legally be charged on a loan anything higher is illegal Anti competition clause in an employment contract non compete agreements PG 256 255 sidebar 8 8 if you leave a company you agree to not perform same services for another company used to be illegal employers have to protect themselves so courts made them legal if they pass two tests reasonable in time duration 1 5 years and geographic location Trade secrets information that is very confidential Consideration Pg 229 250 253 Party A s legal detriment becomes Party B s legal benefit Party B s legal detriment becomes Party A s legal benefit Both have to have a legal detriment that becomes the other party s benefit Detriment Take on a duty give up a right losing cash for payment Benefit What you gain from the contract Promise of a gift is not enforceable as a contract because it doesn t have consideration passage of time can t be considered a detriment only one party has a detriment giving up money Bilateral contract a promise
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