Chapter 9 Intro to Contracts Contracts a legally enforceable agreement o Elements of a contract ps is there intent Offer all contracts begin with a person or a company proposes a deal Only proposals made in certain ways amount to a legally recognized offer Agreement Acceptance once a party receives an offer he must respond to it in a certain way Consideration there has to be bargaining that leads to an exchange between the parties Both must receive some measureable benefit doesn t have to be money Legality must be for a lawful purpose Capacity the parties must be adults of sound mind sober Consent certain kinds of trickery and force can prevent the formation of a contract Writing while verbal agreements often amount to contracts some types of contracts must be in writing to be enforceable o Other Important Issues Performance and discharge if a party fully accomplishes what the contract requires his duties are discharged But what if his obligations are performed poorly or not at all Remedies a court will award money or other relief to a party injured by o Bilateral contracts a promise made in exchange for another promise eg Acting contract sales contract o Unilateral contracts a binding agreement in which one party has made an offer that the other party can accept only by action not words I ll pay 100 to anyone who returns my lost dog o Executory contracts an agreement in which one or more parties have not yet o Executed contract an agreement in which all parties have fulfilled their fulfilled their obligations obligations o Valid contract one that satisfies all of the law s requirements o Unenforceable agreement occurs when the parties intend to form a valid bargain but a court declares that some rule of law prevents enforcing it o Voidable contract an agreement that may be terminated by one of the parties o Void agreement a contract that neither party can enforce b c the bargain is illegal or one of the parties had no legal authority to make it o Mr W Fireworks Inc v Ozuna two key terms Mr W sells fireworks He leased a portion of Ozuna s land under these a breach of contract Types of Contracts Like all growing cities San Antonio sometimes annexes new land and its city limits change One annexation caused the Ozuna property to fall within 5 000 ft of the new city limits and it became illegal to sell fireworks from the property Mr W stopped selling fireworks and paying rent on Ozuna s land Two years later San Antonio s border shifted again This time the city disannexed some property and shrank The new city limits placed Ozuna s property just beyond the 5 000 ft no fireworks zone Ozuna then leased a part of his land to Alamo Fireworks a competitor of Mr W Mr W sued for brach of contract arguing that Ozuna had no right to lease to a competitor for a period of 10 year The trail curt granted Ozuna s motion for sumary judgment Mr W appealed Did Ozuna breach his contract with Mr W by leasing his land to a competitor The property owners argue that when the city ordinance made the sale of fireworks illegal on the subject properties the leases became void resulting in the property owners and Mr W no longer having an enforceable agreement While Mr W is arguing that the illegalization of the sale of fireworks made the contract voidable it is still seeking to enforce the provision of the contract prohibiting the property owners from leasing to competitors We decline to adopt such an interpretation since he is not entitled to enforce portions that are favorable to him and at the same time disaffirm other provisions that he finds burdensome Further contracts requiring an illegal act are void We affirm the judgment of the trial court o Express contract an agreement with all the important terms explicitly stated o Implied contract the words and conduct of the parties indicate they intend an agreement o Promissory Estoppels a possible remedy for an injured plaintiff in a case with no valid contract where the plaintiff can show a promise reasonable reliance and injustice Detrimental reliance the defendant made a promise that the plaintiff relied on The defendant made a promise knowing that the plaintiff would likely to rely on it The plaintiff did rely on the promise and The only way to avoid injustice is to enforce the promise o Quasi contract a possible remedy for an injured plaintiff in a case with no valid contract where the plaintiff can show benefit to the defendant reasonable expectation of payment and unjust enrichment Unjust enrichment The plaintiff gave some benefit to the defendant The plaintiff reasonably to be paid for the benefit and the defendant knew this and The defendant would be unjustly enriched if he did not pay the damages awarded are called quantum meruit Sources of Contract Law o Common Law o Uniform Commercial Code UCC Article 2 governs the sale of goods goods means anything movable except for money securities and certain legal rights and governs only if the primary purpose is the sale of goods The Agreement acceptance o Meeting of the minds One side must make an offer and the other must make an o Offer an act or statement that proposes definite terms and permits the other party to create a contract by accepting those terms Offeror the person who makes an offer offeree the person to whom an offer is made Whether a statement is an offer a do the offeror s words and actions indicate an intention to make a bargain b are the terms of the offer reasonably definite Statements that usually do not amount to offers Invitations to bargain Letters of intent a letter that summarizes negotiating progress but they merely state what the parties are considering not what they have actually agreed to However the letter could bind if its language indicates that the parties intended to be bound Advertisements o Carlill v Carbolic Smoke Ball Company o The Carbolic Smoke Ball Company ran a newspaper ad that contained two key passages smoke ball and used it as directed for two months She then caught the flu She sued arguing that b c her reponse to the ad had created a contract with the company she was entitled to 100 The trial court agreed awarding Carlill the money The company appealed o Did the advertisement amount to an offer If so was Carlill purchased a the offer accepted o The deposit is called as proof of his sincerity in the matter so there is the promise Then it s biding b c the performance of the conditions is the acceptance of the offer and the person who makes the offer shews by his