Chapter 9 Contracts 1 Final exam only covers contracts and Antitrust 43 of the questions will be contracts and only 7 questions on antitrust that will only be covered for one day in class 2 Law of contracts deals with the enforcement of a Not every promise is legally enforceable 3 History of contracts a It did not become important in the U S until the 19th century and the industrial revolution b Freedom of contract contracts should be enforced because they are the product of the free will of the parties c Freedom of contract is changed in the 20th century dramatic increase in govt regulations of private contracts insurance contracts employment contracts and product liability contracts 4 Methods of contracting a Contracts can mean either oral or written b The exception is that there is a small group of contracts that must be in writing in order to be enforceable contract in the sale of real property land or buildings 5 The basic elements of a contract 4 elements a Voluntary agreement an offer and acceptance b Consideration something of benefit given by each party to the contract to every other party c Capacity you have to be over 18 in order to have capacity if you are a minor you don t have capacity the effect of this is that if you re a minor you can get out of contract simply because you re a minor d Both the objective and performance of the contract must be legal 6 Classified Contrast there are 4 different ways to classify contracts a When the contract is bilateral or unilateral i Unilateral contract assuming there are just two parties only one of the parties makes a promise 1 Ex Frequent flyer programs airline promises you the miles and you re not promising them anything ii Bilateral contract where both of the two parties make promise 1 Ex Professor Mark s employment contract with UMD b 2nd way to classify contracts Valid unenforceable voidable and void contracts 4 sub points ON FINAL i Valid contract meets all the basic requirements and can be enforced in court 1 Basic requirements a b c d Parties have capacity ii Unenforceable contract meets all the basic requirements but may be unenforceable for some other reason 1 Ex of other reasons contracts unenforceable a The statute of limitations tells you how long you have to wait to sue someone has expired statute of limitations varies depending on what state you re in the clock starts running from the day of breach b Where the statute of frauds have not been met statute of frauds means that certain contracts need to be in writing and if they re not in writing their unenforceable iii Voidable contracts those contracts where one of the parties has a legal right to cancel their obligations under the agreement 1 2 situations where a contract is voidable 2 A mentally impaired person could get out of the contract because of this iv Void Contracts ON FINAL agreements that don t create any legal obligations for anyone and you cant get any relief from the court for breach 1 Example a mafia contract to kill someone c Expressed versus Implied i Express parties directly state the terms of their deal orally or in writing at the time the contract is formed ii Implied terms are not expressly stated instead the terms are implied from the surrounding facts and circumstances 1 Ex trip to the dentist the terms are implied there s no contract that he will use reasonable care for the services and in return its implied that you will pay the dentist for performance of those services none of those terms are expressed d Executed versus Executitory i Executed when all the parties have fully performed all their contractual ii Executory until all the duties have been performed 7 Any given contract can fall into multiple categories you don t just fall into one of duties these categories 8 Sources of Law regarding contracts 2 Basic sources of Law a UCC Uniform commercial code article two deal with the sale of goods i There is not just one UCC every state their own version but they are all pretty similar except for Louisiana they are often an outlier with regard to law they have only adopted part of the UCC whereas every other state has adopted some version of the entire UCC ii UCC is divided into different parts called articles we only care about article two here which deals with the sale of goods iii Goods tangible moveable personal property does not include real property sale of land or buildings does not apply to intangible things iv Article 2 does not apply to service contracts when UCC doesn t apply sale of stock and bonds then common law does 1 This leads to the issue of Hybrid contracts where the contract deals with both goods and services which is pretty common a In this case Courts typically figure out whether goods or services are predominant in the contract i If goods are predominant then the UCC applies if services are predominant the UCC does not apply POINT OF b Common Law judge made law c Differences between UCC and Common Law i 1st difference UCC is more flexible than common law UCC is not as rigid as common law in various respects 1 First respect regarding contract formation if the UCC applies the court is more likely to think that a contract is formed than if a common law applies 2 UCC is less concerned with meeting the expectations of the parties ii 2nd difference UCC imposes a duty of good faith and fair dealing in performance of contract duty to act honestly if the UCC applies one of the parties could sue the other for breach of the duty of good faith and fair dealing this is a separate ground to sue on where as the common law doesn t always recognize this duty iii 3rd difference the UCC expressly recognizes the concept of unconscionable contracts which is one that is grossly unfair if it is unconscionable it is typically unenforceable under the UCC iv 4th difference The UCC unlike the common law distinguished merchants from non merchants and merchants are held to higher standards 1 Merchant someone who regularly deals with the kinds of goods being sold or represents to the buyer that he has special 9 Non Contract Obligations knowledge of those goods a 2 requirements of contract are mutual agreement and consideration without these you don t have a contract b Non contract obligations in certain situations the court will enforce obligations even where there is no mutual agreement or consideration THIS IS CALLED c 2 types of non contract obligations i Quasi contract person A provides some benefit to person B and the benefit is being
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