Lecture 10 19 2012 Contract Law Importance of this area of law cannot be over stated Vital to a free market Without law there is a barrier to entry for the market Need to have mutual trust in eachother Not in today s world Drug trade Place where law does not extend too Contract agreement that a court will enforce Court is simply an agency of government Government is the true enforcer Contract is a way to enforce a promise Government needs to be persuaded that it is a good promise that needs to be enforced Public Policy is way to persuade Public Policy can change Contract law is mostly common law Judge made law Great Benefit for business Business gets government to enforce agreements Why should a court government enforce contract Pg 190 Sources of Contract Law Have to first ask if it is a good transition or not May end up applying wrong law or something that doesn t apply at all Example Condos in Florida After a while newspapers were full of stories of people who had been ripped off from condo sales Acceptance difference Government passed statute to make seller create a disclosure for condos Can find similar statutes for similar situation with different products Uniform Commercial Code Statute proposed to states rather than Federal States formed commission Delegates Several articles that deals with faucets in law Article 2 is for sale of goods May be opposite of what common law gives as law Things that fall under Uniform Commercial Code counts movable objects Goods may vary on acceptance Others may NOT vary on acceptance need to mirror Can be oral behavioral written Two ways to interpret intent Objective Theory Looking for meeting of the minds Problem nobody knows what one is thinking Bargaining Theory Deal is a deal Everything is negotiable Have to have an agreement that a court will enforce Offer Three C s Contractional Content Clear Terms Communication Not a Contract becomes contract once accepted In order to have a contract you need to have contractual intent Intent means what a reasonable person would interpret a statement to mean Acceptance I accept Makes Contract a concrete thing Consideration Lecture 10 22 2012 Contract Law Contd Offer Can be revoked Acceptance Really easy rule Mirror Rule Boiled down to it s essence in common law acceptance has to match offer Time Subject matter In a goods transaction Changed Changing subject matter is okay Still treated as a contract Usually have a contract with new proposals Limited to terms Objected terms Terms materially change Acceptance is effective under dispatch not under deliverance Consideration All about detriment Has been modified through years to avoid inefficiency Not about benefit Legal detriment means giving up something that you wouldn t regularly do in exchange for a promise Where public policy comes in Governments most basic task is to protect secure enforce At a certain level consideration is an exchange IF that is the definition of consideration and everyone wants free market then there is a problem Courts would be leading market place and would be controlling price and wage controls Last president to do this was Nixon Price controls on gasoline Legal detriment vs Detriment in fact pg 201 Detriment in fact Money for coffee Legal detriment When you hear of legal think of rights and duties Assuming duty of paying 0 95 for coffee and they have assumed giving coffee for 0 95 Relinquishing the right to have money or exchange that right for the right of the seller and their coffee Adequacy of Consideration is not to be evaluated by courts only the Legal Consideration Past consideration is NO consideration If payment is given for something done in past and there is no present duty assumed or right relinquished then it would not be enforceable Pre existing duty rule If you are already under duty and another promise is made for the same duty the promise is not enforceable Only enforceable if extra terms are added or detriment is added from promisee side Modification of contract does not require consideration In a goods transaction Lecture 10 24 2012 Contract Law Contd Mutuality of Consideration Youtube Video Lawyer UP on Contracts Elura Michele discuss Mutuality of Consideration The So that test Alternatives to the Traditional Contract Law Bargain Theory all theories come from separate law ideals that overlap Contract Law Equity Promissory Estoppel Trend sweeping contract law Reliance Theory Remedy is the Reliance Need Promise Reliance Substantial economic detriment Proving claims Documentation Possible Oral testimony Depends if judge or jury will believe it swearing contest Example Newton buying Vandalia tractor company owned by Emerick in Illinois Newton puts in contract if Newton does not get license to distribute Kubota the deal is off This is a condition Kubota needs Emerick to cancel distribution license and Newton needs to apply Promise Newton will be dealer Reliance Emerick cancels distribution Newton applies Kubota turns Newton down Substantial economic detriment Newton does repairs 40 000 on Kubota tractors Emerick loses value of business without distribution if Newton leaves deal Kubota claims that Promissory Estoppel has only been used as a defense never as a tool to enforce a bargain Interesting on public policy because it will really screw up negotiations Court denies it will mess up negotiations it will not force Kubota to do business with Newton but would make them fix reliance on Kubota 40 000 for Newton and license for Emerick Moral of the story don t make a promise that you cannot keep and be careful in situations where you may be set up to make a promise Because it may be a promise that someone relies upon and you will be stuck with a liability Being introduced as something you are not may become a promise if someone relies on that introduction Youtube Video How Promissory Estoppel is like a bikini wax Upon receiving a strong offer from a reliable source a reasonable person does something to their detriment ONLY because of offer Quasi Contract Another Equitable Doctrine Known as Doctrine unjust enrichment Quasi meaning as if Not really a contract at all Opposite of reliance About benefits Three Requirements Benefit Person conferring wishes to be compensated person retains benefit Circumstances should be as such that the beneficiary should pay Example Pay for one bill twice Bill comes pay Same bill comes again pay again Could sue with Quasi Contract if company does not refund or give benefit for payment