ContractsOften defined as legally enforceable promisesNot all promises are contractsAn agreement that a court of law will recognize and enforceCategories of ContractsNot mutually exclusiveWritten v. Oral contractsany agreement, oral or written, may result in a binding contractmust meet certain requirementssome contracts are required to be in writing in order to be enforceable (defined by the statute of frauds)Bilateral contracts v. Unilateral contractsBilateral Contracts: involves 2 promises and 2 performancesMost contracts are bilateralUnilateral Contracts: involves 1 promise, followed by 1 performance, which then triggers a 2nd performance from the offeror.Exp. Reward postersExpress contracts v. Implied contracts v. Quasi-contractsExpress contract: created when parties have expressly agreed on the promises and performances.Implied contract: the agreement is reached by the parties’ actions rather than their words.Exp. Going to the doctor, patient typically doesn’t negotiate terms but owes the doctor a reasonable fee for services rendered (an implied contract in fact)Quasi-contract: no express or implied contract exists but a party may sill recover losses.Enforceable where one party suffers losses as a result of another party’s unjust enrichment.Based on an implied by law recovery, benefits from an unrequested serviceExp. Doctor performs services on an unconscious patient.Recovery also possible when an express contract is unenforceable for some legal reason, but one of the parties has gained a benefit.Exp. Contractor installs new floor but before he can finish a fire destroys the house. Contractor may still recover for services rendered.Valid v. Void contractsValid contract: has the necessary elements.Void contract: agreements that have not been formed in conformance with the law from the outset of the agreement and cannot be enforced by either party.Exp. A contract for the sale of illegal narcoticsVoidable v. Unenforceable contractsVoidable contract: one party at its option may either disaffirm the contract or enforce it.Exp. Minor buys a used car, law allows minors to cancel contracts until they turn 18, she may disaffirm and return the car or enforce by keeping the car until she turns 18.Avoiding the contract: when a party chooses to legally disaffirm a contract that was voidable.Unenforceable contract: meets the elements required by law for an otherwise binding agreement, but is subject to legal defense such as the statutory requirement that certain contracts be in writing in order to be enforceable.Sources of LawState Common LawContracts for services or real estateState Statute Based on Uniform Commercial Code (UCC)Contracts for goods or productsUCC also covers transactions related to leasing of equipment.Hybrid contracts: involve terms for both goods and servicesSource of law is established by determining the predominant thrust of the contract subject matterIf the contract is predominantly for services, and the goods are incidental, the contract is governed by common law.If the goods are the main feature of the contract, and services are incidental, the contract is governed by statutory lawDetermining source of law, courts will examine:Allocation of price (value of goods v. services)Uniqueness of the services ( did it require special talent?)The more unique the service, the more likely it is covered by common law.Overview of a contract transactionContract is formed when two or more parties agree to a particular set of termsOne party typically agrees to provide services, real estate, or goods in exchange for something of valueAn agreement is legally binding if it meets formation requirements.After formation requirements are met, the contract is governed by laws that set requirements for enforceabilityAssuming contract was properly formed and is legally enforceable, the law sets rules and consequences related to how the parties fulfill their obligationsKnown as performance (or nonperformance) of the agreement.Contract Formation: Mutual AssentMutual assent: broad underlying requirement to form an enforceable contractIn order for a contract to be valid, parties must reach an agreement using a combination of offer and acceptance.Offeror must make a valid offer to the offeree who must accept the offer in order for parties to be bound by the argument’s termsDoes not require that both parties actually intended to enter into an argumentRequires only that the parties’ acts or words lead the other party to reasonably believe that an agreement has been reachedOther three requirements for formation (other than agreement)Agreement must be supported by considerationParties must have capacity.Subject matter and performance must have legality and be consistent with public policyRequirements for enforceabilityAgreement must be the product of general assentIn some cases, certain terms must be in writing (statute of frauds)Agreement Part 1: OfferOffer: promise or commitment to do (or refrain from doing a specified activity.Expression of willingness to enter a contract by the offerorOfferor must have objective intent to contract when making the offer.Must have serious intention to become bound by the offerTerms of the offer must be reasonably certainAbsent of these the offer is considered an offer to discuss or negotiate terms of an agreement.Intention depends on the contexts of the agreement.Advertisements as an offerMost advertisements are not offersMass advertisements are recognized as an invitation for the consumer to make an offer to the sellerAgreement Part 2: AcceptanceOfferee has power of acceptanceAcceptance: expression of agreement to terms of the offerTypically communicated in writing or orallySome cases may also accept via action or conductOffer has to be properly accepted by the offereeOfferor has the power to terminate, modify terms, or prescribe the method of acceptance of the offer up until the acceptance of the offer.Events of termination of the power of acceptance: action of the parties v. operation of lawOffer may be terminated in three waysRevocation (offeror withdraws the offer)Most states recognize that revocation is only effective upon receipt by the offeree or the offeree’s agentSome offers are irrevocableOffers in the form of an option contract,When the offeree partly performed or detrimentally relied on the offer, andFirm offers by a merchant under the UCCOption ContractsOfferor agrees to hold an offer open for a certain period of time in exchange for