Chapter 9 Introduction To Contracts 05 08 2014 Contracts Deal with promises and damages if promises are broken o Not all promises are enforceable Breach of promise would purpose a remedy Unlike tort law criminal law contract law is not imposable except for Affordable Care Act o Voluntary agreements for mutual benefits Contracts facilitate the planning necessary in modern society Evolution of Contract Law o Dates back to Common Law tradition in England several hundred years ago Common law was very technical precise rule oriented Contained a lot of elements of contracts Reflected laissez faire economy that was prevalent in the day o Freedom of contract idea that contracts enforced because they are products of free wills of the creators o Court s role is not to re write contracts Just to interpret and enforce them o Trend is going towards broader more flexible standards as opposed to rules in terms of contracts Interventionist approach Hands off approach Concepts like good faith justice began to emerge Requirements of a contract o Negotiation Agreement Voluntary Consideration Capacity legal ability to enter a contract AKA not a minor or mentally incompetent judged by court Legality Gratuitous promise I ll give you 10 000 for nothing not enforceable Oral Contracts are permissible do not need to be written Standardized form contracts contracts that are pre printed by one party and presented to other party for signing o Frequently terms are non negotiable Basic elements of contract o Offer and acceptance of that offer o Consideration to support each party s promise o Contract is between parties who have capacity to contract o Objective and performance of contract must be legal Types of Contracts o Unilateral Question One Sided agreement whereby one makes a promise to do or refrain from doing something in return for a In English If you do X Y and or Z you will be entitled performance to some benefit Example if you buy 10 coffees 11th one is free Two Parties I ll pay you 5 000 if you lease me a kiosk o Valid Contract meets all legal requirements for binding o Bilateral Question in the mall Enforceable o Unenforceable Valid but unenforceable because violates some law such as statute of limitations o Voidable in which one or more of parties have legal right to cancel their obligations under the contract Reasons one would cancel fraud duress mental illness misleading when entering contract Example sell jaguar and find out it has a Hyundai engine in it after the sale would constitute fraud o Void Agreements that create no legal obligations and for which no remedy will be given Ex Imposing a hit on somebody o Express contract terms between parties are explicitly oral or in writing states o Implied Contract when the surrounding facts and circumstances indicate that an agreement has been reached an implied contract has been created o Executed When all of parties have fully performed their contractual duties o Executory before such duties have been fulfilled Sources of Contract Law o Common Law Of Contracts Contracts for the sale of real estate services intangibles such as stocks or bonds o Uniform Commercial Code More likely to find a contract existed than the common law of contracts Sales of goods Looks at intent More concerned with practical realities what do people do in the real world interpret contracts based on reasonableness Judged by looking at customs of merchants in particular industry If client s acting within those customs courts will take that into consideration 2 states may interpret it differently gone a long way towards establishing uniformity requires that parties must observe o Hybrid contract Services common law goods article 2 o Unconscionable Contracts So unfair that it d be unfair to enforce o Merchants held to higher standard Considered merchant if you have or pretend to have some knowledge about what you re selling o Quasi contract o Promissory Estoppel Represents an obligation imposed by law to avoid injustice Unjust enrichment dude s painting your house and you let him do it even though it s supposed to be your neighbor s house then you refuse to pay him b c you don t have a contract Probably wouldn t have to pay full contract price just what s reasonably acceptable One person may rely on a promise made by another even though the promise and surrounding circumstances aren t sufficient to justify the conclusion that a contract has been created because one or more of the required elements is missing Make a promise but don t enforce it and other party commits certain actions based on you enforcing your promise Ex job offer across country Move your family out to Cali relying on promise of new job When you get there the job isn t there Chapter 10 The Agreement Offer 05 08 2014 Two parts to a contract Offer and Acceptance agreeing to same agreement at the same time Offer is the first step o Offeror person making the offer o Offeree person receiving the offer o Three Parts of an offer Objective indication of intent to enter contract Judged by objective standards that is what his words actions and circumstances signify about his intent Specificity and definition of terms A proposal that fails to state specifically what the offeror is willing to do and what he asks in return for his performance is unlikely to be considered an offer Communication of the offeree Offeror must be the one to explicitly state offer to offeree person receiving offer Under UCC requirements are less than requirements under common law UCC contract can be created in any matter good enough to prove an existence of contract makes it possible for contract to be performed even if there are certain gaps o Gap filling provision allows courts to apply reasonable terms Common law more strict definition of contract Needs what when how etc Special Offer Problem Areas Advertisements o In general advertisements do not constitute offers They are considered invitations to offer Exceptions clothing store offered to sell fur coat for 1 First come first serve Man comes first they say no b c he s a man Court rules that If it s very specific and requires actions to purchase certain goods it can constitute an offer Another exception we have 5 bmw s for 30 000 each o Generally treated as offers for unilateral contracts Some courts say that person completing task must know about reward beforehand some don t o Generally treated as making invitations to offer o Acceptance only occurs when auctioneer sells to the highest
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