3 2 15 Chapter 10 Contract Law Court Law and Common Law Broad laws that apply to all contracts Uniform Commercial Code Contract Rights and obligations duties that are applied between parties o Binding have to meet requirements of a contract o Non binding not enforceable not a contract o Types Express contracts those that are in writing or verbally agreed between parties enforceable either way clearly evidenced something you can Implied contract one that arises from the actions of the parties Court may find insert that an implied contract existed even though no express contract o Elements 5 requirements whether verbal or written have to be able to point to for court to find that you have a binding contract Agreement among the parties Consists of an offer and an acceptance Offer promise to do something or refrain from doing something much o Clear intent by the offer to be bound I ll give you so o Basic terms and conditions of offer must be clear no uncertainty hypotheticals o Offer clearly communicated to other party o Can be terminated Can be withdrawn before it is accepted Based on Time If rejected If they make a counteroffer By operational law Offer is made time specific If no specific time set Court says it can expire after a reasonable period of time Subject matter of agreement is destroyed If person suffers a mental or physical incapacity If subject matter of contract becomes illegal Acceptance o Clear o Unconditional o Unequivocal Consideration something to value bargain for in exchange for a promise Money on one side service on the other 3 2 15 Court does not want to get involved in determining if consideration is adequate equivalent or fair market value parties are free to agree to whatever they want in a contract A promise or estopel outline5 or detrimental reliance consideration may not be required to define a valid contract if it would be unfair to find there wasn t a contract o If it s unfair if someone relies on your promise or bid we may find you don t need consideration to define a contract General contractors and subcontractors agreements subcontractor hasn t gotten any consideration yet Charitable bid Charity relies on promises to build something Parties that have the legally capacity of contract Not legal under 18 or insane or intoxicated at the time they entered into contract Means person enters into contract voidable contract There is a contract in effect but it is up to the minor incapacitated person if they want to go into the contract or void it Few contracts that minors cannot void o Enlistment in military o Marriage contracts o Most educational loans o Cost incurred for medical care Subject matter has to be law abiding If subject matter is illegal contract is void If subject matter becomes illegal after you entered into it it becomes a void contract Void Contract Different from voidable contract one that never existed from the beginning i e if the subject matter is illegal 3 types of agreements courts will look at even if subject matter is illegal courts can enforce public policy fairness point of view o Exculpatory Contract one that releases one party from consequences brought about by their wrongful acts Against public policy to force someone to sign this type of agreement o Unconscionable Contract Contract that is grossly unfair to an innocent party often due to unfair bargaining power o Contracts in restrain of trade Covenant not to compete employee signs with employer saying they wont go to work for a 3 2 15 competitor for a certain period of time in a certain area Court will enforce if reasonable time period area not 5 years anywhere in US everyone has right to get a job make a living Genuine consent Parties have to know what they re agreeing to fully aware of all material facts No fraud no undue influence Need fully aware consent Protect people from any undue influence pressure Exception most states home solicitation statutes o If you sign a contract to buy something from door to door sales person you have a 3 day cooling off period after you sign contract to cancel it You need to make sure that you document the cancellation within the 3 days o Statute of Frauds there are 5 types of contracts that have to be in writing or the court won t enforce them other subject matters can be verbal and the court will hear case and try to resolve Contract of real property selling land crops timber etc Contract itself can t be performed within one year Promise to pay someone else s debt Promises made in consideration of marriage Promises made by an administrator whom is often a relative to personally pay the debts of an estate o Written document of a contract Material terms of agreement should be in written contract Both parties of a contract should sign it Law says only party trying to enforce it against has to sign it Electronic signatures of a contract are presumed to be valid and are enforceable o Parole Evidence Rule 10 outline If you have a written contract if there is a dispute you cannot introduce oral testimony evidence if it contradicts the written contact Oral testimony can be introduced if written contract is unclear or if it is missing a term o Contracts can be discharged If both parties substantially perform their obligations substantial performance is enough doesn t have to be perfect 9 800 is good enough if promised 10 000 only pay for 9 800 One party can be discharged from rights or obligations Assign rights of a contract to another party Delegate duties obligation to a 3rd party 3 2 15 o Assignment and delegation typically don t apply to contracts involving services only to goods Material breach someone didn t substantially complete their portion Non breaching party may be entitled to damages Non breaching party has obligation to try to mitigate their damages losses from the contract Anticipatory Breach give advance notice that you re going to breach so party starts to try to mitigate damages and calculate the damages that they are going to incur Discharged by agreements of the parties Rescind Rescission All parties agree to terminate the contract Novation parties to a contract agree to discharge one party from a contract and substitute a 3rd party new agreement Mental or Physical Incapacitated Contract discharged by operational law If subject matter of contract is destroyed If subject matter of contract becomes illegal If due to no fault of either party to the agreement it becomes extremely more difficult expensive to fulfill contract court