BMGT380 Mark Fall 13 Exam 3 Chap 9 10 11 not 356 57 12 13 14 15 16 up to 443 49 50 up to 1330 Chapter 9 Introduction to Contracts Law of Contracts deals with the enforcement of promises what is enforceable and how Not all promises are legally enforceable Contract a legally enforceable promise or set of promises o A person injured by a breach of contract is entitled to call on the courts to force the breaching party to honor the contract o Functions of a contract Ability to enter into agreements with others so that we may call on the law to make sure the agreements are honored sort of private law Facilitate planning necessary for a modern industrialized society Evolution of Contract Law First is Mesopotamia and 15th century England 19th Century first gained legal importance with Industrial Revolution o Freedom of Contract contracts should be enforced because they are the products of the free will of the contracting parties who are free to determine the extent of their obligations Courts used a hands off stance and equal bargaining power was assumed Pure contract law consisting of precise clear technical rules 20th century much more governmental regulation o Because of unequal bargaining power with large companies o Concerned with creating contract rules that produce fair results Methods of Contracting Enforceable contracts can be either written or oral o Only certain contracts need to be in writing to be enforceable Standardized form contracts Contracts printed by one party and presented to another for signing Little to no bargaining power and nonnegotiable Basic Elements of a Contract 1 Voluntary Agreement o Made up of an offer and acceptance of offer 2 Consideration something of benefit given by each party to each other 3 Parties must have capacity to contract o Minors don t have capacity 4 Objective and performance of the contract must be legal o I e a contract to sell cocaine or hit contract in unenforceable 4 Ways to Classify Contracts any given contract always falls into multiple categories 1 Bilateral vs Unilateral o Unilateral only one party has made a promise Ex Frequent flyer program if you fly a certain number of miles you accumulate points you can redeem for certain things trips upgrades Customer isn t promising to do anything only airline is o Bilateral two both parties have made a promise Contract formed when promises exchanged even before performing any acts Ex Mark s employment contract with UMD to teach a certain number of classes and do research and UMD agrees to pay a certain amount BMGT380 Mark Fall 13 Exam 3 Chap 9 10 11 not 356 57 12 13 14 15 16 up to 443 49 50 up to 1330 2 Valid Unenforceable Voidable and Void Contracts o Valid Contract all of the requirements for a binding contract and thus is enforceable in court o Unenforceable Contract meets all of the basic elements of a contract but is unenforceable for some other reason some examples include Statute of limitations may have expired Statute of frauds contract may need to be written to be enforceable Ex Agree to sell condo for x number of dollars but don t put it in writing if person pays and the title to the condo isn t given you can t sue b c land building must be in writing o Voidable Contract contracts in which one of the parties can get out of the contract cancel their obligations for one or more reasons Only injured party has the right to cancel the contract if they choose If they do not cancel it contract can be enforced by either party Ex Minors don t have capacity so they can get out a contract just b c of that Kylie Kardashian whichever is the minor enters into a contract with you she can void the contract but you cannot Ex contracts induced by fraud or duress o Void Contracts agreements that create no legal obligations and for which no remedy will be given if contract is breached No one could go into court and sue to enforce them Includes many illegal actions contracts to commit crimes Ex Agreement to sell a kilo of coke and you don t pay for it you can t be sued Ex Mafia contract to murder someone hit contract 3 Express vs Implied Contracts o Express Contract parties have expressly specifically stated the terms of the deal at the time the contract is formed Can be written or oral o Implied Contract surrounding facts and circumstances show that a contract has been formed AKA Contract implied in fact Ex going to the dentist dentist agrees to use reasonable care and skill in treating you and you agree to pay him in return 4 Executed and Executory Contracts o Executed when all parties have fully performed all their contractual duties o Contract is executory until all duties have been fully performed o Matters because damages outcome changes depending on stage Sources of Contract Law 2 Basic Sources o 1 UCC Article 2 in particular deals with the sale of goods Not one document every state has their own 51 of them states and DC Most very similar and have adopted UCC Outlier is Louisiana which has only adopted part of the UCC Goods tangible moveable personal property Personal property everything except real property land buildings i e laptop Doesn t apply to real estate or intangibles ex stocks and bonds BMGT380 Mark Fall 13 Exam 3 Chap 9 10 11 not 356 57 12 13 14 15 16 up to 443 49 50 up to 1330 Does not cover service contracts o 2 Common Law of Contracts judge made law Covers everything the UCC doesn t cover Applies to contracts for sale of real estate services and intangibles Hybrid Contract a contract that deals with both sale of goods and services o Courts look to which part is more predominant i e apply UCC if goods are more o CASE Pass Differences between UCC and Common Law o UCC is much more flexible than the common law UCC Courts are much more likely to find that a contract was made o UCC is less concerned than Common Law of meeting technical requirements of a contract and more concerned with meeting reasonable expectations of the parties For people in the marketplace today not hypothetical person used for torts o UCC distinguishes between merchants and non merchants Merchant someone who regularly deals with the kinds of goods being sold or represents that he same some special knowledge about the goods or employed agent fitting either Merchants are held to a higher standard than non merchants o UCC expressly recognizes the concept of unconscionable contracts A grossly unfair or one sided contract Unenforceable under UCC but sometimes enforceable under common law o UCC imposes a duty of
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