Chapter 9 Law of Contract Deals with the enforcement of promises Not every promise is legally enforceable Idea of contracts is old goes back 1000 s of years o Wasn t important in USA until the 19th century industrial revolution o Basic idea was freedom of contract contract should be enforced because they were the product of the free will of the people who entered into them o Generally courts didn t interfere o Situation changed in 20th century dramatic increase in governmental regulation of private contracts Ex insurance contracts employment contracts product liability law Methods of Contracting Enforceable contracts can be either oral or written o Exception small group of contracts that must be in writing to be enforceable ex contracts to sell property Basic Elements of a Contract 1 Voluntary Agreement a 2 parts Offer and acceptance 2 Consideration party in the contract 3 Capacity a Ex minors don t have capacity a Something of benefit or value that is given by each party to the other 4 Both Objective and Performance of the contract have to be legal a Ex contract to sell cocaine is illegal Classifying Contracts 4 Bilateral or Unilateral made a promise o Unilateral 2 parties to the contract and only one of the parties has Ex frequent flyer program If you fly a certain number of miles you accumulate points which you can redeem for different things o Bilateral 2 parties to the contract and both parties have made a promise Ex Mark s contract with UMD Agrees to certain number of Valid Unenforceable Voidable or Void Contracts classes in exchange for a salary o Valid meets all of the requirements of a binding contract and can be enforced in court o Unenforceable meets all of the basic requirements for a contract but is unenforceable for some other reason Ex statute of limitations has expired needed to be in writing to be enforceable Basic Requirements voluntary consideration capacity legal o Voidable contracts in which one of the parties can get out of the contract for one or more reasons Voidable at the option of the injured party Ex lack of capacity Kylie Kardashian enters into a contract with me She can get out because she is a minor but I can t get out because she is a minor It s voidable at her option o Void creates no legal obligations Nobody can go into court and sue to enforce this Ex enter into a contract to sell cocaine Express Vs Implied o Express parties have directly stated the terms of their deal at the time the contract was formed o Implied terms are not stated but they are implied by the surrounding facts and circumstances to show that the contract has been formed Ex going to the dentist Executed vs Executory the contract o Executed when all parties have fully performed their duties under o Excecutory until fully performed it is called executory Matters because depending on which it is you get different relief from the court Sources of Contract Law UCC Article 2 Sales of Goods o Every state has adopted a version of the UCC except Louisiana only adopted part of it o Goods tangible moveable personal property o Article 2 does not cover service contracts Hybrid Contracts deals with both goods and services Courts try to figure out whether the service part or the goods part of the contract is predominant If goods part is than UCC applies If service part is predominant than UCC does not apply instead common law applies Common Law judge made law o Covers all areas that UCC doesn t deal with o Try to figure out if UCC says anything about the situation If it does than some courts will try to use the UCC as a guideline Difference between UCC and Common Law UCC is more flexible than common law Merchants are held to higher standards in UCC Under UCC unconscionable contracts are unenforceable o Not always true under common law UCC imposes duty of good faith and fair dealing in performance of every contract Common law doesn t have this requirement o Means honesty UCC is much less concerned with common law meeting technical requirements of the contract and more concerned with meeting the reasonable expectations of the parties o Reasonable Expectations expectation of parties who are in the marketplace Non Contract Obligations 2 Couple of situations in which law enforces obligations even though there is no offer and acceptance or consideration Quasi Contract o Party A provides benefit to party B Party B accepts benefit knowingly and keeps it in a situation in which it would be unfair to not require party B to pay for it Under law party B will be required to pay for the benefit even though there is no contract Benefitting party would pay reasonable value of the benefits he received Promissory Estoppel o Party A makes promise to party B no contract but party B relies on that contract to their detriment and then party A doesn t keep that promise Key Party B reliance interest will be protected Even though there s no contract court will order party A to compensate party B Promisee the person to whom the promise was made Promisor one who makes the promise o Need to prove 1 Promisor makes a promise to promisee that a promisor should foresee is likely to induce reliance by the promisee 2 Promisee actually does rely on the promise 3 It would be unjust of promisor to break the promise and not have to compensate the promisee Chapter 10 For a contract you need offer and acceptance Together the offer and acceptance equal a mutual agreement Requirements for an Offer The person who makes the offer is the offerer The person to whom the offer is made is the offeree Not all proposals are offers some proposals are jokes o ex if you go to Paris for spring break and tell your friend you ll give her money to jump off the Eiffel Tower that is a joke 3 Requirements of an Offer of the offerer 1 Objective indication of present intent to enter into a contract on the part a This means offerer isn t joking Offerer intends to make the deal b How do we judge intent 2 possibilities i Subjective Approach we look at what offerer actually intended ii Objective Approach look at the impression that the offerer has given to the offeree courts use this approach because it can be difficult to figure out what the offerer actually intended 2 Specificity or definiteness in the terms of the alleged offer a We require specificity for 2 reasons i The less specific the terms the more likely that there was ii no intent to enter a deal If there is no specificity it is hard for courts to figure out what to do in the event that one
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