Contracts Chapters 7 8 9 10 11 pg 230 237 12 20 questions Employment Law Chapter 23 17 questions Business Organizations Chapter 24 7 questions Corporations Chapter 25 questions 6 Chapter 7 Nature and Classification an assertion that something either will or will not happen in the Promise future Common law governs all contracts except when it has been modified or replaced by statutory law such as the UCC or by administrative agencies Promisor Promisee Contract o Formed by two or more parties who agree to perform or to refrain from the person making the promise the person to whole the promise is made agreement that can be enforced in court performing some act now or in the future Objective theory of contracts a party s intention to enter into a contract is judged by outward objective facts as interpreted by a reasonable person o Determines intent in a contract o The facts include What the party said when entering into the contract How the party acted or appeared The circumstances surrounding the transaction Requirements of a valid contract o Agreement An agreement to dorm a contract includes an offer and an acceptance One party must offer to enter into a legal agreement and another party must accept the terms of the offer o Consideration Any promises made by parties must be supported by legally sufficient and bargained for consideration Consideration convince a person to make a deal something of value received or promised to o Contractual capacity Both parties entering into the contract must have the contractual capacity to do so the law must recognize them as possessing characteristics that qualify them as competent parties o Legality The contract s purpose must be to accomplish some goal that is legal and not against public policy Defenses to the enforceability of a contract o Genuineness of asset or voluntary consent The consent of both parties must be genuine Ex a contract formed as a result of fraud o Form The contract must be in whatever form the law requires Ex some contracts must be in writing to be enforceable o Types of contracts Bilateral vs unilateral contracts the party making the offer Offeror Bilateral contracts by promising to perform o Promise for a promise If the offeree can accept the offer simply Unilateral contracts can accept only by completing the contract performance the offer is phrased so that the offeree require a special form or method of o Promise for an act Formal vs informal Formal contracts creation formation to be enforceable Informal contracts Express vs Implied in Fact Express contracts Implied in fact contracts parties conduct o Requirements requires no special form for creation formed by words orally or written formed at least in part by the The plaintiff furnished some service or property The plaintiff expected to be paid for that service or property and the defendant knew or should have known that payment was expected The defendant had a chance to reject the services or property and did not Executed contract a contract that has been fully performed on both sides a contract that cannot be enforced because of has the four elements necessary for contract formation a valid contract that can be avoided at the option of one or Valid contract Voidable contract both of the parties Unenforceable contracts certain legal defenses against it Void contract if a contract is void Quasi contracts o Quasi as if o Not true contracts because they do not arise from any agreement o Fictional contracts that courts can impose on the parties as if the parties no contract at all None of the parties has any legal obligations contracts implied in law had entered into an actual contract if a court determines that the terms of the contract are Plain meaning rule clear from the written document alone the plain meaning rule will apply and the contract will be enforced according to what it clearly states Other rules of interpretation the parties intentions from the terms of the contract the court will apply a number of well established rules of interpretation o A reasonable lawful and effective meaning with be given to all of a if a court finds that there is a need to determine contract s terms o A contract will be interpreted as a whole not by its individual parts o Terms that were the subject of separate negotiation will be given greater consideration than standardized terms and terms that were not negotiated separately o A word will be given its ordinary commonly accepted meaning and a technical word or term will be given its accepted technical meaning unless the parties clearly intended something else o Specific and exact language will be given greater consideration than a o Written or typed terms prevail over preprinted terms o A party that uses ambiguous expressions is held responsible for the general language ambiguities When the language has more than one meaning it will interpreted against the party that drafted the contract o Evidence of trade usage prior dealing and course of performance may be admitted to clarify the meaning of an ambiguously worded contract Looking at past experiences either in the industry or between the two parties will be used to clarify wording Chapter 8 Agreement and Consideration offer and acceptance form an agreement a promise or commitment to perform or refrain from performing some Agreement Offer specified act in the future o Three elements There must be a serious objective intention by the offeror the one making the offer Does not include o Expressions of opinion o Statements of future intent o Preliminary negotiations o Advertisements catalogues and circulars o Auctions The terms of the offer must be reasonably certain or definite so that the parties and the court can ascertain the terms of the contract The offer must be communicated to the offeree the one receiving the offer the offeror s act of withdrawing an offer Revocation o Must be done before acceptance Option contract specified period of time in return for a payment given by the offeree o Takes away the offeror s power to revoke an offer for the period of time created when an offeror promises to hold an offer open for a specified in the option a rejected of the original offer and the simultaneous making of a Counteroffer new offer Mirror image rule the offer exactly Termination o An offer terminates automatically by law when the period of time specified requires that the offeree s acceptance must mirror those of in the offer has passed o If no period of time for acceptance