B Law Test 2

Contracts Checklist

1. Offer- Someone proposes a deal

2. Acceptance- accept the deal

3. Consideration- Bargaining

4. Legality- Lawful purpose

5. Capacity- must be in a sound mind

6. Consent- certain of no trickery

7. Writing- Some are oral/ no written contract

Privity

People or a third party in contract and have interest in the contract

Mason Case Contract

Biggest non-compete contract (one party agrees not to compete with the other)

Example: Say that you have to stay with this company for 5 years if you leave then you can’t sell your product within 20 miles for here

Bilateral Contracts

When both parties make a promise (yard work)

Unilateral Contract

When one party makes a promise the the other party can accept only be actually doing something (lost dog sign example, get the money once you find the dog)

Executory

When the contract has been made but, one or more parties have not yet fulfilled its obligations

Executed

When all parties have fulfilled their obligations

Voidable Contract

when the law permits one party to terminate the agreement

Void agreement

Is a contract that neither party can enforce, usually because it was made illegally

Uniform Commercial Code (UCC)

Regulates all about contracts about goods anything moveable, so not money or services

Under UCC ONLY offers are open for 3 months

Promissory Estoppel

If the defendant made a promise that the plaintiff relied on, even when there is no contract, a plaintiff may use promissory estoppel to enforce the defendants promise if they can show

1. the defendant made a promise knowing that the plaintiff would likely rely on it

2. The plaintiff did rely on the promise

3. The only way to avoid injustice is to enforce the promise

Conrad V. Fields

Walter fields was paying for Conrads law school, he stopped making payments, and then she sued him (promissory estoppel)

Quasi- Contract

Even when there is no contract, a court may use a quasi-contract to compensate a plaintiff if they can show

1. The plaintiff gave someone benefit to the defendant

2. The plaintiff reasonably expected to be paid for the benefits and the defendant knew that

3. The defendant would be unjustly enriched if they did not pay Lund V Lund Case (farmland)

Mirror image rule

Have to accept exactly what the contract says

offerer can make up anything they want to- master of the offer

Example in class: as soon as the letter hits the mailbox it is a deal, no matter if they never get the letter/lost in mail

Mason Case

Nelson killed three people and then flew back to Atlanta and walked in front of the cameras to make sure it looked like he was there the whole time. Lawyer on tv said id give anyone a million dollars if they could make it back in 28 minutes

Mason’s statement to offer a million dollars to anyone who could travel to an Atlanta hotel in 28 minutes lacked an intention to make an offer for unilateral contract it was a hyperbole

Letters of Intent

Summarize the negotiating process usually serious negations not causal

Definiteness (Baer v. chase Case)

Terms of the offer must be definite, not vague

Baer v. chase case promises was not definite enough, they didn’t know how successful the sopranos was going to be (how much money they were going to make and per person) but wasn’t stated clearly enough in the contract therefore couldn’t be enforced

UCC and Gap Fillers

rules to supply missing terms in a contract

Output and requirements contract

Output= contract obligates the seller to sell all their output to the buyer

Requirements= contract obligates the buyer to obtain all of their needed goods for the seller

Revocation (terminating a offer)

The offeror pulls the contract before anyone accepts the offer

Rejection (terminating an offer)

Offeree rejected the offer, or a counter offer is made, or the counter offer is rejected

Expiration (terminating an offer)

The offer expires if no one excepts it in time

Termination (terminating an offer)

An offeror dies or becomes mentally incapable, then the offer is terminated or destruction of the subject matter

UCC 2-207

UCC modifies the mirror image rule, maybe accept an contract that has additional things added to it but wasn’t written down

Clickwrap

proposed terms are displayed and clicking “ I agree” is binding

Browsewraps

proposed terms are behind a hyperlink, only enforced if users at least knew the agreement existed, regardless if they read it or not

Hybridwrap

Combination of the above, terms are behind a hyperlink, and next to hyperlinked terms is a click to consent button

Consideration

Is the inducement, price, or promise that causes a person to enter into a contract

Value in a consideration

requires legal benefits to the promisor or legal detriment to the promisee

Bargained- for exchange

This occurs when something is sought by the promisor and given by the promisee in exchange for their promises

The parties must bargain for the consideration

What is value?

Act is any action that a party was not legally required to take in the first place

Forebearance is refraining from doing something that one has a legal right to do

Promise to act or forbear refers to any promise to do (or not do) something in the future

Hamer V. Sidway Case

Uncle says he’ll give his nephew 5,000 dollars as long as he doesn’t gamble, drink, smoke, etc until he’s 21 years old, the nephew succeeded

The uncle died and in the estate it didn’t say that the nephew gets the money, so he sued and won because it was a fair agreement and he followed through on his part

Rumspringa

Reminded Carroll of the Hamer V. Sidway case

Its a rite a passage for the amish people, when you turn 21 you can leave the house and do whatever you want, then you have to decide if you want to go back to the amish life or not

What consideration isn’t

Illusory Promise, preexisting duties, and past considerations

Illusory Promise

It is not a consideration therefore there is no contract and neither party can enforce the deal

Exceptions: requirement contracts (buyer agrees to buy everything from their seller) and output contracts (seller has to sell all of their output to the one buyer)

UCC gives explicit support to these types of contracts

Preexisting Duty & Alaska Packers case

You can’t get payed for something you already agreed to do

The fisherman wanted more money the APA promise to pay the workers more wasn’t supported because the workers weren’t doing any more work

Modifications with the UCC

Under the UCC you can modify an existing contract even if there is no new consideration

A signed agreement that excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded

You can cancel a contract if both parties agree that a modification is needed

Unforeseen Circumstances

Usually in construction, started a project and found something horrible, now need more money to complete it, or leave the project unfinished, usually valid consideration

Past consideration & Lee V. Choi Case

Choi agreed to help the Blackwell family after the Blackwell injury, the Blackwells made an agreement that choi will always be taken care of

The promises lack consideration since each reference was due to previous (past) work

Liquidated debt

When there is no dispute about the amount of money owed

Unliquidated debt

The parties dispute about whether any money is owed, or about how much

Accord and satisfaction

The debt is unliquidated

The parties agree that the creditor will accept as full payment a sum less than they have claimed

the debtor pay the amount agreed upon

By check the debtor writes it in full settlement on the check

Agreements Not to Compete

A non-compete agreement where an employee promises no to work for a competitor that left for another business, or if you just bought our a business they have to agree not to open up another business with a different name but all the same people right next to you

Criminal Statues & Mensch V. Heinowitz case

Contracts dealing with an illegal subject matter will not be ratified

Sold marijuana when they were illegal, and now weed is legal,

Your business partner started to rip you off, however the contract was formed when marijuana was illegal so when you sue it doesn’t matter

One illegal always illegal

“Key Man” Insurance

goes along with life insurance you might have insurance on a key man or someone who is very important to you company

Usury Law

Prohibits you from charging excess interest on loans

An extreme case is if you break the usury law and the lender gets in trouble then you may not get any of your money back

By each state

Public Policy A.Z V. B.Z Case

A married couple underwent in vitro fertilization, she froze some of her eggs, the wife added a written note at the bottom of the contract that says she can still use the embryo if the couple separated and that her husband agrees, he signed it without looking

Later on he tried to prohibit her from using the embryos and she argued that she could because there was a contract, however the court said it is unenforceable because it is against public policy

Exculpatory Clauses

Are contracts provisions that attempt to release one party from liability in the event the other is injured

usually ski lift tickets, parking garage tickets (not responsible for car)

Bailment Cases

Giving possession and control of personal property to another person

Unconscionable clause

A contract that a court refuses to enforce because of fundamental unfairness

UCC is less extreme on this than common law

Clark Case

A very old lady wealthy lady 84 year old, a little crazy, lives alone, and plays with dolls

When she was 85 years old she had to have surgery and they ended up keeping her there for 20 years and milked her for her money because she had billions of dollars and it was a non profit hospital

When she died her estate found out about this and sued them for breach of contract saying she wasn’t mental sound to agree to this contract

Disaffirmance

Disaffirm is to give notice of refusal to be bound by an agreement

Disaffirmance of minors

A minor that disaffirms a contract is still entitled to their money, so you have to give them back their money, but the minor also has to give back the item

Minor and old people or people who are mental incompetence are the same

don’t make deals with minors

Ratification

proving or accepting an action or contract after it has already been done

Exceptions of ratification

1. In a few state you don’t have to repay a minor all of their money if they disaffirm

2. Necessaries if it is a necessity like food, a ride, you can’t disaffirm

3. If the minor lied about their age (only in a few states)

4. If you are very intoxicated, however if the court has sympathy and it will effect your family then they might

Fraud

Plaintiff must show the following to prove fraud

Defendant knew that their statement was false, or that they made the statement recklessly and without knowledge of whether it was false

the false statement was material

the injured party justifiably relied on the statement

Reckless Misrepresentation of the fact

You rely on what was presented and was accepted

Status quo ante

returning something back to how it was originally before a change happened

Duress

If one party makes an improper threat that causes the victim to enter into contact, and the victim had no reasonable alternative, then the contract is voidable

claims of economic duress, courts look at these factors

acts that have no legitimate business purpose

greatly unqualified bargaining power

an unnaturally large gain for one party

financial distress to one party

Due Dilligence

check the list that you look through, make sure you don’t get into a bad deal

look at financial records, debt, all of property

Caveat emptor

Let the buyer be ware

don’t take anything that they say, don’t trust them

Statues of Fraud

Requires certain agreement to be in writing to be enforceable

• for the transfer of an interest in land

• that cannot be preformed within one year

• in which a party promises to pay the debt of another

• Made by an executor of an estate to pay a debt of the estate

• made in consideration of marriage

• For the sale of goods of $500 or more

Writing requirements

Must be signed by the defendant

Signature must be signed by the party that is resisting enforcement of the contract

UCC SOF, Goods over $500

Less strict, they look that the parties reached an agreement

Only need it to be signed by the defendant, and the quantity of goods

Merchants Exception under the UCC

If its a merchant who regularly makes deals, made an oral contract

Then the merchant sends a written confirmation that is definite enough to bind them together

the merchant who receives the confirmation will also be bound by it unless they object within ten days

Special Circumstances under the UCC

an oral contract may be enforceable without writing if

the seller is making goods special for the buyer

the defendant admits there was a contract

the goods have already been delivered or paid for

Parol Evidence

Anything that was said, done, or written about before during or after the parties signed the document

General rule don’t allow parol evidence

Integrated Contract (parol evidence)

It is the writing that the parties intend as the final, complete agreement

It has no parol evidence in it

Clauses state that this contract is the “full and final expression” of the parties agreement and that anything said before or during the signing is irrelevant

Exceptions to Parol

If the court determines that the written contract is incomplete or ambiguous, or fraud, misrepresentations, or duress then they will permit parol evidence (usually old emails)

Discharge

When you fulfill all of the obligations of the contract

Or when the parties agree to terminate the contract (rescind)

Conditions

An event that must occur before a party becomes obligated under a contract

Express conditions when a party expressly sates a conditions

Implied conditions these exist when it is clear from the agreement

Types of conditions

Condition Precedent: this requires an event to occur BEFORE a duty arises

Condition Subsequent: this requires an event to occur AFTER a duty arises

Concurrent conditions: both parties have a duty to perform simultaneously

Completion

Strict performance: requires on party to perform its obligations precisely, with no deviation from the contracts terms (fails to perform could receive nothing)

Substantial performance: when one party fulfills enough of its contracts obligations to warrant payment (if it’s substantial the party will have the few defects subtracted off)

Personal satisfaction Contracts

Usually with chefs or Artists, says that if you don’t like what was made you do'n’t have to pay for it

Impossibility

Means that something has happened making it literally impossible to do what the promisor said they would do

destruction of the subject matter

death of the promisor

illegality

Force Majeure (French term)

enforceable unless force majeure occurs

was enforceable but then a war broke out, pandemic, strike, etc

Remedy

A method a court uses to compensate an injured party

expectation interest: the interest is what the injured part excepted to receive from the contracct

Reliance interest: the injured party incurred an expense by relying on the agreement then there compensated

Restitution interest: An injured party conferred a benefit on another party but received nothing due to breach of contract

Equitable intrest

specific performance and injuction