Chapter 9: Introduction to Contracts and Agreement (unedited)

contract

A promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty.

elements of a contract

agreement, consideration, contract capacity, legal object

offer and acceptance

the agreement consists of

agreement

One of the four elements necessary for a contract; consists of an offer made by one party, the offeror, and the acceptance of the offer by another party, the offeree.

offer

A key factor in the agreement element of a contract; consists of the terms and conditions set by one party, the offeror, and presented to another party, the offeree.

acceptance

A key factor in the agreement element of a contract; consists of the agreement of one party, the offeree, to the terms of the offer in the contract made by the other party, the offeror.

consideration

The bargained-for exchange; what each party gets in exchange for his or her promise under a contract.

contractual capacity

The legal ability to enter into a binding agreement.

legal object

the contract can not be either illegal or against public policy

under the age of majority, intoxicated, or suffering from mental illness

those who are __________ do not have the capacity to enter into legally binding contracts

defenses to a contract

lack of genuine assent and lack of proper form

lack of genuine assent

A defense to the agreement of a contract in which the offeree claims that the offeror secured the agreement through improper means, such as duress, fraud, undue influence, or misrepresentation.

lack of proper form

it lacks a writing

common law and the Uniform Commercial Code

sources of contract law

bilateral or unilateral

contracts can be classified as either

what response the offeror expects from the oferee

whether a contract is bilateral or unilaeral depends on

bilateral contract

a promise echanged for a promise

unilateral contract

a promise exchanged for an act

the oferor must hold the offer open for a reasonable amount of time to allow the offereee to complete the performance

to prevent unjustice, once an offeree begins performance

expressed or implied

contracts are classified as

express contract

a contract in which all the terms are clearly set forth in either written or spoken words

implied contract

a contract that arises not from words of agreement but from the conduct of the parties

three conditions for an implied contract

First, the plaintiff provided some property or service to the defendant. Second, the plaintiff expected to be paid for such property or service and a reasonable person in the position of the defendant would have expected to pay for such property or services. Third, the defendant had an opportunity to reject the property or services but did not.

quasi-contract

a court-imposed contractual obligation to prevent unjust enrichment

valid

a teem applied to a contract that includes all four elements of a contract: agreement (offer and acceptance), consideration, contractual capacity, and legal objects

unenforceable

a term applied to a contract that, becuase of a law, cannot be enforced by the courts

void

a term applied to a contract that is not valid becuase its object is illegal or it has some defect that is so serious that it is not a contract

one or both of the parties can either withdraw from the contract or enforce it

a contract is voidable if

voidable

a term applied to a contract that one or both parties have the ability to either withdraw from or enforce

executed

a term applied to a contract in which all of the terms have been fully performed

executory

a term applied to a contract in which not all of the terms have been fully performed

formal contract

a contract that must have a special form or must be created in a specific manner

formal or informal

contract may also be classified as

contracts under seal, rcognizances, letters of credit, negotiable instruments

the restatement of contracts identifies what fornal contracts

contract under seal

a contract that has a seal certifying its legality, such contracts require no consideration for them to be legal

do not

states today ____ require contracts to be under seal

recognizance

an obligation in which a party acknowledges in court that he or she will perform some specific act and/or pay a pric on failur to do so

letter of credit

a binding document that a buyer can request from a bank to quarantee that the payment for goods will be made to the seller

the uniform commercial code

who governs letters of credit

negotiable instrument

a written document signed by a person who makes an unconditional promise to pay a specific sum of money on demnad or at a certain time to the holder of the instrument; an acceptable medium for exchanging value from one person to another

informal contract

a contract that requires no formalities

intent, definite and certain terms, and communication to the offeree

three elements of an offer

intent

the intedning purpose or goal of an action, especially in a contract

definite and certain terms

all the material terms must be included

communication to the offeree

the offer must be communicated to the offeree or to the offeree's agent

with reserve

If nothing is stated to the contrary in the terms of the auction, an auction is presumed to be

without reserve

the seller is treated as making an offer to accept the highest bid

material terms

those terms that allow a court to to determine what the damages are in the event that one of the parties breaches the contract

revocation by the offeror, rejection by the offeree, death or incapacity of the offeror, destruction or subsequent illegality of the subject matter of the offer, and lapse of time or failure of other conditions stated in the offer

five ways to terminate an offer

option contract

an agreement whereby the offeree gives the offeror a piece of consideration in exchange for the offeror's agreement to hold the offer open for the specified period of time

revocation by the offeror

the offeror can revoke the offer at any given time

rejection by the offeree

once the offeree rejects the offer, it is terminated

death or incapacity of the offeror

the offer terminates immediately if the offeror dies or loses the legal capacity to enter the contract

destruction or subsequent illegality of the subject matter

if the subject matter gets destroyed or becomes illegal, the offer immediately terminates

lapse of time or failure of another condition specified in the offer

if the offer staes that it will be held open for only a certain time, the offer will terminate when the time expires

manifestation of intent, agreement to the definate and certain terms of the offer, and communication to the offeror

elements of the acceptance

performance or by a return promise

rwo ways an offeree can manifest her or his intent to enter the contract

First, the offeree receives the benefits of the offered services with reasonable opportunity to reject them and knowledge that some form of compensation is expected, yet the offeree remains silent. Second, the offeror tells the offeree that silence or inaction will constitute an acceptance, and the offeree, by remaining silent, intends to accept. Third, the parties, by their previous course of dealing with each other, have established a pattern of behavior whereby it would be reasonable to assume that silence was intended to communicate acceptance.

three circumstaces underwhich silence can be acceptance

mirror image rule

The principle that holds that the terms of the acceptance must mirror the terms of the offer; if the terms of the acceptance do not mirror the terms of the offer, no contract is formed, and the attempted acceptance is a counteroffer.

a bilateral contract is being formed under common law

the mirror image rule applie when

mailbox rule

The principle that holds that an acceptance is valid when it is placed in the mailbox, whereas a revocation is effective only when received by the offeree. In some jurisdictions, the mailbox rule has been expanded to faxes.