Contracts: Intro

General Approach to Contract Qs

(1) Was an agreement formed? If yes; (2) Was it supported by consideration? If yes; (3) is it enforceable or subject to a defense?

Express Contracts

Contracts formed by language, either oral or written

Implied Contracts

Contracts formed by conduct

Quasi-Contracts

Not contracts at all. A quasi-contract arises when an unenforceable contract results in unjust enrichment, and the court permits a plaintiff to bring an action in restitution

Bilateral Contract

Mutual exchange of promises. Each party is a promisor and a promisee. Bilateral contracts can be accepted in any reasonable way. Unless indicated otherwise, assume a contract is bilateral

Unilateral Contract

A unilateral contract is one in which the offeror requests performance rather than a promise. The offeror promises to confer a benefit upon the completion of the requested act. Full performance is required. Arises in two situations: (1) where the offeror clearly and unambiguously indicates that completion of performance is the only matter of acceptance; and (2) where there is an offer to the public such as a reward offer or a prize contest

Unilateral Contract Magic Words

Although not strictly necessary, the bar exam will usually use the phrase “only by” in reference to acceptance

Void contract

A void contract is one that is totally without any legal effect from the beginning (ab initio). It cannot be enforced by either party.

Voidable Contract

A voidable contract is one that one or both parties may elect to avoid, such by raising a defense that makes it voidable

Unenforceable contract

A contract that is otherwise valid but isn’t enforceable due to a defense such as the SoL or SoF

UCC and Common Law

UCC Article 2 dictates contracts for the sale of goods and common law dictates all other contracts.

UCC “Goods”

Goods are all things movable at the time they are identified as the items to be sold under contract. Most tangible things are goods.

UCC Merchants

Many rules in UCC Art 2 depend on whether the seller and/or buyer are merchants. A merchant must be acting in a way that relates to their business.

UCC Merchant Definition

One who regularly deals in goods of the kind sold or who otherwise by their profession holds themselves out as having special knowledge or skills as to the practices or goods involved.

UCC Merchants and General Business Practices

For UCC provisions that deal with general business practices, such as the SOF, almost anyone in business can be deemed a merchant

UCC Merchant Special Definition

Some Art 2 provisions, such as the implied warranty of merchantability, are narrower and require a person to be a merchant with respect to goods of the kind involved in the transaction

Contracts Involving Goods and Non-goods

If a sale involves both goods and services, you need to determine which aspect is dominant and apply the law governing that aspect to the whole contract. If the contract divides payment between goods and services, then the laws govern their respective portions

Good Faith and Fair Dealing

Every UCC contract imposes an obligation of good faith in its performance and enforcement. The common law also imposes a duty of good faith and fair dealing. A breach of this duty usually involves exercising discretion in a way that deprives the other party of the fruits of the contract