BLAW261 - Introduction to Contracts

Simply an enforceable agreement between two or more parties to do something or to refrain from doing something.

contract

Contracts may be _____ or _____.

express/implied

A contract that is stated in writing or verbally.

express

A contract that is implied from the conduct of the parties.

implied-in-fact

(1) one party provides something of value to the other party;

(2) the providing party expects to be paid; and

(3) the receiving party had the opportunity to reject what was provided but did not.

implied-in-fact contract elements

A contract implied to prevent unjust enrichment, even though there was no actual contract between the parties.

implied-in-law contract

(1) one party receives a benefit from another party and retains that benefit; and

(2) it would be unjust to allow the receiving party to retain the benefit without compensation.

implied-in-law contract elements

A contract that meets all of the requirements for a contract and is enforceable by the courts.

valid

A contract that has no legal effect. Neither party is obligated to perform under the contract, and neither party can sue to enforce the contract.

void

A contract that at least one party has the option to void. If the contract is voided, both parties are released from their obligations. If the contract is not voided, both parties must perform.

voidable

1. Agreement.

2. Consideration.

3. Contractual Capacity.

4. Legality.

elements of express contract

A voluntary exchange of promises to do something or to refrain from doing something.

agreement

1. Mutual assent. Mutual assent is a “meeting of the minds.”

2. Offer; and

3. Acceptance.

requirements of agreement element

Who are the parties of offer?

offeror and offeree

The party who makes an offer to enter into a contract.

offeror

The party to whom the offer is made.

offeree

Three elements required:

(1) objective intent to be bound;

(2) the terms must be definite and reasonably certain; and

(3) the offer must be communicated to the offeree.

offer elements

Acts of the Parties:

• Revocation by Offeror: Must occur before acceptance.

• Rejection by Offeree: Once rejected, the offer cannot be later accepted.

• Counteroffer by Offeree: Terminates the original offer and creates a new offer.

By Operation of Law:

• Destruction of the subject matter.

• Death or incompetency of offeror/offeree.

• Superseding illegality of the proposed contract.

• Lapse of time (offer expires after a set or reasonable time).

How an offer can be terminated in contract law.

“A manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the objective theory of contract.” Restatement (Second) of Contracts, § 50.

acceptance

• Acceptance can be by (1) agreement to perform or (2) by performance.

• Acceptance must be unequivocal (clear).

acceptance parts

For acceptance to be effective, the offeree must accept the terms exactly as stated without modification.

the mirror image rule

Can silence usually be considered acceptance, even if the offer states that silence will be considered acceptance?

no

time of acceptance

the “mailbox rule”

an offer is accepted when it is dispatched, even if it is lost in transmission.

The “Mailbox Rule”

• The Mailbox Rule applies even if some other delivery service is used: overnight delivery, courier, etc.

• Be careful—the Mailbox Rule can be hard to prove factually, but it is still the law!

the “mailbox rule” parts

Something of legal value given in exchange for a promise.

consideration

• Legal value.

• Bargained for exchange.

consideration elements

• Money

• Property

• A promise to do something

• A promise not to do something

examples of consideration

Promises to make a _____ are generally not enforceable because they lack consideration.

gift

Problems of Consideration:

Contracts cannot be supported by illegal consideration—either through a promise to do an illegal act or to refrain from doing an illegal act.

illeglity

Problems of Consideration:

Contracts cannot be supported by illusory consideration—promises that the parties can choose to perform or not perform.

illusory promises

Problems of Consideration:

Consideration cannot be comprised of doing something that one of the parties already has a duty or obligation to do.

preexisting duty

Problems of Consideration:

Consideration that has already been paid/promised/performed.

past consideration