Legal Studies Exam 2

Contract (K)

A legally enforceable agreement that creates rights and obligations between parties.

Do Contracts Have to Be in Writing?

No — oral contracts can still be binding if all elements exist.

Common Law

Covers services, real estate, employment. Strict — all terms must match.

UCC (Uniform Commercial Code)

Covers sale of goods. More flexible — fills in missing terms.

The Four Elements of a Valid Contract

Agreement – Offer + Acceptance
Consideration – Each side gives something of value
Capacity – Legal ability to understand the contract
Legality – Purpose must be lawful

Issues with Offers

Negotiation ≠ offer (talking isn’t a deal)

Counteroffer = rejection + new offer

Revocation before acceptance = valid

Jokes can still count (Lucy v. Zehmer)

Example of a contract

Alex offers to sell his guitar to Taylor for $300 (offer).
Taylor agrees and pays (acceptance + consideration).
Both are over 18 (capacity).
Selling a guitar is legal (legality).

Public Policy in Contracts

Contracts that harm public welfare or morals aren’t enforced.
Includes fraud, gambling, usury (illegal interest rates), or non-compete abuse.

Duress

Forced agreement under threat → not valid.Undue influence:

Undue influence

Unfair persuasion → not valid.

Unconscionability

So unfair it “shocks the conscience''.

Objective Theory of Contracts

Courts look at outward behavior, not secret intentions.
Would a reasonable person think it was a real deal?
Lucy v. Zehmer — a “joke” farm sale was enforceable because they acted seriously.

Real-World Test of Contracts

Difference between talking and legally locked-in: one handshake, one click, or one bad assumption.

Courts focus on actions, not intentions.

Bilateral Contracts

Promise for a promise; both parties are promisor and promisee.

• Binding: The moment promises are exchanged.

  • Joe: “I’ll sell you my red Mustang for $25,000.”

  • AJ: “Deal.”

Dr. G Note: Like a handshake with consequences.

Unilateral Contracts

Promise for an act; offeror is bound once performance begins.

• $100 reward for finding a lost dog.

• University scholarship contingent on GPA/performance.

Dr. G Note: “If you do the thing, I’ll pay the price.”

Express Contracts

Terms stated clearly, verbally or in writing.

• Written lease, verbal service agreement.

Implied-in-Fact Contracts

Contract formed by conduct, not words.

• Haircut payment, dentist cleaning.

Implied-in-Law (Quasi) Contracts

Court-imposed to prevent unjust enrichment; no actual agreement exists.

• Paramedic treats unconscious person.

• Contractor mistakenly repairs your roof, you knew and allowed it.

Formal Contracts

Require specific formality (statutory or traditional) to be valid.

• Checks, deeds, letters of credit, contracts with a seal.

Dr. G Note: Legal equivalent of “pics or it didn’t happen.”

Informal Contracts

No formalities required; enforceable if four elements exists

• Employment agreements, oral Ks, handshakes, texts.

Dr. G Note: The law cares about intent, not calligraphy.

Executed Contracts

Both parties fully performed obligations.

• Haircut paid for and completed; home sale closed.

Executory Contracts

Performance still owed by at least one party.

• Lease halfway through, construction project in progress.

Valid

All four elements met (agreement, consideration, capacity, legality).

Void

Never legally existed (illegal or impossible).

Voidable

Initially valid; one party can cancel (minors, duress, intoxication).

Unenforceable

Looks fine but cannot be enforced (statute violations, limitations).