Unit 2 Bus law

bus law unit 2

Promise

A persons assurance that he or she will or will not do something

Promisor

A person who makes a promise

Promisee

A person to whom a promise is made

Common law governs contracts related to:

Services, Real estate, Employment, insurance

UCC governs:

The sale of goods, the lease of goods

Requirements of a Valid contract:

1. Offer

2. Acceptance

3. Consideration

Bilateral contract:

A promise for a promise

Unilateral contract:

A promise for an act

Express contract:

Formed by words

Formal contract:

Required a special form for creation

Executed contract:

A contract that has been completely perfomed by both parties

Executory contract:

A contract that has not yet fully been performed

Quasi Contract:

A fictional contract imposed on parties by a court in the interests of fairness and justice

Ambiguity

1. When the intent of the parties cannot be determined from the contracts language 

2. When the contract lacks a provision on a disputed term

3. When a term is susceptible to more than one interpretation 

4. When there is uncertainty about  provision 

Elements of an agreement

1. Offer

2. Acceptance

Elements of an elective offer

1. Serious intention

2. Reasonably certain or definite terms

3. Communicated

Situations in which intent may be lacking:

1. Express of opinion

2. Statement of future intent

3. Preliminary negotiations

4. Invitations to bed

5. Advertisements and price lists

6. Live and online auctions

Requirements of the offer

1. Parties

2. Object/subject matter

3. Death or incompetence of the offeror or the offeree

4. Supervening illegality of the proposed contract

Termination by action of the parties:

• Be revocation

• Expressed

• Performance of acts

Mailbox rule

• Can accept contract via whatever communication you have been using (As soon as the contract acceptance is sent or mailed it is valid)

Click wrap agreements

Clicking yes to terms on an app

Shrink wrap agreements

Terms expressed in a document when you purchase goods like software

If you keep it your subject to those terms and conditions

Browse Wrap agreements

• Don’t have to consent to

• Posted on the website

Uniform Electronic transaction act (UETA)

• Valid in 48 states

• Only related to transactions

• Email signature can act as signature

Elements of considerations

1. Something of legally sufficient value

• Promise to do something you have no legal obligation to do

• Performance of an act not otherwise obligated to undertake

  2. Bargained for

Bargained for exchange

1. Something of legally sufficient value

2. Exchange

Agreements that lack Considerations:

• Preexisting legal duty

• Past consideration

• Illusory promises

Contractual capacity:

• Minority

• Age of Minority: 18

• Termination (Marriage, some states)

• Emancipation

• Voidable

• Disaffirmance

Exceptions to a minor right to disaffirm:

• Marriage contracts

• Contracts to enlist in armed services

• Necessaries

Intoxication

• Voidable or valid

• Rare to be avoided

• Disaffirmance

• Ratification

Mental incompetence

• Contracts made by mentally incompetent persons can be either voidable if the person did not know they were entering the contract or if the person lacked the mental capacity to comprehend its nature, purpose, and consequences

Courts will enforce exculpatory clauses if:

• They are reasonable 

• They do not violate public policy 

• They do not protect parties form liability for intentional misconduct 

• The language used is not ambiguous 

• The parties are in relatively equal bargaining positions

Dis criminatory contracts:

Unenforceable

Effect of illegality

• Contract is void

• If it has been executed, neither party can recover damages

Voluntary Consent:

• Review

• Legality

• Lack of capacity

• Form

Mistake:

• Voidable if mistake of fact

• Materiality

• Unilateral v. Bilateral

Unilateral Mistake:

• Mistaken party does not have relief

• Exceptions: Other party know or should have known, inadvertent math error

Bilateral Contract

• Either party can rescind the contract

• When the parties reasonably interpret a term differently

Mistakes of value:

• Contract normally is enforceable - assumes the risk

Fraudulent Misrepresentation:

Options:

• Rescind

• Enforce

Elements of Fraudulent Misrepresentation

• Misrepresentation of a material fact

• Intent to deceive

• Justifiable reliance

• Injury

Misrepresentation can occur by:

• Words

• Actions

• Conduct

Exception to Misrepresentation by silence:

Seller knows of problem buyer can’t be expected to discover

Statues of Fraud

• Origins

• State legislation

• Purpose

• Voidable

5 contracts that require a writing

1. Land

   • Real property + fixtures

   • Other interests in land

     2. Performance lasting more than 1 year

     3. Collateral

        • Primary vs secondary

        • Secondary promise means someone else agreed to pay for it, and then someone else steps up to pay if the person does pay

        • Main purpose rule means that if the promise to pay the debt because it benefits them it does not have to be in writing

          4. Promise in consideration of marriage

             • Unilateral promise in consideration of marriage

             • Prenups

               5. UCC contracts for the sale of goods over $500

Promissory Estoppel:

• The promisee must have justifiably relied on it to her or his detriment 

• The reliance must have been foreseeable to the person making the promise 

• There must be no way to avoid injustice expect to enforce the promise

Sufficiency of the writing:

1. Evidences the agreement

2. Is signed by the party against whom the enforcement is sought 

What must be contained in the writing:

• Essential terms

• Voluntary agreement

• Name the parties

• Subject matter, consideration with reasonable certainty

The parole evidence rule:

• A substantive rule of contracts under which a court will not receive into evidence the parties prior negotiations, prior agreements, or contemporaneous oral agreements if that evidence contradicts or varies the terms of the written contract

Exceptions to the parole evidence rule:

• Contracts subsequently modified

• Voidable or void contacts 

• Contracts containing ambiguous terms

• Incomplete contracts 

• Prior dealing, course of performance or usage of trade

• Contracts subject to an orally agreed on condition precedent 

• Contracts w/an obvious or gross clerical error  

Integrated Contracts:

• A written contract that constitutes the final expression the parties agreement

A contract can be either:

• Completely integrated (Contains all of the terms of the parties agreement 

• Partially integrated (Contains only some of the terms that the parties agreed on and not others)