ch. 9 & 10

bus 207 - prof. wu

contract definition

Legally enforceable agreement with four elements: agreement, consideration, legal purpose, and capacity. Example: Hiring a contractor to remodel a kitchen.

2 sources of contract law

UCC and state common law. Example: Buying goods = UCC; hiring a plumber = common law.

UCC (uniform commercial code)

Article 2 governs the sale of goods. Example: Contract to buy 100 laptops.

state common law

Governs services, real estate, and anything not covered by UCC. Example: Contract for landscaping services.

classification of contracts

Bilateral/unilateral; express/implied; valid/voidable/void; executed/executory; formal/informal. Example: Signing a written contract (express).

agreement

Offer + acceptance. Begins when the offeror makes an offer to the offeree. Example: Seller offers to sell a bike for $200.

elements of contracts

A valid offer has intent, definite terms, and communication to the offeree. Example: “I will sell you my car for $5,000.”

termination of offer

Offer ends by revocation, rejection, death, destruction, illegality, or lapse of time. Example: Offer expires after 24 hours.

elements of acceptance

Acceptance requires intent to be bound and communication to the offeror. Example: “Yes, I accept your offer.”

consideration

Something of value exchanged by both parties. Example: You pay $50, they mow your lawn.

rules of consideration

Courts enforce promises only if both sides give something of value. Example: Paying for services creates enforceable promise.

promissory estoppel

Promise enforced when someone reasonably relies on it. Example: You quit your job because an employer promised to hire you.

adequacy of consideration

Courts don’t care if the deal is fair—only that consideration exists. Example: Selling a car for $1 still counts.

illusory promise

Not real consideration because it doesn’t actually obligate the party. Example: “I’ll buy it if I feel like it.”

past consideration

Not valid; promise can’t be based on something already done. Example: “I’ll pay you for helping me last week.”

preexisting-duty rule

No consideration if you promise to do something you already must do. Example: Police can't demand reward for catching criminal.

liquidated debt

No dispute about the amount owed. Example: You owe $500 on a bill—no arguments.

unliquidated debt

Parties dispute whether money is owed or how much. Example: Contractor and homeowner disagree on price.

accord and satisfaction

Settlement for unliquidated debt: new agreement (accord) + payment of reduced amount (satisfaction). Example: Debtor pays $300 instead of disputed $500 and creditor accepts.