legl 2700 E3 - Contracts

does a contract have to be in writing to be enforceable

No!!!!!! verbal is also valid unless it’s required to be in writing

bilateral contract

mutual promises

• BOTH parties have a duty to perform

unilateral contract

one promise

• only one party is obligated to perform

express contract

parties show their agreement in words (written or oral)

• parties discuss promised terms of their agreement

implied-in-fact contract

arised from CONDUCT of parties

• ex. going to restaurant, implied you promise to pay the bill

implied-in-law / quasi-contracts

no contract exists - remedy prevents one party from unjust enrichment

ex. overpaying credit card bill and CC company must return additional money to prevent UnjEnrich

valid

all requirements are met

enforceable

agreement will be upheld in courtu

unenforceable

party has justifiable reason for not performing

• OR can have a valid yet unenforce contract bc its not in writing. to be enforce, it must be in writing

void

agreement lacks an essential element

voidable

at least one party can withdraw and make the contract void

executed contract

parties have performed

executory contract

parties have NOT performed

5 elements of an enforceable contract

1. offer to enter into contract

2. acceptance of offer

3. consideration for each promise

4. capacity of each party to enter contract

5. legality

objective standard

courts measure intent from a reasonable person’s perspective in the position of the offeree

revocation

offeror retracts offer before offeree accepts it

rejection

offeree rejects offer

counteroffer

offeree makes a counterproposal, rejecting original offer

lapse of time

offer terminated bc offeree fails to accept by defined deadline or reasonable length of time

subject matter destruction

when subject matter of contract is destroyed prior to acceptance of offer

offeror death/insanity

contract invalid if offeror no longer has capacity to make this offer

acceptance of bilateral contract

offeree has made the required promise

acceptance of unilateral contract

accepted by performing a requested ACT

mirror image rule

offeree’s acceptance must match/mirror the offer exactly to creating a binding contract, otherwise it’s a counteroffer

mailbox rule

acceptance becomes legally binding when the offeree dispatches it (“places it in the mailbox/sends email”)

when does an offeror’s revocation take effect

effective once the offeree RECEIVES the revocation

consideration

exchange of value between parties

• each party gives something of value to the other

• any value = consideration

exchange between parties which results in a benefit to one and a detriment to the other

ex. promise to pay, deliver goods/perform service, not to sue, keep offer open

what doesnt count as consideration

• pre-existing obligation

  • contractor cant demand extra money for the same job

• past consideration

  • if consideration is given and payment is promised AFTER, theres no obligation to fulfill that payment bc there was no initial bargain for exchange

• promise to make a gift

  • promise to give a gift for a birthday and receive nothing in return - no bargain for exchange

promissory estoppel

1. promisor made a promise significant enough to cause the promisee to act on it

2. promisee relied on promise

3. promisee suffered significant detriment

4. relief can only come from promisor fulfilling the promise

ex. musician promises to teach at school if music program is built. says nevermind. principal spent so much time and money on program. musician must now fulfill promise

capacity

person’s ability to be legally bound by a contract

• minors cant be bound and contract is voidable at minor’s discretion

  • exception- contract for necessaries: may get out of it but they become liable

how is competence determined for capacity

Is the adult capable of understanding the nature and purpose of the contract

statute of frauds

requires certain contracts to be in writing

• sale of interest in land

• Collateral promise to pay another person’s debt

• Contracts that cannot be performed within one year from the date of the agreement

• Sale of goods of $500 or more (UCC)

fraud

misrepresentation of fact with intent to deceive, deceived party justifiably relies on fraud and results in injury

• remedy- defrauded party can void the contract or enforce the contract and sue for damages

innocent misrepresentation

misrep of fact WITHOUT intent to deceive, party relies on and results in injury

• remedy- injured party has option to void the contract

mutual mistakes

both parties make a mistake to a fundamental aspect of the agreement

• remedy- rescission by either party

unilateral mistake

one party is wrong abut a material fact

• remedy- no remedy, just outta luck

how does a court determine materiality

whether the parties would have contracted had they been aware of the mistake

• mistake must be one of FACT

duress

action that compels another to do what he/she would not otherwise do

• by force or threat of force

• physical or economic

undue influence

one party is taken advantage of unfairly by a party who misuses a position of relationship or legal confidence

• people in a special relationship of power or trust may exert undue influence

• remedy- contract is voidable

who DECIDES contracts

JUDGES (court)

contract hierarchy

1. handwritten terms

2. typed terms

3. pre-printed terms

parol evidence rule

parties to a complete and final written contract cannot introduce evidence of oral agreements made at the time of or prior to the written contract that would change the terms of the contract

• if a contract has been finalized but you see something orally discussed missing, you cant do anything about it. you shouldve realized before it was completed and signed

when is evidence of oral agreements allowed

• oral agreements made AFTER the contract is completed may be admitted

• evidence to explain the meaning of terms may be admitted

• its necessary to prevent fraud

duty of performance

performance required by a party as promised in a contract

discharged

when a party is relieved from all responsibilities of performance

condition precedent

a condition must take place before a party has a duty to perform

condition subsquent

excuses performance if some future event takes place

ex. i will wash your car on wednesday. i wont if it rains

express conditions

explicitly mentioned in contract governing performance

implied conditions

not explicit, can be read into parties’ obligations to performcon

concurrent conditions

parties have a simultaneous duty of performance

ex. buyer provides money for a property and seller signs deed over at the same time; paying for groceries while getting them handed to you

complete performance

everything required has been done

• if you have comp perf, youre entitled to CP by other party and to sue to enforce this right

substantial performance

less than complete but greater than significant performance

• other party is still equired to perform and you may sue for any damages resulting from breach                                              

• Ex. Contractor has built a home but hasn’t finished all the landscaping by the due date. Home built but not landscaping done. Buyer would still have to buy the home but may SUE for the delay that has occurred

material breach

performance is materially deficient or non-existent

• party who did not perform - abandoned job and not required to perform

• breached party - no longer has to perform (ex. pay for unfinished job)

• party who didnt - now liable and will likely get sued for damages

Ex. You hire a contractor to build a $10,000 deck. After building only 10% of it, the contractor abandons the job (a material breach).

• Contractor: Does not have to finish building, but is now in breach and liable for damages.

• Homeowner: Is excused from paying the remaining balance and can sue the contractor for the cost of hiring someone else to finish the job.

force majeure (excuse for nonperformance)

*must be negotiated into the contract

• excuse/delay party’s duty to perform if certain extreme event occurs

• must be outside of party’s control and unforseeable

impossibility (excuse for nonperformance)

per is illegal or physically impossible

ex. subject matter was destroyed

frustration of purpose

when an unforeseen event undermines a party’s principal purpose for entering a contract

• technically still possible but results would be different than intended

• ex. hire a swim trainer for lessons but become paralyzed. trainer can still coach but buyer no longer has purpose for

commercial impracticability (UCC)

circumstances greatly increase difficulty and violate parties’ reasonable expectations

ex. manufacturer needs certain raw materials to produce their product and access to this supply has been suddenly cut off. Manufac can no longer make this product and can use this excuse. HOWEVER if ANOTHER manufac STILL has access to this raw material, the excuse would NOT be valid bc the product can be obtained from the other manufac

compensatory damages

aim to put the plaintiff in the position as if the contract had been performed

liquidated damages

when the amount of damages is stipulated in the contract

• amount the breached party earns is an estimate of how much damages would be

consequential damages

damages for the downstream impact of the breach

• shutdown restaurant because fridge isnt work > lost good food and revenue from customers

lost profits (buyer breaches)

buyer fails to pay but seller makes a replacement sale for lower price

• seller can sue for lost profits (difference in prics)

contract price (buyer breaches)

buyer fails to pay and seller CANT resale

• sue for contract price i cant resell

difference between market vs contract price (seller breaches)

seller fails to deliver goods and buyer must buy from market at a higher price

• buyer can sue for diff in price

specific performance (equitable remedies)

required defendant to do what he/she is contractually obliged to do

• ONLY FOR UNIQUE SUBJECT MATTER - LAND

injunction (equitable remedies)

court order directing a party to do or refrain from doing something

rescission (equitable remedies)

court cancels the agreement and returns the consideration exchanged to each respective party