Comprehensive Contract Law Notes

Contracts Overview

• Contract: A legally enforceable agreement between parties.
• Contract Components:
  • Promise: Assurance of action or non-action.
  • Promisor: The one who makes a promise.
  • Promisee: The one to whom a promise is made.

Common Law & UCC

• Common Law governs contracts related to:
  • Services
  • Real estate
  • Employment
  • Insurance
• Uniform Commercial Code (UCC) governs:
  • Sale of goods
  • Lease of goods

Functions of Contract Law

• Provides stability, predictability, and certainty in transactions.
• Ensures enforceability and helps avoid potential disputes.
• Supports a market economy by ensuring compliance and providing relief.

Requirements for a Valid Contract

1. Offer: A definite proposal by one party.
2. Acceptance: Agreement to the terms of the offer.
3. Consideration: Value exchanged between parties.

Defenses to Enforceability of a Contract

1. Lack of Capacity: If a party is intoxicated or a minor.
2. Legality: If the contract is for an illegal purpose.
3. Voluntary Consent: All parties must agree willingly.
4. Form: Certain contracts must be in a specific format.
5. Meeting of the Minds: Parties must understand and agree on the terms.

Classifications Based on Contract Formation

• Bilateral: Mutual promises made by both parties.
• Unilateral: One party makes a promise in exchange for performance.
• Formal: Requires a specific form for creation.
• Informal: No special form is necessary.
• Express: Clearly stated terms.
• Implied: Assumed through actions or circumstances.

Case Example: Weston V. Cornell

• Leslie Weston was offered a five-year professorship at Cornell University, conditional on review.
• After extensions and denials of tenure, she sued for breach of contract.
• Court decided subjective beliefs don’t create triable issues; ruling favored Cornell.

Case Example: Boswell V. Panera Bread Co.

• Managers sued for breach over a bonus based on performance; they argued it was a unilateral contract.
• The court ruled managers substantially performed and thus Panera could not modify terms.

Types of Contracts

• Executed Contract: Fully performed by both parties.
• Executory Contract: Not yet fully performed.
• Quasi Contract: Imposed by law to avoid unjust enrichment.

Contract Ambiguity

• A contract is ambiguous when:
  1. Intent cannot be determined.
  2. Lacks a provision on a disputed term.
  3. A term has multiple interpretations.
  4. There is uncertainty about the provisions.

Rules of Contract Interpretation

1. All contract terms should have reasonable, effective meanings.
2. Contracts are interpreted as a whole.
3. Specific clauses may be subordinate to the general intent.
4. Ordinary meaning applies unless a technical definition is stipulated.
5. Exact wording holds more weight than general language.
6. Handwritten terms prevail over typed/printed ones.
7. Ambiguities are interpreted against the drafter.
8. Evidence from trade usage and dealings can clarify meanings.

Elements of Agreement

• Offer Requirements:
  • Serious intent.
  • Reasonably certain terms.
  • Must be communicated.

Situations Lacking Serious Intent

1. Opinions.
2. Future intent statements.
3. Preliminary negotiations.
4. Invitations to bid.
5. Advertisements.
6. Auctions.

Case Example: Lucy v. Zehmer

• Zehmer agreed to sell his farm to Lucy while drinking but later claimed he was joking.
• Court decided against Zehmer as intent to contract was evidenced, reversing the initial ruling.

Acceptance

• Must be unequivocal; any conditions may void acceptance.
• Mode and Timeliness:
  • Acceptance via any communication means can be valid.
  • Mailbox rule applies: acceptance is effective once sent.

E-Contracts

• Important considerations include visibility of provisions, acceptance, payment terms, etc.
  • Click Wrap: Acceptance by clicking on terms.
  • Shrink Wrap: Terms found within packaged products.

Online Acceptance Cases

• Bailey V. Kentucky Lottery Corporation: Lottery winner disqualified due to incorrect contact info; court upheld lottery rules.

Consideration in Contracts

• Must involve:
  1. Something of legally sufficient value.
  2. A bargain for exchange.

Agreements Lacking Consideration

• Preexisting legal duties.
• Past consideration.
• Illusory promises.

Capacity to Contract

• Minority: Contracts typically voidable by minors.
• Intoxication: Can lead to voidable contracts.
• Mental Incompetence: Contracts could be void based on mental capacity.

Legality of Contracts

• Contracts that promote illegal activities are unenforceable.
• Unconscionable contracts are those that are extremely unjust.

Writing Requirement (Statute of Frauds)

• Certain contracts must be in writing:
  1. Real estate.
  2. Contracts longer than a year.
  3. Guarantees of debt.
  4. Prenuptial agreements.
  5. UCC goods over $500.

Promissory Estoppel

• Valid if a promisee reasonably relied on a promise to their detriment.
• Courts enforce promises when necessary to avoid injustice.

Parol Evidence Rule

• Bars admission of prior agreements that contradict written contracts unless exceptions apply (e.g., modifications, ambiguities).

Integrated Contracts

• Completely Integrated: Contains all terms of agreement.
• Partially Integrated: Contains some terms but not all.