Contract Law

Overview of Contract Law

Sources of Contract Law
- Governed primarily by common law, except when superseded by statutory law.
- Example: Sale and lease of goods governed by the Uniform Commercial Code (UCC).
Function of Contract Law
- Ensures enforceability of private agreement promises.

Promise
- Declaration to perform or refrain from a future act.
- Promisor - party making the promise.
- Promisee - party to whom promise is made.
Contract Definition
- A promise or set of promises that can be enforced by law.
- Formed by parties agreeing to perform or refrain from some act.

Parties in a Contract
- Offeror: Makes the offer.
- Offeree: Receives the offer.
Bilateral vs. Unilateral Contracts
- Bilateral Contract: Offeree accepts by promising to perform.
- Example: Promise to mow a lawn for payment.
- Unilateral Contract: Offeree needs to perform an act to accept.
- Example: Reward advertisement for finding a lost dog.

Express vs. Implied Contracts
- Express Contracts: Terms explicitly stated (orally/written).
- Implied Contracts: Terms inferred from conduct.
- Example: Customer orders food at restaurant, which implies a payment for service.
Quasi Contracts
- Not true contracts but imposed by courts to prevent unjust enrichment.
- Example: A plumber repairs a leak in your home without prior consent, and you are expected to pay.

By Performance
- Executed Contracts: Fully performed by all parties.
- Executory Contracts: Not yet fully performed by at least one party.
By Enforceability
- Valid Contract: Meets all requirements (agreement, consideration, capacity, legality).
- Voidable Contract: Valid but can be legally canceled by one party.
- Unenforceable Contract: Originally valid, but now unenforceable due to statute.
- Void Contract: No legal effect or binding power.

Agreement
- Comprised of an Offer and Acceptance.
Consideration
- Legally sufficient value exchanged between parties.
Contractual Capacity
- All parties must have the legal ability to contract (competence).
Legality
- The contract’s purpose must be legal at the time of execution.

Offer Definition
- A proposal for a contract, which must be communicated, have serious intent, and contain definite terms.
Acceptance
- Voluntary agreement to the terms of the offer. Must be unequivocal and communicated.
- Silence generally does not constitute acceptance.

Methods of Termination
- Revocation: Offeror withdraws before acceptance.
- Rejection: Offeree declines the offer.
- Counteroffer: New offer from offeree that rejects the original.
Operation of Law
- Lapse of time, destruction of subject matter, or death/incompetence of a party can terminate an offer.

Definition
- Value given in return for a promise (bilateral) or performance (unilateral).
Requirements
- Legally sufficient value and a bargained-for exchange.
- Contracts cannot be based on past consideration or lack of true exchange.

Minors
- Contracts are voidable at their option, except for contracts for necessities.
Intoxicated Persons
- Contracts can be voidable if the person couldn’t understand the contract due to intoxication.
Mental Incompetence
- If previously judged incompetent, contracts are void. Otherwise, contracts may be voidable if the person didn’t understand the terms.

Legal Purpose
- Contracts formed for illegal purposes are void.
- Must comply with statutes governing contract formation and enforceability.

Definition
- Requires certain contracts to be in writing to be enforceable (e.g., contracts involving land, contracts that cannot be performed within one year).
Exceptions
- Oral contracts may be enforceable if performance was possible within a year, but not when impossible.