Contracts are fundamental to business.

• Created rights and duties for both parties

• Promisor is the person who initiates the contract, promisee is the person who receives the contract

• Contracts, if breached, do not result in punitive damages

Valid, enforceable contracts have all of the following: (1) offer, (2) acceptance, (3) agreement, (4) consideration, (5) capacity, (6) legality

• Consideration: giving and getting of something of value (good or performance)

• Capacity: ability to enter and fulfill a contract as dictated

Defenses (to leave a contract): genuineness to assent - mistake, fraud, duress are claimable

Statute of Frauds: requirement of certain contracts to be in writing if any of the following conditions apply; (1) consideration happens in/over one year, (2) sale of good or performance is valued over $500, (3) there is a sale of debt

• Must include parties, subject manner, terms and conditions, and a signature

Click on / wrap agreement: terms of service that pop up when a user clicks “accept” on a website. once accepted, it means the user has signed to a contract and is legally binding.

• ESIGN Act of 2000

• Uniform Electronic Transactions Act

• Agreeing to these types of agreements is as valid as a paper contract

• Usually, the user signs away their right to sue the website in exchange for access. (consideration)

Plain Language Rule: in court, the jury will read only what is written and legally defined in the contract WITHOUT considering context. language that is unclear will be attached the usual meaning to the word.

• This is meant to protect the “layman” of the contract

Offer: invitation to make a contract

• Offers can be initiated by newspapers, internet, fax, email, mail, action, advertisements

• An offer is not constituted until it is received by the offeree

• An offer once rejected is terminated and cannot be accepted once the offer or received the rejection

• Negotiations are not offers

Offers may be terminated by:

1. Lapse of time

2. Notice of revocation / communication

3. Qualified acceptance (negotiation)

4. Rejection of Offer

5. Death / insanity (lack of requisite capacity)

6. Destruction of thing required for contract

Classifications of contracts:

• Void: never a contract to begin with; missing offer, acceptance, or consideration

• Valid: enforceable, legal contract

• Voidable: there is a right by either party to avoid the contract (by their volition —> minors) so the contract is…

• Unenforceable: determined by the court, one of the party lacks requisite capasity so the contract is…

• Implied: nonverbal and unwritten

• Expressed: verbal or written

• Unilateral: contract that requires action to be fulfilled, offerer will pay after offeree completes some task

• Bilateral: two party contract to exchange some consideration

• Executed: a contract in which all elements are completed

• Executory: a contract which is not fully performed

• Oral: verbal contract

• Written: written contract

• Implied in Fact: a contract established through prior habits and behavior. is not necessarily written or verbal

• Implied in Law / Quasi Contract: not a valid contract. formed when one party was unjustly enriched by the other party’s action // unfair for no compensation

Consideration: exchange of items or services of perceived value. could be (1) a promise, (2) performance, (3) refrainment of legal right

Mailbox rule: an offer is valid once it is sent, no requirement to be received. (click “send” on an email, put mail in postbox)

UCC (Uniform Commercial Code): governs standardized transactions (sale of goods and merchant rules)

Mirror image rule: when written, a contract should match the valid offer.

Substantial performance: if a contract is revoked, partially completed performance, if significant, will mandate contract to be performed

• Evertite v Green (roof tiles)

• FMC v Pizza Emporium (swimming for money)

Impossibility of performance: illness or death of promisor, supervening illegality, or destruction of the subject matter of the contract makes performing the contract impossible

Detrimental reliance / Promissory Estoppel: protects persons who rely on the promises of others by preventing promissors from raising legal defenses to the enforcement of their promises despite the fact that technically, no enforceable contract exists

Unconscionability: harsh / shocking / grossly unfair contract that unjustly enriches one side

Specific Performance: court order to move forward with consideration or damages

Minors

• Disaffirmance, Avoidance: minor’s right to cancel and refuse to honor contracts or otherwise contractual obligation within a reasonable amount of time, canceling the WHOLE contract and must be expressed

• Emancipation: divorce from parents, a minor has no parental support

• Mandated Contracts Which Minors Cannot Avoid: tax returns, parking tickets, banking, military service, necessities, sports, entertainment, identity theft

Cases