Acct 352 Ch. 11

What should you ask yourself to determine whether a contract is bilateral or unilateral?

"what does the offeree/promisee have to do to accept the offer?"

Unilateral Contract

- The offeror's offer can be accepted only by the performance of an act by the offeree -where the offeror expects that the oferee will do the things they promise. So actually doing it instead of just promising. You have an offer but to accept it, you must do the thing. -no contract until the promise is COMPLETED. -Acceptance is the completion

Ex: I will pay you 100$ to cut my grass. What type of contract?

- express contract.

Bilateral Contract

-A contract wherein the offeror requires the offeree to PROMSIE to perform an act. A contract is formed when the offeree promises to do the act -you can only change the contract before the person makes the promise. -contract that is formed when both parties exchange PROMISES!!! so you have to do what you promised you would do otherwise i can sue you "i promise to pay you 100$ if you promise to cut my grass" if they both promise then the contract is formed. What rights do you have if you promise to pay 100$ if he cuts your lawn? you have the right to ensure they cut you lawn and if they dont you can sue them. you have the right to make them cut your lawn because we have a contract base on the promise!! -Acceptance is promise

Example 2: Allan promises to give Ben movie tickets in exchange for Ben's promise to mow Allan's lawn:

-Allan's promise to give Ben movie tickets is Allan's consideration for Ben's promise to mow -Ben's promise to mow is Ben's consideration for Allan's promise to give the movie tickets

Example 1: Allan promises to pay Ben $500 if Ben mows Allan's lawn. What is both their consideration?

-Allan's promise to pay Ben $500 is Allan's consideration for Ben's mowing the lawn -Ben's mowing of the lawn is Ben's consideration for Allan's promise to pay $500

Quasi (Implied In law) Contract

-Contract that doesnt exist -not expressed or implied. -the court pretends there is a contract for justice. -There is no actual contract between the parties but the court imposes a contract because to not do so would mean that one of the parties would be unjustly enriched

What do courts hope to accomplish when there is a dispute involving a contract?

-The contract is private law between the parties reflecting the mutual obligations the parties voluntarily assigned to each other -Thus, whenever there is a dispute concerning the enforceability of the contract, *the courts strive to honor the contract the parties intended to enter into* so that the court can give effect to the private law of the parties -To determine what the parties intended the courts will look to the objective intent of the parties

Example: Jill recently purchased a house in a subdivision. The other homeowners in the subdivision have an oral contract with Jack whereby Jack mows their lawns twice a month for $200 each home. Jill is unaware of this contract. Jill has never seen Jack nor has she had any conversations with Jack. But Jack assumes that Jill has joined in with the other homeowners and wants him to do her yardwork as well. So, Jack includes Jill's yard in his work. He does this for 4 months. Jill requested that Jack stop his work after Jill learns that Jack was doing the yardwork under the mistaken belief that Jill had joined in the contract with the other homeowners. Jill has never paid Jack. Jack requests payment from Jill. Jill refuses to pay. Jack sues Jill.

-The oral contract between the homeowners and Jack is an express contract. -There is likely a *quasi contract* between Jill and Jack because: 1) even though Jill did not intend to enter into an express contract with Jack, and 2) since Jill's conduct does not suggest that a contract can be implied, 3) It would be unjust to allow Jill to benefit from 4 months of FREE yard-work from Jack. So since he was doing it for 4 months, JACK GETS PAID because its fair -he should have introduced himself and said he does this for everyone instead of just doing it.

To determine the objective intent of the parties, the court will look at

-The words and conduct of the parties during the making of the contract -The circumstances surrounding the making of the contract

Example: Jill recently purchased a house in a subdivision. The other homeowners in the subdivision have a written contract with Jack whereby Jack mows their lawns twice a month for $200 each home. Jill has had conversations with Jack in which Jack has informed Jill about the contract with the other homeowners and has mentioned to Jill that he will begin mowing Jill's yard as well. Jill never agreed to this. Jack includes Jill's yard in his work. He does Jill's yardwork for several months and Jill never requests that Jack stop the work. During this time Jill has not paid Jack. Jack requests payment from Jill. Jill refuses to pay. Jack sues Jill.

-The written contract between the homeowners and Jack is an express contract. (but does he have one with jill no? but you can check there behavior ) -There is likely an *implied contract* between Jill and Jack because by their actions it can be implied that Jack and Jill intended to enter into a contract. (he went to her house and introduced himself and assumed that she would want him to take care of the lawn too. She could have told him to stop cutting the grass but she never told him to stop. Judge might assume that it seems like she wanted this because she kept allowing for 4 months him to cut the grass)

how to determine in the real world if a contact is bilateral or unilateral?

-you look at what the offeree has to do in order to accept the offer. If she has to promise to do it then its bilateral, if she actually has to do something then its unilateral. "promise to cut my lawn" -bilateral bc the offeror is asking the offeree to promise "i promise to pay you 100$ if you cut my lawn" -Unilateral. because the offeree has to actually cut the lawn, not just promise too

Example: Jane promises to pay Mary $1,000 if Mary repairs Jane's broken windshield.

.Jane's offer is not accepted until Mary actually repairs the windshield So there is no acceptance, and thus no agreement and thus no valid contract until Jane repairs the broken windshield

to have an agreement what 2 things are needed?

1) an offer 2) acceptance from the offeree 3) meaning of the minds

what are the 4 elements needed to have a valid contract?

1. Agreement 2. Consideration 3. Lawful object 4. Contractual Capacity

As the judge is interpreting the contract there are rules that the judge must follow:

1. Extrinsic evidence 2. Ambiguous terms

Who are the parties to a contract?

1. Offeror (promisor) 2. Offeree (Promisee)

Examples of contracts in everyday life

1. Use of utilities 2. Swiping your debit or credit card for purchases at restaurants, stores, doctor visits, etc. 3. Taxi ride(if you take me to point B, I will pay you what you charge per mile. You voluntarily entered into the taxi, so ill give u money if you take me to point B) 4. Borrowing a book from your local library (one person agrees to return the book and one person agrees to lend it out. I will lend you it if you promise to return it and pay fees. )

Unenforceable contract

: A valid contract that cannot be enforced because of a legal defect. For example, contracts can be oral or written, but certain contracts must be in writing. If a contract is required to be in writing but it is not, the contract is unenforceable -a valid contract but it is deficient for someway. It is unenforceable. Ex: you can have an oral contract (spoken) but if the contract is required to be in writing, but it is not, the contract therefor becomes unenforceable. Even though its valid, it cant be enforced because it wasn't in writing.

Example: if Jane promises to pay Mary $10,000 if Mary promises to kill Jim and Mary promises to Kill Jim = Contract?

: NO because killing is legally wrong. So if Mary kills Jim, Jane doesn't have to pay Mary because it's a void contract (it is illegal)

Executed Contract

A completed contract because it is fully performed by both parties -This means its been fully performed "i promise to pay you 500$ if you cut my lawn, You cut my lawn so I gave you the $500. it is executed"

Valid contract

A contract with agreement, consideration, contractual capacity, form, and legality.

Define Contract

An agreement voluntarily entered into by parties which creates obligations enforceable by law.If you don't follow it, then you go to court b/c it is enforced by law.

Mary promises to hire Jane if Jane promises never to serve on a jury. Mary promises never to serve on a jury = Contract?

Answer = No. Against public policy

Example: Jane promises to pay Mary $10,000 if Mary promises to kill Jim. Mary promises to Kill Jim = Contract?

Answer = No. Murder is illegal and cannot be the basis (subject matter) of a contract

Example #1: Mary promises to repair Jane's broken windshield if Jane promises to pay Mary $500. Jane promises to pay Mary $500 = Consideration?

Answer = Yes. Voluntary exchange of promises by Mary and Jane

What are we looking for to have in a contract?

Commitment between 2 parties with respect to do stuff for each other

Implied (Implied In Fact) Contract

Conduct creates and defines the terms of the contract. -Express and implied contracts are actual contracts that are formed by the words or actions of the parties. -A contract can be a mixture of an express and an implied contract—with some express terms and implied terms. -just like an express contract except it isn't written or said orally. -the court can look at your behavior and see if the 2 parties had a contract. even tho the parties didnt say they offered or accepted, it is clear you had a contract. Because the way we conducted ourselves with one another, it is a contract

Example #1: Jane promises to pay Mary $10,000 if Mary promises to repair Jane's broken windshield. Mary promises to repair the windshield. Jane pays Mary $10,000.

Contract is executed because Jane, as she promised, pays Mary $10,000 and Mary, as she promised, repairs the broken windshield -Bilateral. -Has it been executed: no because she didnt do it

Executory Contract

Contract is not completed because one or both parties has not performed the terms of the contract -where 1 or both parties have not done what there supposed to do. -i paid you the money but you havent cut my grass = Executory

Extrinsic evidence

I must not rely on anything extrinsic to the contract if the contract is clear. (anything NOT in the contract). The judge cant look at the email that one party sent to help the judge interpret the contract because its outside the contract and the contract is already clear. Sometimes they look to extrinsic evidence IF THE CONTRACT IS UNCLEAR! If the contract says blue but email says green. a. You go with blue because its in the contract and it is clear. Only can look at extrinsic evidence if the contract is unclear. Who decides if its unclear the judge

Example #3: If Jane pays Mary but thereafter sues Mary to get her money back, who wins? Why?

Jane wins and gets her money back- because there is no agreement or consideration, no offer or acceptance. What you have to decide: is there a valid contract? (I would do x and she would pay me x)

Example #2: Without asking Jane, Mary repairs Jane's broken windshield. Jane refuses to pay Mary. Mary sues Jane alleging breach of contract. Who wins?

Jane wins, because there was no contract because there is no consideration because they both didn't bargain for exchange. Also, there is no voluntary agreement because there was no offer.

Where the courts start with contracts

Judge must interpret the contract -where do you start the interpretation: by reading the contract. If it is not clear to the judge, then you must see if all the elements to the contract are there and if its still not clear, you must make a decision on what to give you based on what you bargained for. They do this by looking at the objective intent to the parties. What would a reasonable person have understood this offer to me. They figure this out by looking at the circumstances and asking what is a reasonable conclusion to draw from this contract?

Example #2: Jane has a green 1999 Toyota Prius and a green 2012 Toyota Prius. Jane offers to sell her green 1999 Toyota Prius to Mary for $15,000. Mary accepts Jane's offer but thinks she is buying the green 2012 Prius = Agreement?

No we have an offer and an acceptance. But, they don't have meaning of the minds (not on same page). If they are talking about different things, you don't have a meaning of the minds.

Agreement

Parties each consent to give up something of value in exchange for something of value There is Agreement when there is an offer by offeror and an acceptance of the offer by the offeree. BUT the offeror and offeree must mutually assent (agree) to the terms of offer

Contractual Capacity

Parties must have the legal capacity to enter into a contract in order for a contract to be enforceable against them --the people you are dealing with have the ability, understanding etc. to enter into a contract. -Minors (people under 18), or people who are insane, don't have the contractual capacity because they are deemed by law to be incapable of having judgment to enter a contract.

Why are contracts important?

The contract offers you a guarantee of performance by another person and if they don't perform you can take them to court. It also gives you peace of mind. Why is that important in the business world? Without contracts, businesses come to a halt.

Voidable contract

The parties have entered into a valid contract so that a contract exists, but either the offeror or offeree can void (i.e. cancel the contract), because of a defect with the contract. When a contract is cancelled, neither party has an obligation to perform Example: if you are a minor, you can agree with adults that you will give them x and they will give you y. it is up to you to decide if this transaction will turn into a contract or not. You have the power. -if you buy a car at 18 and you don't want it anymore then you don't have to have it. You can cancel it.

Lawful Object

The subject matter of a contract must be legal. A contract to accomplish something illegal or against public policy is void

Express Contract

The terms of the agreement (oral or written) are explicitly stated. -contract where the terms are explicit: it is actual and simple terms. - I said it, its clear, the terms are explicit (clear)

Ambiguous terms

These terms are always *enforced against the person who WROTE the contract.* you as the writer, had every opportunity to put in what you wanted and you didn't. if it is not understood, it can be used against the person. Example: if I can use extrinsic evidence to prove the ambiguous term, then there's no ambiguous rule. -When do you use this rule: it is *when you CANT explain the contract no matter what.* The email they are showing me doesn't explain what a word means. Katie said it means x and jackie said it means y. Therefor you cant explain it

Example #1: Jane promises to pay Mary $1,000 if Mary repairs Jane's broken windshield. Mary comes to Jane's house the next day to repair Jane's windshield. Before Mary begins work on the windshield, Jane informs Mary she has changed her mind. Can Jane change her mind?

Yes

Example #1: Jane offers to sell her green 2012 Toyota Prius to Mary for $15,000. It is a car Mary has been constantly asking Jane to sell to her. Mary accepts Jane's offer by paying Jane $15,000 = Agreement?

Yes because you have an offer (Jane offers her Toyota) and an acceptance (Mary accepts the offer). Therefor this is an AGREEMENT.

Mutual Assent

assent exists when there is a "meeting of the minds" (i.e. a common understanding) about the terms, conditions, and subject matter of the offer and acceptance In other words, offeror and offeree are bargaining over (or talking about) the same thing

Enforceable contract

contract contains all necessary elements and there are no defenses against enforcement -therefor we can enforce it to either party.

Void Contract

contract that has no legal effect. There is something legally wrong with it. Therefor neither party is obligated under it. An unlawful purpose like killing someone, is therefore a void contract.

Objective intent is determined by

determined by the reasonable person standard - What would the reasonable person in the position of the contracting parties have intended?

What do the examples of contracts in everyday life have in common?

have a voluntary exchange of things of value by 2 parties

Bargained-for exchange

means there was a negotiation during which the parties voluntarily agreed to the exchange

Example #2: After Mary has spent 8 hours repairing the windshield and is nearly finished Jane asks Mary to stop work and refuses to pay Mary? Can Jane do this?

no, Jane will breach her contract forcing her to pay damages to Mary

Define Breach of Contract

occurs when offeror or offeree fails to perform the obligation she agreed to (i.e. she did not fulfill her end of the bargain). The non-breaching party can file a civil lawsuit to recover any damages resulting from the breach -when 1 party doesnt do what she/he said they would do in the contract

Consideration

the bargained-for exchange of something of value in return for something of value -he thing that you GIVE UP that is of value. This can include money, services, goods, promises. Each party has a promise.

Offeree

the party to whom an offer is made and who has the power to accept the offer

Offeror

the party/person who makes an offer to enter into a contract