chapter 13

A bilateral Contract

A promise + A promise to form a binding contract

contracts are governed by uniform commercial code (UCC).

If the contract is for the sale of a good, it falls under article 2

executed contracts

Once all of the terms of the contract have been fully performed, the contract has been Executed

Informal Contracts

( simple contract) they are quite complex, but they are called" simple" because no formalities are required in making them. o Just as important and legally binding as their more formal counterparts.

3 sources of contract law

1. Case Law ( Common Law) 2. UCC 3. (More recently the third source with globalization- Convention on Contracts for International Sales of Goods ( CIGS) here we will mainly focus on common law

As a general rule, three conditions must be met for the courts to find an implied, or implied-in-fact , contract

1. The plaintiff provided some property or service to the defendant. 2. The plaintiff expected the be paid for such property or service, and a reasonable person in the position of the defendant would have executed to pay for it. 3. Defendant had an opportunity to reject the property or service but did not

elements of a contract

4 elements are necessary in a contract 1. the agreement 2. the consideration 3. contractual capacity 4. legal object

The objective Theory of Contracts

: which means we base the existence of a contract on the parties outward manifestations of intent and we base its interpretation on how a reasonable person would interpret it. • Meaning, the subjective intent of the parties is not usually relevant, its more about how they represented their intent through their actions and words. • But, Subjective intent may be relevant in a few circumstances - Mistake: if a mutual misunderstanding between the parties exists, and if as a result they did not really come to a meeting of minds , there is no contract.

formal Contracts 4 names identified

:have a special form or must be created in a specific manner. statement (second) of contract identifies 4 types of formal contracts a. Contracts under seal b. Recognizance c. Letters of credit d. Negotiable instruments

Lack of Genuine Assent

A contractor is suppose to be entered freely by those parties, but sometimes the offeror (party proposing the contract) secures acceptance of the agreement through improper means such as fraud, duress, undue influence, or misrepresentation. • In these situations there is no genuine assent and the offeree can use that as defense against the agreement.

Unilateral Contract

A promise + A requested Action ( the offeror wants the oferee to do smoething , not to promise to do something. )

• Negotiable instruments:

Are unconditional written promises to pay the holder of a specific sum of money on demand or at a certain time. o Ex: checks, notes, drafts, and certificate of deposit o Governed by UCC

executory contracts

As long as some of the terms have not yet been performed, the contract is

how to breach a Unilateral Contract

Just as the offeree is under no obligation to actually perform the act called for by the offeror, the offeror may revoke the offer at any time before performance. •Courts hold that once the oferee begins the performance, the offeror must hold the ofer open for a reasonable time to allow the offeree to complete it.

UETA

National Conference of Commissions on Uniform State law promotes this piece of legislation, which almost every state has adopted. They also created to affirm that electronic contracts are legally valid + also attempts to make state laws consistent regarding topics such as validity of signatures created online.

as Restatement of the Law Second, Contracts.

Prominent legal scholars organize the principles of common law of contracts into the Original Restatement of the Law, Contracts. It is not actually the law itself, but judges frequently use it because it is an authoritative statement of what the law is. Drafters will explain what the law is in a majority of states and what other states have adopted as alternative approaches.

• Uniform Commercial Code ( UCC)

To help interstate commerce - The national conference of Commissioners and Uniform STATE LAWS and American Law institute drafted a set of commercial laws that could be applicable to all states. • Became law in every state that adopted it

4 way to describe what can happen to a contract in terms of legitimacy

Valid, Void, Voidable, unenforceable Contracts

governed by common law

anything that isn't about the sale of goods

Express Contract

are all clearly set forth in either written or spoken words.

Quasi - Contracts

are sometimes called implied in law contracts, they are not actually contracts. Rather, in order to prevent one party from being unjustly enriched at the expense of another, the courts impose contractual obligations on one of the parties as if that party had entered into a contract. Ex: Diego and pavement - this quasi contract imposes such a duty that prevents Diego form being unjustly enriched at the expense of the paving company. The enrichment must be unjust , if Diego was out of town then he wouldn't have had to pay for it and he would have just gotten lucky. A defendant does not need to acknowledge the subcontractors role for the quasi-contract to exist

Implied Contracts

arise not from words but from the conduct of the parties

• Recognizance:

arises when a person acknowledges in court that he or she will perform some specified act or pay a price upon failure to do so. o Ex: a bond in trial - you will come back or forfeit the bond and stay in jail

classification of contracts

bilateral and unilateral ( important to know the distinction because it determines when the oferee is legally bound to perform.

the agreement

consists of an offer by one party, called the offeror, to enter into a contract and an acceptance of the terms of the offer by the other party, called the oforee

CONTRACT

defined as a set promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty. -• A set of legally enforceable promises.

Voidable Contract

if one or both parties has the ability to either withdraw from the contract or enforce it. - If the parties discover that the contract is voidable after one or both have performed , and one party choses to have the contract terminated, both parties have to return everything to each other so they are restored to when they first started. -Errors in a contract can make it voidable -Contract by minor is voidable by the minor -Innocent party can void contract cause by duress, fraud, or undue influence.

how to breach a bilateral contract

if you fail to perform then the contract is breached. Ex: ebay and highest bidder, should either party fail to perform then the other party can seek legal remedy. ie. Zapos case - need to make sure you are actually making a binding promise - class action case against their unilateral saying that they can change the law anytime they want.

• Letter of Credit

is an arrangement by the issuer to pay another party a sum of money on receipt of an invoice and other documents o Governed by UCC

Void Contract

is in effect not a contract at all: either it object is illegal or it has some defect so serious that it is not a contract Ex: contract to kill someone

contractual capacity

is the legal ability to enter into a binding agreement. Most adults over the age of majority have capacity; those under age of majority, people suffering with mental illness, and intoxicated persons do not.

page 146 things the judge should lean towards when reading a contract

look up in book

Valid Contract

one that contains all of the legal elements set forth in the beginning of this chapter. • Valid contract is one that will be enforced • However, sometimes A contract may be valid yet unenforceable when a law prohibits the court from enforcing it ie. statute of limitations , statute if fraud and mandates about breach of contract

Covenant to Compete

restricts what an employee may do after leaving a company, and they often dictate where, when, and with whom an employee may work.

• Plain Meaning Rule:

states that if a writing, or a term in question, appears to be plain and ambiguous on its face, we must determine its meaning from just " four corners" of the document, without looking at outside evidence and give the words their ordinary meaning.

the consideration

the bargained-for exchange or what each party gets in exchange for his or her promise under the contract

In determining whether parties intend to enter into a contract,

the courts look at their objective words and behavior and do not try to figure out what they might have been secretly intending.

oferee

the party that agreed to the terms of the offerors contract

offeror

the party that offers the agreement

Legal Object

this means that to be enforceable, the contract cannot be either illegal or against public policy

The contract lacks proper form

typically means it lacks a writing. The contract itself does not have to be in writing but a writing meeting certain criteria that confirms the existence of the contract must exist.

recovery in quasi- contract may be obtained when

• A benefit is conferred by the plaintiff upon the defendant • The defendant has knowledge the benefit that is being bestows upon her • The defendant retains the benefit under circumstance in which it would be unjust to do so without payment.

ESIGN

• Congress passed ESIGN to facilitate the use of electronic records and signatures in e-commerce. Federal Law affirms that E- contracts are legally valid.