Chapter 12 Reading: Formation of Traditional and E-Contracts

The Restatement (Second) of Contracts, which is a compilation of common law contract principles, states that parties may agree to a contract

"by written or spoken words or by other action or by failure to act."

forbearance

(1) The act of refraining from exercising a legal right. (2) An agreement between a lender and a borrower in which the lender agrees to temporarily cease requiring mortgage payments, to delay foreclosure, or to accept smaller payments than previously scheduled.

Substitute Method of Acceptance

Effective if the substitute serves the same purpose (Fed-Ex vs. UPS). Not effective on dispatch. Effective when received by the Offeror If the offeree accepts the offer by a substitute means, the acceptance may still be effective if the substituted method serves the same purpose as the authorized means.

Illusory Promises

If the terms of the contract express such uncertainty of performance that the promisor has not definitely promised to do anything, the promise is said to be illusory—without consideration and unenforceable.

Mode and Timeliness of Acceptance

In bilateral contracts, acceptance must be timely. The general rule is that acceptance in a bilateral contract is timely if it is made before the offer is terminated. Problems may arise, though, when the parties involved are not dealing face to face. In such situations, the offeree should use an authorized mode of communication.

Acceptance

In contract law, the offeree's indication to the offeror that the offeree agrees to be bound by the terms of the offeror's proposal.

revocation

In contract law, the withdrawal of an offer by an offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability.

Shrink-Wrap Agreements and Enforceable Contract Terms

In some cases, the courts have enforced the terms of shrink-wrap agreements in the same way as the terms of other contracts. These courts have reasoned that by including the terms with the product, the seller proposed a contract. The buyer could accept this contract by using the product after having an opportunity to read the terms. Thus, a buyer's failure to object to terms contained within a shrink-wrapped software package may constitute an acceptance of the terms by conduct.

Gambling is the creation of risk for the purpose of assuming it. Any scheme that involves the distribution of property by chance among persons who have paid valuable consideration for the opportunity (chance) to receive the property is

gambling. Traditionally, the states deemed gambling contracts illegal and thus void. Today, many states allow (and regulate) certain forms of gambling, such as horse racing, video poker machines, and charity-sponsored bingo. In addition, nearly all states allow state-operated lotteries and gambling on Native American reservations.

Silence as Acceptance

general rule: offeree should not be legally obligated to affirmatively reject an offer. In some instances, however, the offeree does have a duty to speak, and her or his silence or inaction will operate as an acceptance. Silence can constitute an acceptance when the offeree has had prior dealings with the offeror.

Irrevocable

incapable of being changed or called back

Like a revocation, a rejection of an offer is effective only when it is actually received by

offeror or the offeror's agent.

The party making an offer is called the _________, and the party to whom the offer is made is called the __________.

offeror, offeree

Procedural unconscionability

often involves inconspicuous print, unintelligible language ("legalese"), or the lack of an opportunity to read the contract or ask questions about its meaning. This type of unconscionability typically arises when a party's lack of knowledge or understanding of the contract terms deprived him or her of any meaningful choice.

Often, consideration is broken down into two parts:

something of legally sufficient value must be given in exchange for the promise, and there must be a bargained-for exchange.

The common law governs all contracts except when it has been modified or replaced by ___________________, such as the Uniform Commercial Code (UCC), or by administrative agency regulations.

statutory law

ancillary

subordinate or supplementary

If the offeree rejects the offer—by words or by conduct—the offer is terminated. Any subsequent attempt by the offeree to accept will be construed as a _______________, giving the original offeror (now the offeree) the power of acceptance.

new offer

Substantive unconscionability

occurs when contracts, or portions of contracts, are oppressive or overly harsh. Courts generally focus on provisions that deprive one party of the benefits of the agreement or leave that party without a remedy for nonperformance by the other.

Authorized Means of Acceptance

offer specifies (expressly or impliedly) how acceptance should be made -no acceptance if authorized means is not used

express contract

A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written.

Formal contracts

A contract that by law requires a specific form, such as being executed under seal, to be valid.

Informal contracts

A contract that does not require a specified form or formality in order to be valid.

executed contract

A contract that has been completely performed by both parties.

executory contract

A contract that has not yet been fully performed.

e-contracts

A contract that is entered into in cyberspace and is evidenced only by electronic impulses (such as those that make up a computer's memory), rather than, for example, a typewritten form.

voidable contract

A contract that may be legally avoided (canceled) at the option of one of the parties. If a contract is avoided, both parties are released from it. If it is ratified, both parties mus fully perform their respective legal obligations.

unilateral contract

A contract that results when an offer can be accepted only by the offeree's performance. Promise for an act

valid contract

A contract that results when the elements necessary for contract formation (agreement, consideration, contractual capacity, and legality) are present.

option contract

A contract under which the offeror cannot revoke his or her offer for a stipulated time period and the offeree can accept or reject the offer at any time during this period. The offeree must give consideration for the option to be enforceable.

covenant not to compete

A contractual promise to refrain from competing with another party for a certain period of time and within a certain geographic area. Although covenants not to compete restrain trade, they are commonly found in partnership agreements, business sale agreements, and employment contracts. If they are ancillary to such agreements, covenants not to compete will normally be enforced by the courts unless the time period or geographic area is deemed unreasonable.

offer

A promise or commitment to perform or refrain from performing some specified act in the future.

To be legally sufficient, consideration must be something of value in the eyes of the law and may consist of the following:

A promise to do something that one has no prior legal duty to do. The performance of an action that one is otherwise not obligated to undertake. The refraining from an action that one has a legal right to undertake (called a forbearance).

Rescission

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made; may be effected through the mutual consent of the parties, by their conduct, or by court decree.

mailbox rule (deposited acceptance rule)

A rule providing that an acceptance of an offer becomes effective on dispatch, not when it is received by the offeror.

Statute of Frauds

A state statute under which certain types of contracts must be in writing to be enforceable.

Supervening Illegality

A statute or court decision that makes an offer illegal automatically terminates the offer.

objective theory of contracts

A theory under which the intent to form a contract will be judged by outward, objective facts as interpreted by a reasonable person, rather than by the party's own secret, subjective intentions. Objective facts might include what a party said when entering into the contract, how a party acted or appeared, and the circumstances surrounding the transaction.

intended beneficiary

A third party for whose benefit a contract is formed; an intended beneficiary can sue the promisor if such a contract is breached.

bilateral contract

A type of contract that arises when a promise is given in exchange for a promise. Promise for a promise

Uniform Electronic Transactions Act (UETA)

A uniform state act providing a legal framework for electronic transactions giving electronic signatures and records the same validity and enforceability as manual signatures and paper-based transactions.

unenforceable contract

A valid contract rendered unenforceable by some statute or law.

offeror

A person who makes an offer.

Promise

A person's assurance that he or she will or will not do something.

exculpatory clauses

A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.

mirror image rule

A common law rule that requires, for a valid contractual agreement, that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer.

implied contract

A contract formed in whole or in part from the conduct of the parties (as opposed to an express contract).

void contract

A contract having no legal force or binding effect.

release

A contract in which one party forfeits the right to pursue a legal claim against the other party.

reformation

A court-ordered correction of a written contract so that it reflects the true intentions of the parties.

liquidated debt

A debt that is due and certain in amount.

unliquidated debt

A debt that is uncertain in amount.

promissory estoppel

A doctrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies. Such a promise is binding if justice will be better served by the enforcement of the promise.

agreement

A meeting of two or more minds in regard to the terms of a contract; usually broken down into two events—an offer by one party to form a contract, and an acceptance of the offer by the person to whom the offer is made.

offeree

A person to whom an offer is made.

At a minimum, an online offer should include the following provisions:

Acceptance of terms. A clause that clearly indicates what constitutes the buyer's agreement to the terms of the offer, such as a box containing the words "I accept" that the buyer can click. Payment. A provision specifying how payment for the goods (including any applicable taxes) must be made. Return policy. A statement of the seller's refund and return policies. Disclaimer. Disclaimers of liability for certain uses of the goods. For instance, an online seller of business forms may add a disclaimer that the seller does not accept responsibility for the buyer's reliance on the forms rather than on an attorney's advice. Limitation on remedies. A provision specifying the remedies available to the buyer if the goods are found to be defective or if the contract is otherwise breached. Any limitation of remedies should be clearly spelled out. Privacy policy. A statement indicating how the seller will use the information gathered about the buyer. Dispute resolution. Provisions relating to dispute settlement, which we examine more closely in the following section.

Record

According to the Uniform Electronic Transactions Act, information that is either inscribed on a tangible medium or stored in an electronic or other medium, and that is retrievable.

Requirement of a valid contract:

Agreement. An agreement to form a contract includes an offer and an acceptance. One party must offer to enter into a legal agreement, and another party must accept the terms of the offer. Consideration. Any promises made by the parties to the contract must be supported by legally sufficient and bargained-for consideration (something of value received or promised, such as money, to convince a person to make a deal). Contractual capacity. Both parties entering into the contract must have the contractual capacity to do so. The law must recognize them as possessing characteristics that qualify them as competent parties. Legality. The contract's purpose must be to accomplish some goal that is legal and not against public policy.

agreements to agree

Agreements to agree to material terms at some future date

accord and satisfaction

An agreement for payment (or other performance) between two parties, one of whom has a right of action against the other. After the payment has been accepted or other performance has been made, the "accord and satisfaction" is complete, and the obligation is discharged. The accord is the agreement. In the accord, one party undertakes to give or perform, and the other to accept, in satisfaction of a claim, something other than that on which the parties originally agreed. Satisfaction is the performance (usually payment) that takes place after the accord is executed.

click-on agreement

An agreement that arises when a buyer, engaging in a transaction on a computer, indicates his or her assent to be bound by the terms of an offer by clicking on a button that says, for example, "I agree"; sometimes referred to as a click-on license or a click-wrap agreement.

contract

An agreement that can be enforced in court, formed by two or more parties, each of whom agrees to perform or to refrain from performing some act now or in the future.

covenant not to sue

An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim.

shrink-wrap agreement

An agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packaged; sometimes called a shrinkwrap license.

Destruction, Death, or Incompetence

An offer is automatically terminated if the specific subject matter of the offer (such as a smartphone or a house) is destroyed before the offer is accepted. Notice of the destruction is not required for the offer to terminate. An offeree's power of acceptance is also terminated when the offeror or offeree dies or is legally incapacitated—unless the offer is irrevocable.

Definiteness of Terms

An offer must have reasonably definite terms so that a court can determine if a breach has occurred and give an appropriate remedy

Lapse of Time

An offer terminates automatically by law when the period of time specified in the offer has passed. If the offer states that it will be left open until a particular date, then the offer will terminate at midnight on that day. If the offer states that it will be open for a number of days, this time period normally begins to run when the offeree receives the offer (not when it is formed or sent). If the offer does not specify a time for acceptance, the offer terminates at the end of a reasonable period of time. What constitutes a reasonable period of time depends on the subject matter of the contract, business and market conditions, and other relevant circumstances.

counteroffer

An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer.

Contracts to Commit a Crime

Any contract to commit a crime is in violation of a statute. Thus, a contract to sell illegal drugs in violation of criminal laws is unenforceable, as is a contract to cover up a corporation's violation of an environmental or other law.

e-signature

As defined by the Uniform Electronic Transactions Act, "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record." Thus, e-signatures can include encrypted digital signatures, names (intended as signatures) at the ends of e-mail messages, and "clicks" on a Web page if the clicks include some means of identification.

estopped

Barred, impeded, or precluded.

usury

Charging an illegal rate of interest.

Unequivocal Acceptance

Clear and unambiguous acceptance Should have only one possible meaning Must not contain conditions or exceptions

Discriminatory Contracts

Contracts in which a party promises to discriminate on the basis of race, color, national origin, religion, gender, age, or disability are contrary to both statute and public policy. They are also unenforceable. For instance, if a property owner promises in a contract not to sell the property to a member of a particular race, the contract is unenforceable. The public policy underlying these prohibitions is very strong, and the courts are quick to invalidate discriminatory contracts.

Contracts in Restraint of Trade

Contracts that tend to reduce competition for the provision of goods or services in a market. Generally are unenforceable because they are contrary to public policy and typically violate one or more federal or state antitrust statutes. An exception is recognized when the restraint is reasonable and is contained in an ancillary (secondary or subordinate) clause in a contract. Such restraints often are included in contracts for the sale of an ongoing business and in employment contracts.

Court Enforcement of Exculpatory Clauses

Courts do enforce exculpatory clauses if they are reasonable, do not violate public policy, and do not protect parties from liability for intentional misconduct. The language used must not be ambiguous, and the parties must have been in relatively equal bargaining positions.

unconscionable

Describes a contract or clause that is void on the basis of public policy because one party is forced to accept terms that are unfairly burdensome and that unfairly benefit the dominating party.

Revocation may be accomplished by either of the following:

Express repudiation of the offer (such as "I withdraw my previous offer of October 17"). Performance of acts that are inconsistent with the existence of the offer and are made known to the offeree (for instance, selling the offered property to another person in the offeree's presence).

The concept of intention can be further clarified by looking at statements that are not offers and situations in which the parties' intent to be bound might be questionable.

Expressions of opinion. An expression of opinion is not an offer. It does not indicate an intention to enter into a binding agreement. Statements of future intent. A statement of an intention to do something in the future (such as "I plan to sell my Verizon stock") is not an offer. Preliminary negotiations. A request or invitation to negotiate is not an offer. It only expresses a willingness to discuss the possibility of entering into a contract. Statements such as "Will you sell your farm?" or "I wouldn't sell my car for less than $8,000" are examples. Invitations to bid. When a government entity or private firm needs to have construction work done, contractors are invited to submit bids. The invitation to submit bids is not an offer. The bids that contractors submit are offers, however, and the government entity or private firm can bind the contractor by accepting the bid. Advertisements and price lists. In general, representations made in advertisements and price lists are treated not as offers to contract but as invitations to negotiate. Live and online auctions. In a live auction, a seller "offers" goods for sale through an auctioneer, but this is not an offer to form a contract. Rather, it is an invitation asking bidders to submit offers. In the context of an auction, a bidder is the offeror, and the auctioneer is the offeree. The offer is accepted when the auctioneer strikes the hammer.

Consideration

Generally, the value given in return for a promise (bilateral contract) or a performance (unilateral contract). The consideration, which must be present to make the contract legally binding, must be something of legally sufficient value and must be bargained for. It is the inducement, price, or motive that causes a party to enter into an agreement. As long as consideration is present, the courts generally do not interfere with contracts based on the amount of consideration paid.

The power of the offeree to transform the offer into a binding, legal obligation can be terminated by operation of law through the occurrence of any of the following events:

Lapse of time. Destruction of the specific subject matter of the offer. Death or incompetence of the offeror or the offeree. Supervening illegality of the proposed contract.

Violation of Public Policy

Most courts view exculpatory clauses with disfavor. Exculpatory clauses found in rental agreements for commercial property are frequently held to be contrary to public policy, and such clauses are almost always unenforceable in residential property leases. Courts also usually hold that exculpatory clauses are against public policy in the employment context.

third party beneficiary

One for whose benefit a promise is made in a contract but who is not a party to the contract.

Dispute-Settlement Provisions

Online offers frequently include provisions relating to dispute settlement. For instance, an offer might include an arbitration clause specifying that any dispute arising under the contract will be arbitrated in a designated forum. The parties might also select the forum and the law that will govern any disputes. The same contract may include arbitration, forum-selection, and choice-of-law clauses.

past consideration

Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain. You can bargain for something to take place now or in the future but not for something that has already taken place.

Shrink-Wrap Terms That May Not Be Enforced

Sometimes, however, the courts have refused to enforce certain terms included in shrink-wrap agreements because the buyer did not expressly consent to them. An important factor is when the parties formed their contract. If a buyer orders a product over the telephone, for instance, and is not informed of an arbitration clause or a forum-selection clause at that time, the buyer clearly has not expressly agreed to these terms. If the buyer discovers the clauses after the parties have entered into a contract, a court may conclude that those terms were proposals for additional terms and were not part of the contract.

browse-wrap terms

Terms and conditions of use that are presented to an Internet user at the time a product, such as software, is downloaded but that need not be agreed to before the product is installed or used.

assignment

The act of transferring to another all or part of one's rights arising under a contract. . The transfer of contractual rights to a third party

A release generally will be binding if it meets the following requirements:

The agreement is made in good faith (honestly). The release contract is in a signed writing (required in many states). The contract is accompanied by consideration.

As a general rule, all rights can be assigned. Exceptions are made, however, under certain circumstances, including the following:

The assignment is prohibited by statute. The contract is personal. The assignment significantly changes the risk or duties of the obligor (the person contractually obligated to perform). The contract prohibits assignment.

An offer must have reasonably definite terms so that a court can determine if a breach has occurred and give an appropriate remedy. The specific terms required depend, of course, on the type of contract. Generally, a contract must include the following terms, either expressed in the contract or capable of being reasonably inferred from it:

The identification of the parties. The identification of the object or subject matter of the contract (also the quantity, when appropriate), including the work to be performed, with specific identification of such items as goods, services, and land. The consideration to be paid. The time of payment, delivery, or performance.

Rescission and New Contract

The law recognizes that two parties can mutually agree to rescind, or cancel, their contract, at least to the extent that it is executory (still to be carried out)

Enforcement Issues

The laws governing the enforceability of covenants not to compete vary significantly from state to state. California prohibits the enforcement of covenants not to compete altogether. In some states, including Texas, such a covenant will not be enforced unless the employee has received some benefit in return for signing the noncompete agreement. This is true even if the covenant is reasonable as to time and area. If the employee receives no benefit, the covenant will be deemed void.

contractual capacity

The legal ability to enter into contracts; the threshold mental capacity required by law for a party who enters into a contract to be bound by that contract.

disaffirmance

The legal avoidance, or setting aside, of a contractual obligation. To disaffirm, a minor must express his or her intent, through words or conduct, not to be bound to the contract.

Under the common law, three elements are necessary for an offer to be effective:

The offeror must have a serious intention to become bound by the offer. The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract. The offer must be communicated to the offeree.

For an implied contract to arise, certain requirements must be met. Normally, if the following conditions exist, a court will hold that an implied contract was formed:

The plaintiff furnished some service or property. The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected. The defendant had a chance to reject the services or property and did not.

Unforeseen Difficulties

The rule regarding preexisting duty is meant to prevent extortion and the so-called holdup game. Nonetheless, if, during performance of a contract, extraordinary difficulties arise that were totally unforeseen at the time the contract was formed, a court may allow an exception to the rule. The key is whether the court finds that the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made.

delegation

The transfer of a contractual duty to a third party. The party delegating the duty (the delegator) to the third party (the delegatee) is still obliged to perform on the contract should the delegatee fail to perform.

Under this doctrine, a court may enforce an otherwise unenforceable promise to avoid the injustice that would otherwise result. For the promissory estoppel doctrine to be applied, the following elements are required:

There must be a clear and definite promise. The promisor should have expected that the promisee would rely on the promise. The promisee reasonably relied on the promise by acting or refraining from some act. The promisee's reliance was definite and resulted in substantial detriment. Enforcement of the promise is necessary to avoid injustice.

Preexisting Duty

Under most circumstances, a promise to do what one already has a legal duty to do does not constitute legally sufficient consideration. The preexisting legal duty may be imposed by law or may arise out of a previous contract. If a party is already bound by contract to perform a certain duty, that duty cannot serve as consideration for a second contract.

Even if all of the four requirements of a valid contract are satisfied, a contract may be unenforceable if the following requirements are not met. These requirements typically are raised as defenses to the enforceability of an otherwise valid contract.

Voluntary consent. The consent of both parties must be voluntary. For instance, if a contract was formed as a result of fraud, undue influence, mistake, or duress, the contract may not be enforceable. Form. The contract must be in whatever form the law requires. Some contracts must be in writing to be enforceable.

As a general rule, any duty can be delegated. There are, however, some circumstances in which delegation is prohibited:

When special trust has been placed in the obligor. When performance depends on the personal skill or talents of the obligor. When performance by a third party will vary materially from that expected by the obligee (the person to whom an obligation is owed) under the contract. When the contract expressly prohibits delegation by including an antidelegation clause.

Licensing Statutes

Whether a contract with an unlicensed person is legal and enforceable depends on the purpose of the licensing statute. If the statute's purpose is to protect the public from unauthorized practitioners (such as unlicensed architects, attorneys, and electricians), then a contract involving an unlicensed practitioner is generally illegal and unenforceable. If the statute's purpose is merely to raise government revenues, however, a court may enforce the contract and fine the unlicensed person.

Contrary to public policy

a contract that has a negative impact on society or that interferes with the public's safety and welfare making the contract not enforceable.

Although we typically refer to the offeror and the offeree as a seller and a buyer, in many online transactions these parties would be more accurately described as

a licensor and a licensee.

incidental beneficiary

a third person who receives a benefit from a contract even though that person's benefit is not the reason the contract was made. Because the benefit is unintentional, an incidental beneficiary cannot sue to enforce the contract. Only intended beneficiaries acquire legal rights in a contract.

Communication of Acceptance

acceptance effective upon dispatch unless the offer specifically provides otherwise or the offeree uses an unauthorized means of communication

A valid contract has the necessary elements to entitle at least one of the parties to enforce it in court. Those elements, as mentioned earlier, consist of

an agreement (offer and acceptance), supported by legally sufficient consideration, made by parties who have the legal capacity to enter into the contract, and a legal purpose.

When rights under a contract are assigned unconditionally, the rights of the assignor

are extinguished.

There are exceptions to the rule of privity of contract. One exception allows a party to a contract to transfer the rights or duties arising from the contract to another person through an _________________________________________________. Another exception involves a third party beneficiary contract—a contract in which the parties to the contract intend that the contract

assignment (of rights) or a delegation (of duties), benefit a third party

In an assignment, the party assigning the rights to a third party is known as the_______________, and the party receiving the rights is the

assignor, assignee

Although there are many exceptions, the general rule today is that the obligee can sue ________________________ if the duties are not performed.

both the delegatee and the delegator

Contracts relating to services, real estate, employment, and insurance, for instance, generally are governed by the _____________ of contracts.

common law

The first requirement for an effective offer is a serious intent on the part of the offeror. Serious intent is not determined by the subjective intentions, beliefs, and assumptions of the offeror. Rather, it is determined by what a reasonable person in the offeree's position would

conclude that the offeror's words and actions meant.

Sometimes, parties rescind a contract and make a new contract at the same time. When this occurs, it is often difficult to determine whether there was

consideration for the new contract, or whether the parties had a preexisting duty under the previous contract.

Preliminary Agreement

constitutes a binding contract if the parties have agreed on all essential terms and no disputed issues remain to be resolved. If the parties agree on certain major terms but leave other terms open for further negotiation, this is not binding. The parties are bound only in the sense that they have committed themselves to negotiate the undecided terms in good faith in an effort to reach a final agreement.

Generally, contract disputes arise when there is a promise of future performance. If the contractual promise is not fulfilled, the party who made it is subject to the sanctions of a

court

Just as a party can transfer rights through an assignment, a party can also transfer duties. Duties are not assigned, however, they are

delegated

The party delegating the duties is the _________________, and the party to whom the duties are delegated is the delegatee.

delegator, delegatee

The following types of contracts are generally required to be in writing or evidenced by a written memorandum or electronic record:

ecord: Contracts involving interests in land. Contracts that cannot by their terms be performed within one year from the day after the date of formation. Collateral, or secondary, contracts, such as promises to answer for the debt or duty of another and promises by the administrator or executor of an estate to pay a debt of the estate personally—that is, out of her or his own pocket. Promises made in consideration of marriage. Under the Uniform Commercial Code, contracts for the sale of goods priced at $500 or more.

In almost all states, the age of majority (when a person is no longer a minor) for contractual purposes is

eighteen years.

For an e-signature to be enforceable, the contracting parties must have agreed to use

electronic signatures

If one party has fully performed but the other has not, the contract is said to be

executed on the one side and executory on the other, but the contract is still classified as executory.

Normally, a delegation of duties does not relieve the delegator of the obligation to perform in the event that the delegatee

fails to do so.

In most states, a creditor's acceptance of a lesser sum than the entire amount of a liquidated debt is not satisfaction, and the balance of the debt

is still legally owed.

The actual name of the Statute of Frauds is misleading because the statute does not apply to fraud. Rather, it denies enforceability to certain contracts that do not comply with

its writing requirements

Like other types of law, contract law reflects our social values, interests, and expectations at a given point in time. It shows, for instance, to what extent our society allows people to make promises or commitments that are

legally binding

A contract can be void because one of the parties was determined by a court to be _______________, for instance, or because the purpose of the contract was ______________

mentally incompetent, illegal

Contract law deals with, among other things, the formation and keeping of

promises

Communication

the offer must be communicated to the offeree. Ordinarily, one cannot agree to a bargain without knowing that it exists.

A promise is illusory when it fails to bind .

the promisor

A contract that is otherwise valid may still be unenforceable if it is not in the proper form. Certain types of contracts are required to be in

writing or evidenced by a memorandum or electronic record