Chapter 9: Contracts & E-Commerce

When is a contract created?

A contract is created if the offer is accepted; No contract is created if the offer is not accepted.

The parties to a contract are __ How many parties do their need to be?

The Offeror: the party who makes an offer to enter into a contract The Offeree: the party to whom the offer is made *always at least 2 parties

Define Executed & Executory Contracts

-Executed: a contract that has been fully performed on both sides -Executory: a contract that has not been fully performed by both sides; contracts that have been fully performed by one side but not the other are classified as executory.

Name & Define 3 other Types of Contracts

-Express: a contract that is created orally or in writing -Implied in fact: contracts that are implied from the conduct of the parties. (eg,. Raising bid at auction house, nodding your head; saying yes even though you didn't say anything or wrote it down) (objective manifestation: clear that you said yes/no) -Quasi Contract/Implied in law: contract created by law which is imposed as if the parties had entered into a contract; allows a court to award monetary damages to a plaintiff for providing work or services even to no actual contract exists; eg. You are unconscious and they send you to the hospital, doctors still need to get paid

What is recoverable and what are the limits of a Quasi Contract recovery?

-Quantum Meruit: you are allowed to recover the reasonable value of services rendered -If the party granted a benefit unnecessarily or granted the benefit as a result of misconduct or negligence they are not allowed recovery; party who received benefit is not liable

Name and define Valid, Void, Voidable, & Unenforceable Contracts

-Valid: Meets all 4 elements to establish a contract; a contract that is enforceable by at least one of the parties -Void: has no legal effect (as if the contract never existed); neither party can enforce, usually because the purpose of the deal is illegal or because one of the parties has no legal authority to make a contract -Voidable: contract in which at least one party has the option to void his or her contractual obligations. When voided both parties are released from obligation; if the party with the option chooses to ratify the contract, both parties must fully perform their obligations *contracts may be voided by minors, insane persons, intoxicated persons, persons acting under duress, undue influence, fraud, & in cases of mutual mistake -Unenforceable: all essential elements to create a valid contract are met but there is some legal defense; parties may voluntarily perform a contract that is unenforceable

Contract

-are voluntarily entered into by parties -an agreement that is legally enforceable by a court -cannot be forced into a contract

What are the 4 basic elements/requirements of a contract and define them

1. Agreement: there must be an agreement between the parties. Requires offer by offeror and acceptance by offeree. 2. Consideration: Bargaining that leads to exchange (eg. money, personal property, real property, promise to provide services, etc.) between the parties 3. Contractual Capacity: Must be adults of sound mind 4. Lawful object: The subject of agreement must be lawful/of legal purpose. The subject should not be 1)illegal 2)immoral or 3)opposed to public policy

Name and Define the 2 Contract Types (every contract is one or the other) If there is ambiguity over what type, which is presumed?

1. Bilateral: "a promise for a promise"; no act of performance is necessary to create a bilateral contract; contract is created when promise is made 2. Unilateral: "a promise for an act"; there is no contract until the offeree performs the requested act; offer cannot be revoked once offeree has begun performance, only before. *Bilateral is presumed if there is ambiguity

What are the 3 sources of Contract Law? Define them. Where do we mainly get our contract law from? How is it driven?

1. Common law of Contracts: the major source of our contract law; courts decisions became precedent for later decisions (stare decisis); contract law developed primarily by state courts (not federal) 2. Restatement of the Law Contracts: a compilation of contract law principles drafted by legal scholars *Note: the Restatement is not law; lawyers & judges use it as guidance. 3. Uniform Commercial Code (UCG): goal is to create a uniform system of commercial law among 50 states; normally takes precedence over the common law of contracts; involves sales contracts: creation and enforcement of contracts for the sale of goods -Driven historically, have been passed down

When is a Quasi Contract is used? (3 elements required)

1. When one person confers a benefit to another who retains that benefit 2. Benefit provided with the "reasonable expectation" of compensation 3. It would be unjust not to require that person to pay for the benefit received.

3 elements of an Implied-in-fact contract

1. the plaintiff provided property or services to the defendant 2. The plaintiff expected to be paid by the defendant for the property or services and did not provide the property or services gratuitously 3. the defendant was given an opportunity to reject the property or services provided by the plaintiff but failed to do so.

Define Formal vs Informal Contracts Name and Define 3 Formal Contracts Most contracts in life are which type?

Formal: contracts that require a special form or method of creation 1. Negotiable instruments: include checks, drafts, notes , certificates of deposits; recognized by the UCG 2. Letters of Credit: an agreement by the issuer of the letter to pay a sum of money upon the receipt of an invoice and other documents; governed by the UCG. 3. Recognizance: a party acknowledges in court that he or she will pay a specified sum of money if a certain event occurs. Informal Contracts: simple contracts; no special form or method is required for their creation; still valid & enforceable; eg. leases, sales contracts, service contracts *most contracts in life are informal

Court system involvement in Contracts

Most contracts are performed without the aid of the court system because parties feel a moral duty to perform as promised.