Law unit four, final

Executed and Executory Contracts

A contract is executed when all of the parties have fully performed their contractual duties. It is executory until such duties have been fully performed. Any contract may be described using one or more of the above terms. For examples, eurocars inc. orders five new mercedes-benz from mercedes. Mercedes sends eurocars its standard acknowledgement form accepting the order. The parties have a valid, express bilateral contract that will be executory until mercedes delivers the cars and eurocars pays for them

The Evolution of Contract Law

The idea of contract is ancient. Thousands of years ago, Egyptians and Mesopotamians recognized devices resembling contracts; by the fifteenth century the common law courts of england had developed a variety of theories to justify enforcing certain promises. Contract law did not, however, assume major importance in our legal system until the nineteenth century, when the Industrial revolution created the necessity for greater private planing and certainty in commercial transactions. The central principle of contract law that emerged from this period was freedom of contract. Freedom of contract is the idea that contracts should be enforced because they are the products of the free wills of their creators, who should, within broad limits, be free to determine the extent of their obligation. The proper role of the courts in such a system of contract was to enforce these freely made bargains but otherwise to adopt a hands-off stance. The freedom to make good deals carried with it the risk of making bad deals. As long as a person voluntarily entered a contract, it would generally be enforced against him, even if the result was grossly unfair. And since equal bargaining power tended to be assumed, the courts were usually unwilling to hear defenses based on unequal bargaining power. The judicial posture allowed the courts to create a pure contract law consisting of precise, clear and technical rules that were capable of general, almost mechanical, application. Such a law of contract met the needs of the marketplace by affording the predictable and consistent results necessary to facilitate private planing.

Valid, Unenforceable, Voidable, and Void Contracts

Valid Contract- one that meets all of the legal requirements for a binding contract. They are therefore enforceable in court. An unenforceable contract is one that meets the basic legal requirements for a contract but may not be enforceable because of some other legal rule. If a contract is one involving the statute of frauds, "which refers to the requirement that certain kinds of contracts be memorialized in a writing, signed by the party to be charged, with sufficient content to evidence the contract", but no writing is made, the contract is said to be unenforceable. Another example of an unenforceable contract is an otherwise valid contract whose enforcement is barred by the applicable contract statute of limitations. Voidable contracts - those in which harmed parties have the legal right to cancel their obligations under the contract. For example, a contract that is induced by fraud or duress is voidable/cancelable at the election of the victimized party. The important feature of a voidable contract is that the injured party has the right to cancel the contract if he chooses. That right belongs only to the harmed party, and if he does not cancel the contract, it can be enforced by either party. Void contracts are agreements that create no legal obligations and for which no remedy will be given. Contracts to commit crimes, such as "hit" contracts, are classic examples of void contracts.

The nature of contracts

a contract is a legally enforceable promise or set of promises. When promises have the status of contract, the contracting party harmed by a breach of the contract is entitled to obtain legal remedies against the breaching party.

The functions of contracts

Contracts give us the ability to enter into agreements with other with confidence that we may call on the law - not merely the good faith of the other party - to make sure that those agreements will be honored. Within limitations that you will study later, contracting lets us create a type of private law - the terms of the agreements we make - that governs our dealings with others. Contracts facilitate the planning that is necessary in a modern, industrialized society. How could we make loans, sell goods on credit etc. Who would invest in a business if he or she could not rely on the fact that the builders and suppliers of the facilities and equipment, the suppliers of the raw materials necessary to manufacture products, and the customers who agree to purchase those products would all honor those commitments? Contract is necessary to the world as we know it

Bilateral and Unilateral Contracts

Contracts traditionally have been classified as unilateral or bilateral depending upon whether one party has made a promise or both parties have done so. In unilateral contracts, only one party makes a promise. For example, perks cafe issues "frequent buyer" cards to its customers, and stamps the cards each time a customer buys a cup of coffee. Perks promises to give any customer a free cup of coffee if the customer buys ten cups of coffee and has his "frequent buyer" card stamped ten times. In this case, Perks has made an offer for a unilateral contract, a contract that will be created with a customer only if and when the customer buys ten cups of coffee and has his card stamped ten times. In a bilateral contract, by contrast, both parties exchange promises and the contract is formed as soon as the promises are exchanged. For example if perks cafe promises to pay willowtown mall one k a month if willowtown mall will promise to lease a kiosk in the mall to perks for the holiay season, perks has made an offer for a bilateral contract because it is offering a promise in exchange for a promise. If willowtown mall makes the requested promise, a bilateral contract is formed at that point - even before the parties begin performing an of the acts that they have promised to do.

Express and Implied Contracts

In an express contract, the parties have directly stated the terms of their contract orally or in writing at the time the contract was formed. However the mutual agreement necessary to create a contract may also be demonstrated by the conduct of the parties. When the surrounding facts and circumstances indicate that an agreement has in fact been reached, an implied contract, also called a contract implied in fact, has been created. When you go to a doctor for a treatment for example, you do not ordinarally state the terms of your agreement in advance, although it is clear that you do, in fact, have an agreement. A court would infer a promise by your doctor to use reasonable care and skill in treating you and a return promise on your part to pay a reasonable fee for her services.

Basic elements of a contract

Over the years the law has developed a number of requirements that a set of promises must meet before they are treated as a contract. To quality as a contract, a set of promises must be based on a voluntary agreement, which is made up of an "offer" and an "acceptance" of that offer. In addition there usually must be "consideration" to support each party's promise. The contract must be between parties who have capacity to contract, and the objective and performance of the contract must be legal. Each of the elements of a contract will be discussed individually in subsequent chapters.

The methods of Contracting

contracts do not have to be in writing There are some situations in which the law requires certain kinds of contracts to be evidenced by a writing to be enforced. Unless the law specifically requires a certain kind of contract to be in writing, an oral contract that can be proven is as legally enforceable as a written one. Contracts can be and are made in many ways. When most of us imagine a contract, we envision two parties bargaining for a deal, drafting a contract on paper, and singing it or shaking hands. Some contracts are negotiated and formed in that way. Far more common today, both online and offline, is the use of standardized form contracts. Such contracts are preprinted by one party and presented to the other party for signing. In most situations, the party who drafts and presents the standardized contract is the one with greater bargaining power and or sophistication in the transaction. Frequently, the terms of standardized contracts are nonnegotiable. Such contracts have the advantage of providing an efficient method of standardizing common transactions. On the other hand, they present the dangers that the party who signs the contract will not know what he is agreeing to and that the party who drafts and presents the contract will take advantage of his bargaining power to include terms that are oppressive or abnormal in that kind of transaction.