B-Law Ch. 9
"Formal" Contract
Must meet special form requirements -Examples: Letters of credit and negotiable instruments
"Informal" Contract
No formalities required in making; a "simple" contract
"Executory" Contract
Some duties under contract not yet fully performed by one/both parties
Auctions
unless "without reserve", seller is not offering to sell to highest bidder (Ex. Buyer bids at a regular auction with reserve rights and seller decides not to sell even though buyer was the highest bidder.)
A person who wants to recover using a quasi-contract theory must prove that:
(1) a benefit was conferred on the defendant; (2) the defendant appreciated the benefit; and (3) because of the circumstances, it would be unjust to allow the defendant to retain the benefit without compensating the party that conferred it.
Future intent to contract
(Ex. "Our company plans to sell this truck for $25,000")
Opinion
(Ex. "This is a fine truck")
Preliminary Negotiations
(Ex. "Would you take $23,000 for that truck?")
Advertisements
(Ex. dealership advertising a truck for $25,000)
Termination of Offer
-Revocation by Offeror (exceptions) -Rejection by Offeree -Death/Incapacity of Offeror -Destruction/Subsequent Illegality of Subject Matter of Offer -Lapse of Time/Failure of Condition(s) -Specified in Offer
Auction with reserve
-Seller merely expresses intent to receive offers -Auctioneer (as representative of seller) may withdraw item from auction at any time before "hammer falls" -Before hammer falls (signaling acceptance of offer), bidder/offeror may revoke bid
Auction without reserve
-Seller must accept highest bid - Bidder/offeree may not revoke bid/acceptance
Classification of contracts (2)
1) "Bilateral" Contract 2) "Unilateral" Contract
Classification of contracts (2)
1) "Express" Contract 2) "Implied" Contract
Sources of Contract law (2)
1) Common law 2) The uniform Commercial Code (UCC)
Defenses to Enforcement of Contract (2) (:All four elements of the contract are present but one of the parties may have a defense to the contracts enforcement)
1) Lack of genuine assent 2) Lack of proper form
Elements Required For Contract Formation (4)
1)Agreement 2)Consideration 3)Contractual Capacity 4)Legal Object
1) Lack of genuine assent
A contract is supposed to be entered freely into by both parties but sometimes the offerer secures the acceptance by improper means such as: fraud, duress, undue influence, or misrepresentation.
Contract
A set of legally enforceable promises.
"Valid" Contract
All elements are present, and therefore, the contract is enforceable in court.
"Unenforceable" Contract
All elements are present, but some law prohibits the enforcement.
"Executed" Contract
All terms of contract fully performed
UCC
An offer may have open terms, including price, and still be valid. The UCC solves this problem by allowing open terms to be filled in under the rules of Article 2. For example, if the price is left open, the court will fill in a reasonable price at the time and place of delivery. Essential terms under the UCC are: -Parties must be identifiable, - Description of goods must be specified, and -The quantity of goods must be specified (*requirements and output contracts)
2) Consideration
Bargained for Exchange (What each party gets in exchange for their promise under contract)
2) "Implied" Contract
Based on conduct or actions * Example would be when you go to the doctor for treatment, you don't normally enter into an express contract - there is simply an implied contractual promise to pay a reasonable fee for services.
1) "Express" Contract
Based on written or spoken words *Most contracts fall in this classification.
2) Lack of proper form requirements
Certain contracts require a writing if there is none, the agreement will not be enforced.
1) Agreement
Consists of an OFFER by one party called the OFFERER, and, ACCEPTANCE by the other party called the OFFEREE.
1) "Bilateral" Contract
Exchange of promises * a contract ex) shannon promises to pay gary $1000 in exchange for painting her car. If either party fails the other may sue.
"Void" Contract
Illegal purpose/subject matter, and therefore, the contract is unenforceable by any party.
"Quasi-Contract" ("Implied-in-law contract)
Imposed in certain cases to avoid unjust enrichment, even if all elements of contract formation not satisfied *Most commonly applied when one person provides goods or services to another person who benefitted from them but has no contractual relationship that would otherwise obligate payment ex) MR. Jones and his driveway resurfacing *Damages are the fair market value of the goods or services involved.
2) The Uniform Commercial Code (UCC)
Intended as a uniform law to govern commercial transactions across state lines in order to preserve the reasonable expectations of contracting parties -Adopted by most states, except not fully adopted by Louisiana -Governs contracts for the sale of goods - Goods are defined as tangible, movable personal property Does not apply to real property or intellectual property or to contracts for services - Holds merchants to a higher standard than non-merchants
3) Contractual Capacity
Legal ability to enter into binding contract.
"Voidable" Contract
One or both parties can withdraw from contract. Most commonly, though, the reason for the voidability limits which party can withdraw from the contract.
2) "Unilateral" Contract
Promise in return for performance of act *a reward ex) if jim loses his dog he may post a sign offering a $50 reward if his dog is found and returned safely
Acceptance
Represents offeree's intent to be bound by terms of offer and resulting contract Silence generally does not constitute acceptance Terms of acceptance Under common law, terms of acceptance must be identical to terms of offer ("Mirror-Image" Rule) Under the UCC, a definite acceptance can create a contract even where all terms are not identical Effective when communicated by offeree to offeror If no method of communicating acceptance specified in offer, any reasonable means of acceptance effective (Examples: in person, telephone, mail, fax, e-mail)
1) Common Law
Restatement of the Law is a valuable resource (compiled by legal scholars organized by American Law Institute)
4) Legal Object
The contract cannot be illegal or against public policy.
Offerors cannot revoke in the following circumstances:
When an Option Contract exists When a firm offer is made When there is a unilateral contract offer
Firm Offers: (An offeror cannot revoke / terminate an offer if a it qualifies as a firm offer.)
a merchant makes written offer to buy or sell goods, giving assurances that the offer will be help open (maximum duration is three months or the amount of time in the assurance, whichever is shorter) *Example would be a rain check
option contracts: (An offeror cannot revoke / terminate an offer if an option contract exists.)
a separate contract in which an offeror agrees not to revoke her offer for a stated time in exchange for some valuable consideration.