Contract Law Final Outline

CONTRACTS

INTRODUCTION

• Definitions of a Contract:

  • RST: a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty

• Key Factors:

  • Contract is an exchange relationship

  • Created by agreement of two or more parties

  • Containing at least one promise

  • Recognized as enforceable in law

  • a few types of transactions (Statute of Frauds) - agreement must be recorded either in writing or electronically to qualify as a legally enforceable contract

  • most cases - oral agreement is sufficient and no particular formalities needed

    • Usually a written document

      • If it is oral, it is challenging to enforce it because it is based on subjectivity

      • Hard to look at the intention of the person when the contract was signed

      • Although it is as legally enforceable as a written agreement, as long as you can have evidence to prove it

• Uniform Commercial Code:

  • States adopt them —> contract law is state based law

  • States have different forms of this, none adopted it holistically

  • A mode of legislation, adopted by the State

  • Related to the sale of goods

WHAT IS A CONTRACT

Exchange relationship created by agreement between two or more parties, containing at least one promise, and recognized as enforceable in law

• #1: An exchange relationship

  • parties commit themselves to each other for a common enterprise

  • relationship can be short (couple of hours) or can be long (ten-year lease)

  • discrete one-time thing (buying) or many transactions - regularly

  • reciprocal arrangement in which each party gives up something to get something else from the other

  • an agreement that lacks an element of exchange (giving of a gift) does not qualify as a contract

• #2: Created by agreement

  • at least two parties to this agreement, but could be a multiple party one too

  • voluntary nature of contract is fundamental

    • Can only be a contract if both parties exercise free will and intend to make a contract or consent to it

    • freedom of contract, which includes both power to choose whether or not to make a contract and the power to assent to its terms - central policy

    • Consent is vital premise of contract

• #3: Containing at least one promise

  • at least one of the parties must have made a promise - committed to or refrain from doing

  • If no future commitment is made, law has no role to play in this relationship

• #4: Recognized as enforceable in the law

  • contract law is to enforce contract obligations

    • binding the parties who made them and giving the party to whom they are made the right to employ power of the state, through the courts, to enforce them

  • legal enforcement is crucial to contract law

    • If it didn’t exist, no ultimate recourse to law where social or economic pressure is not enough to motivate a party to honor his commitment

    • If didn’t exist, diminish the reliability and predictability in commercial dealings

Stages of a Contract

• 1st Stage - Firm proposal to enter into a contract: offer

• Next Stage - offer’s reaction to it

  • Hallmark of an offer is that it gives the offeree the power to make the decision on whether or not there will be a contract

    • If proposal is written in a way that does not give the recipient the power, but keeps the power in the hands of the person who made the proposal, it is simply not an offer

  • Acceptance

    • if she accepts offer - a contract comes into effect immediately upon acceptance

      • to accept must not only signify assent to a contract on the terms proposed prescribed by the of error, but must do so within the time and accordance with the procedure prescribed by the offeror, or in the absence of that, under reasonable circumstances

        • substantive aspect - assent to the contract terms

        • procedural aspect - communication of that assent in the proper time and manner

  • Rejection

    • If doesn’t accept the offer within time and manner, the offer is rejected

      • Offeree may expressly reject the offer, but she ignoring is enough

  • Counteroffer

    • new offer by the offeree that constitutes arejection of the original offer and the substitution of a new one in its place

    • Any material change on the terms and conditions of the offer

      • Now original offeree becomes the offeror and vice versa

        • Then he could present a new counteroffer and the roles reverse. this goes on until the parties reach an agreement or the negotiations collapse

• Last Stage - offeror can cut short the time by revoking the offer

  • As long as the offer has not yet been accepted, the offeror can cancel it even before its time has expired

    • Must notify the offeree that the offer has been revoked

  • If you say it is a firm offer - you cannot take it back if they accept it within the time limit specified in the contract

    • Legal obligation to wait until the time passes (like when being offered a job - you have 2 weeks to accept)

    • There has to be a promise that the offer won’t be revoked

UCC 2-204: Formation in General

• 1) Acontract for saleofgoodsmay be made in any manner sufficient to showagreement, including conduct by both parties which recognizes the existence of such acontract.

• (2) Anagreementsufficient to constitute acontract for salemay be found even though the moment of its making is undetermined.

• (3) Even though one or more terms are left open acontract for saledoes not fail for indefiniteness if the parties have intended to make acontractand there is a reasonably certain basis for giving an appropriate remedy.

OFFER

Restatement §24: Offer

• An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to the bargain is invited and will conclude it

Restatement §59:

• A reply to an offer which purports to accept it but is conditional on the offeror’s assent to terms additional to or different from those offered is not an acceptance but is a counter offer

A contract is formed by an exchange of communication in which a transaction is proposed by one party and is accepted...

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