1. The agreement consists of an offer by one party, called the offeror, to enter into contract and an acceptance of the terms of the offer by the other party, called the offeree

2. Consideration: the bargained-for exchange for his or her promise under the contract

3. Contractual Capacity: Legal ability to enter into a binding agreement

4. Legal Object: the contract cannot be either illegal or against public policy

1. Lack of Genuine Assent: Contract is supposed to be entered into freely by both parties but sometimes the offeror secures the acceptance of the agreement through improper means...fraud, duress, under influence, or misrepresentation

2. Contract lacks proper form, usually means it lacks writing

The existence and interpretation of a contract is based on the outward manifestation of intent by the parties

1. Common Law: Primary source

2. Uniform Commercial Code: To deal with problems of interstate commerce contracts were drawn up that were applicable to all states

3. International Sales

1. Bilateral: If an offeror wants a promise from the offeree to form a binding contract. As soon as the promises are exchanged, a contract is formed and the party's legal obligations arise

2. Unilateral: The offeror wants a performance to form the contract. Most common is an award

Have all their terms clearly set forth in either written or spoken words

1. The plantiff provided some property or service to the defendany

2. The plantiff expected to be paid for such property or service and a reasonable person in the position of the defendant would have expected to pay for such property or services

3. The defendant had an opportunity to reject the property or services, but did not

Sometimes called implied-in-law contracts, but are not actual contracts but are in order to prevent one party from being unjustly enriched at the expense of another

Contract that contains all the legal elements of a contract, enforceable

1. May be unenforceable when there is a law that prohibits the courts from enforcing it

Contracts that have a special form or must be created in a specific manner-- 4 types: Contracts under seal, recognizance, letters of credit, negotiable instruments

It is what a person will receive in return for performing a contract obligation. It's required in every contract

1. Lack of Consideration

2. Adequacy of Consideration

3. Illusory Consideration

4. Past Consideration

5. Preexisting Duty

1.Rule: For a promise to be enforced there must be consideration

2. A court will enforce one party's promise only if the other party promised something in exchange

3. Exception to rule of consideration is PROMISSORY ESTOPPEL: one party makes a promise knowing the other party will rely on it, the other party does not rely on it, and the only way to avoid injustice is to enforce the promise

1. Rule: The court seldom considers adequacy of consideration

2. Meaning the court doesnt weight if you made a good bargain

Past Consideration

1. Rule: Past consideration is no consideration

2. For a court to enforce a promise both sides must offer consideration

3. For a promise to be enforceable, there must be bargaining and an exchange

4. A promise cannot be based on consideration that was provided before the promise was made

5. Restatement of Contracts: promises based on past consideration may be enforceable to the extent necessary to avoid injustice

1. Rule: A promise to do something that you're aleady obligated to do is not valid consideration

2. Performance of a duty you are obligated to do under law is not good consideration

3. Performance of an existing contractual duty is not good consideration

4. Exceptions: Unforseen circumstances cause a party to make a promise regarding an unfinished project that promise is valid consideration. Additional work the promise is valid consideration

1. The debt is unliquidated

2. The creditor agrees to accept as full payment less than the creditor claims is owed

3. The debtor pays the amount they have agreed on

1. Someone under the age of 18

 occurs when a minor’s parents or legal guardians give up their right to exercise legal control over the minor, typically when the minor moves out of the parent’s house and begin supporting himself or herself

Because their contracts are viodable, minors have the right, until a reasonable time after reaching the age of majority, to disaffirm or void their contracts

(a)   First, the statute attempts to ease contractual negotiations by requiring sufficiently reliable evidence to prove the existence and specific terms of a contract. 

(b)  The second main purpose of the statue of frauds is to prevent unreliable oral evidence from interfering with a contractual relationship

(c)   The third main purpose of the statue of frauds is to prevent parties from entering into contracts with which they do not agree

i)      Contracts whose terms prevent possible performance with one year

(a)   Contracts whose performance, based on the terms of the contract, could not possibly occur within one year fall within the statute of frauds and, therefore, must be in writing

ii)    Promises made in consideration of marriage

(a)   A prenuptial agreement is an agreement two parties enter into before marriage that clearly states the ownership rights each party enjoys in the other party’s property

iii)  Contracts for one party to pay the debt of another if the initial party fails to pay

(a)   Secondary obligations these promises are also referred to as secondary promises, collateral promises, or suretyship promises

(b)  A secondary obligation occurs when a party outside a primary agreement promises to fulfill one of the original party’s (primary debtor’s) obligations if the original party fails to fulfill his or her obligation

(c)   Primary obligations are debts incurred in an initial contract

(d)  A specific instance of secondary obligation involves the administrator or executor of an estate

(e)   There is an exception as to when a secondary obligation needs to be in writing: the main purpose rule

(f)    If the main purpose for incurring a secondary obligation is to obtain a personal benefit, the promise does not fall within the statute and does not have to be in writing

iv)   Contracts related to an interest in land

(a)   Within the statutes of frauds, “land” encompasses not only the land and soil itself but anything attached to the land, such as trees, buildings

(b)  The statue is intended to prevent oral claims to the existence of a contract for sale of land      because the statute requires writing as evidence of the contract, claim to an oral contract for the sale of land is not enough to prove such a contract existed

v)     Contracts for the sale of Goods totaling more than $500

(a)   To satisfy the UCC’s requirement for a written document, the contract or memorandum need to only state the quantity to be sold, buyer, seller, price, and method of payment do not need to be included in the writing according to the UCC

(b)  The UCC and the statute of frauds require that the party denying or in violation of the contract needs to have signed the written agreement, whereas the party bringing suit could have but need not have signed the writing

vi)   Further Requirements specific to Certain States

(a)   Equal dignity rule, contracts that would normally fall under the statute and need writing if negotiated by the principal must be in writing even if negotiated by an agent

2)     Exceptions to Statue of Frauds

i)      Admission

(a)   Is a statement made in court, under oath, or at some stage during a legal proceeding in which a party against whom charges have been brought admits that an oral contract existed, even though the contract was required to be in writing

ii)    Partial Performance

(a)   If the buyer in alleged contract for the sale of land has paid any portion of the sale price, has begun to permanently improve the land, or has taken possession of the land, the courts will consider the contact partially performed, and this partial performance will amount to proof of the contract

(b)  Accordingly, partial performance can override the statute’s requirement for a written agreement

iii)  Promissory Estoppel

(a)   Is the legal enforcement of an otherwise unenforceable contract due to a party’s detrimental reliance on the contract

iv)   Exceptions Under the UCC

(a)   In addition to the exceptions under the statue of frauds, exceptions also exist under the UCC as to when a contract ordinarily required to be in writing need not be in writing.

(b)  For instance, under the UCC, oral contracts between merchants need not be in writing to be enforceable. Therefore, if one merchant agrees to sell goods to another, the contract is enforceable even if it is not in writing

3)     Sufficiency of the Writing

i)      Required elements in the writing include the identification of the parties to the contract, the subject of the agreement, the consideration (if any), and any pertinent terms of the contract

ii)    Further more the contract must be signed

4)     Parol Evidence Rule

i)      Is a common law rule that specifically addresses the admissibility of oral evidence as it relates to written contracts

ii)    The purpose of the parol evidence rule is to restrict evidence from being admitted that substantially contradicts the agreement in its written form

iii)  However, when a court determines that the written agreement does not represent a complete and final version of the agreement, evidence may be admissible to further the court’s understand of the agreement

iv)   Parol evidence rule on its face is a misnomer

v)     First parol evidence applies to both parol, spoken words, and written speech.  The parol evidence rule covers evidence extrinsic to the original writing and is not limited to spoken words

vi)   Second, parol evidence rule is not a rule of evidence but rather relates to substantive legal issues; namely, what constitutes a legally binding agreement and how do we know what the agreement is

vii) The third, the parol evidence rule is not a unitary concept or rule but an amalgamation of different rules and conditions

viii)         Merger clauses is a clause parties include in a written within the statue of frauds that states that the written agreement accurately reflects the final, complete version of the agreement

5)     Exceptions to the Parol Evidence

i)      These exceptions are:

(a)   Contracts that have been subsequently modified

(b)  To be admissible, the modification must have been made after the writing, and the evidence must clearly indicate this later modification

ii)    Contracts conditioned on orally agreed-on terms

(a)   When an entire contract is conditioned on something occurring first, the first thing is known as condition precedent

(b)  Evidence of the existence of a condition precedent agreed to orally is admissible, as stated previously because the contract is not modified by such evidence; rather its enforceability is called into question

iii)  Nonfinialized, Partially Written and Partially Oral Contracts

(a)   When a contract consists of both written and oral elements, judges tend to treat the agreement as nonfinialized

iv)   Contracts Containing Ambiguous Terms

(a)   To attempt to reach the most accurate interpretation of the original agreement, the court allows evidence, even if it is oral, for the sole purpose of clarifying ambiguous terms

v)     Incomplete Contracts

(a)   When a contract is fundamentally flawed because it is missing critical information courts can allow parol evidence to provide the missing information

vi)   Contracts with Obvious Typographical Errors

vii) Void or Voidable Contracts

viii)         Evidence of Prior Dealings or Usage of Trade

i)      Admission

(a)   Is a statement made in court, under oath, or at some stage during a legal proceeding in which a party against whom charges have been brought admits that an oral contract existed, even though the contract was required to be in writing

ii)    Partial Performance

(a)   If the buyer in alleged contract for the sale of land has paid any portion of the sale price, has begun to permanently improve the land, or has taken possession of the land, the courts will consider the contact partially performed, and this partial performance will amount to proof of the contract

(b)  Accordingly, partial performance can override the statute’s requirement for a written agreement

iii)  Promissory Estoppel

(a)   Is the legal enforcement of an otherwise unenforceable contract due to a party’s detrimental reliance on the contract

iv)   Exceptions Under the UCC

(a)   In addition to the exceptions under the statue of frauds, exceptions also exist under the UCC as to when a contract ordinarily required to be in writing need not be in writing.

i)      Required elements in the writing include the identification of the parties to the contract, the subject of the agreement, the consideration (if any), and any pertinent terms of the contract

Parol Evidence Rule

i)      Is a common law rule that specifically addresses the admissibility of oral evidence as it relates to written contracts

ii)    The purpose of the parol evidence rule is to restrict evidence from being admitted that substantially contradicts the agreement in its written form

iii)  However, when a court determines that the written agreement does not represent a complete and final version of the agreement, evidence may be admissible to further the court’s understand of the agreement

iv)   Parol evidence rule on its face is a misnomer

v)     First parol evidence applies to both parol, spoken words, and written speech.  The parol evidence rule covers evidence extrinsic to the original writing and is not limited to spoken words

vi)   Second, parol evidence rule is not a rule of evidence but rather relates to substantive legal issues; namely, what constitutes a legally binding agreement and how do we know what the agreement is

vii) The third, the parol evidence rule is not a unitary concept or rule but an amalgamation of different rules and conditions

viii)         Merger clauses is a clause parties include in a written within the statue of frauds that states that the written agreement accurately reflects the final, complete version of the agreement

(a)   Contracts that have been subsequently modified

(b)  To be admissible, the modification must have been made after the writing, and the evidence must clearly indicate this later modification

ii)    Contracts conditioned on orally agreed-on terms

(a)   When an entire contract is conditioned on something occurring first, the first thing is known as condition precedent

(b)  Evidence of the existence of a condition precedent agreed to orally is admissible, as stated previously because the contract is not modified by such evidence; rather its enforceability is called into question

iii)  Nonfinialized, Partially Written and Partially Oral Contracts

(a)   When a contract consists of both written and oral elements, judges tend to treat the agreement as nonfinialized

iv)   Contracts Containing Ambiguous Terms

(a)   To attempt to reach the most accurate interpretation of the original agreement, the court allows evidence, even if it is oral, for the sole purpose of clarifying ambiguous terms

v)     Incomplete Contracts

(a)   When a contract is fundamentally flawed because it is missing critical information courts can allow parol evidence to provide the missing information

vi)   Contracts with Obvious Typographical Errors

vii) Void or Voidable Contracts

viii)         Evidence of Prior Dealings or Usage of Trade

i)      Integrated Contracts are written contracts intended to be the complete and final representation of the parties’ agreement

ii)    The easiest test to determine the admissibility of parol evidence is to check whether the written contract is written with the statue of frauds is in integrated contract

i)      Contract involve an agreement between two parties where each party agrees to do something for the other

ii)    Both parties are obligors (contractual parties who agreed to do something for the other party) and obliges (contractual parties who agreed to receive something for the other party)

iii)  Consequently contracts create a situation in which both parties have a duty to perform the agreed-on action and a right to be the recipient of the other party’s duty

iv)   These rights and duties can be transferred to third parties-parties not part of the original contract

v)     Assignment

(a)   Assignment occurs when a party to a contract (an assignor) transfers her rights to a contract to a third party (an assignee)

(b)  In other words, the assignor gives to an assignee the right to collect what was contractually agreed on in the first contract

(c)   First, although assignments may be given orally or writing the UCC requires that assignments be in writing when the amount be assigned is greater than $5000

(d)  Second, an assignee must agree to accept the assigned rights.  An assignee may decline an assignment if he has not legally agreed to the assignment and if he declines in a timely fashion after learning about the assignment and its terms

(e)   Third, in some situations contractual rights cannot be assigned

i)      A delegation occurs when a party to a contact (a delegator) transfers her duty to perform to a third party who is not part of the original contract (a delegatee)

ii)    Whereas assignments transfer to a contract, delegation transfer duties

iii)  One important distinction between assignments and delegations involves the rights of transferring party-the assignor or the delegator

iv)   Duties that cannot be delegated

(a)   The reasoning is that assignments usually do not affect the party to the contract who is not involved in the assignment (the obligor), whereas a delegation forces the party to the contact who is not involved in the delegatioin ( the obligee) to receive performance of the contract from a party with whom the obligee did not directly contract

(b)  There are certain situations in which duties cannot be delegated to a third party

1.     Duties that are personal in nature

2.     Duties for which the delegatee’s performance will vary significantly from the delegator’s

3.     Duties in contracts that forbid delegations

1.generally defined as a relationship between a principal and an agent

2.____________    relationship the agent is authorized to act for and on behalf of the principal who hires the agent to represent him or her

3.  the fiduciary relation that results from the manifestation of consent of one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act

4. Primarily State Law 

1. _________ relationships are consensual relationships formed by informal oral agreements or formal written contracts

2. can be created only for a lawful purpose, in the same way that a contract cannot have an illegal purpose

3. almost anyone can act as an agent

4.     Expressed agency (agency by agreement)

(a)    Power of attorney a document that gives an agent authority to sign legal documents on behalf of the principal         

(b)   Durable Power of attorney is a written document, created by a principal expressing his or her wishes for an agent’s authority not to be affected by the principal’s subsequent incapacity

(c)    Two expectations to agency being in writing: 1. Agency agreements need to be in writing whenever an agreement is reached for an agent to enter into a contract that the statute of frauds requires to be in writing 2. Whenever an agent is given the power of attorney

(d)   Gratuitous agent is one who acts without consideration; that is, he or she is not paid for his or her services

(a)    In some cases an agency relationship is not created by an express agreement but, rather, is implied by the conduct of the parties

(b)   The circumstances of a situation determine the extent of an agent’s ability to conduct business on behalf of the principal

  Apparent Agency (Agency by Estoppel)

(a)    Apparent agency or agency by estoppel which is the agent has apparent authority to act; thus, the principal is estopped or prevented from denying the individual is an agent

   Agency by Ratification

(a)    Two requirements: 1) an individual must misrepresent himself or herself as an agent for another party 2) the principal accepts or ratifies the unauthorized act

(b)   For ratification to be effective, two additional requirements must be met: 1) the principal must have complete knowledge of all material facts regarding the contract 2) the principal must ratify the entirety of the agent’s act (the principal cannot accept certain parts and reject other parts of the agent’s act

    Principal- Agent Relationship

(a)    Exists when an employer hires an employee to enter into contracts on behalf of the employer

     Employer-Employee Relationship

(a)    Whenever an employer hires an employee to perform some sort of physical service,

(b)   Agents are employees

        Employer-Independent Contractor Relationship

(a)    Independent contractor is a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking

  Principal’s Duties to the Agent

Duty of compensation

Duty of reimbursement and indemnification

Duty of Cooperation

Duty to provide safe working conditions

(a)    the principal has a duty to compensate the agent for services provided unless the parties have agreed that the agent will act gratuitously

(a)    the principal has a duty of reimbursement and indemnification to the agent. If an agent makes authorized expenditures in the course of working on behalf of the principal, the principal has a duty to reimburse the agent for that amount of money

(a)    the principal must assist the agent in the performance of his or her duties

Agent’s Duties to the Principal

Duty of Loyalty

Duty of Notification

Duty of Performance

Duty of obedience

Duty of accounting

(a)    because the agency relationship is a fiduciary relationship (relationship of trust) the agent has a responsibility to act in the interest of the principal

(a)    not only does the agent have to communicate offers from third parties but the agent must also communicate any information the agent thinks could be important to the principal

(a)    first the agent must perform the duties as specified in the agency agreement; second the agent must perform the specified duties with reasonable skill and care

(a)    the agent must follow the lawful instruction and direction of the principal

(a)    the agent must keep an accurate account of the transactions of money and property made on behalf of the principal

        Principal’s rights and remedies against the agent

Constructive trust

Avoidance

Indemnification

(a)    is an equitable trust imposed on one who wrongfully obtains or holds legal right to property he or she should not posses

(a)    when agency relationship exists through a contract and the agent breaches the agreement or his fiduciary duties, the principal may use her right of avoidance which allows a principal to nullify any contract the agent negotiated

(a)    when a breach was caused by the agent’s negligence, when sued by a third party, a principal may sue his agent to recover the amount assessed to the third party

   Agent’s Rights and Remedies Against the Principal

(a)    Tort and contract Remedies

(b)   Demand for an accounting

(c)    Specific performance

Express Authority

1. referred to as actual authority

2. The principal had explicitly instructed the agent to do something

3.   Equal dignity Rule: when express authority is granted for an agent to enter into a contract legally required to be in writing, most states require that the grant of authority also be in writing

4.  Power of attorney is a specific form of express authority usually in writing, granting an agent specific powers

i)        Special power of attorney grants the agent express authority over specifically outlined acts

ii)      General power of attorney allows the agent to conduct all business for the principal

iii)    Durable power of attorney specifics that the agent’s authority is intended to continue beyond the principal’s incapacitation

i)        The relationship is inferred from the conduct of the parties

ii)      Consequently the authority of the agent is implied on the basis of the words and actions of the principal to the agent

Apparent Authority and Estoppel

i)        The third party reasonably believe the agent has authority to represent the principal, the principal must uphold any agreements made with the agent who has apparent authority

Classification of the Principal

i)        Disclosed Principal the third part is aware that the agent is making an agreement on behalf of a principal and the third part also knows the identity of the principal

ii)      Partially disclosed Principal or an unidentified principal is a third party is aware that an agent is making an agreement on behalf of a principal but the third party is unaware of the identity of the principal

iii)    Undisclosed Principal is a third party does not know an agent is acting on behalf of the a principal

      Authorized Acts

i)        When an agent acts with the scope of her authority on behalf of a disclosed or partially disclosed principal the agent is not liable for the acts of the principal

ii)      The principal is liable only if the agent has some kind of authority to act on the principal

     Unauthorized Acts

i)        Believes the agent has authority, agent is liability and the principal no liability

ii)      Believes that the agent is mistaken about her authority the agent and the principal are not liable

i)        Two conditions 1) if the principal directs the agent to commit a tort, the principal is liable for any damages caused by this tort 2) if the principal fails to provide proper instruments or tools or gives inadequate instructions to the agent concerning the necessity to employ competent agent, the law then holds the principal liable to a third party negligence

ii)      Respondeat Superior

(a)    Respondeat superior Latin phrase meaning let the superior speak, is used in the context of the principal/employer-agent/employee relationship

(b)   The principal/employer holds vicarious liability (liability assigned with out fault) for any harm caused by the agent/employee during the time the agent/employee is working for the principal

iii)    Intentional torts and respondeat superior

(a)    The principal is responsible for the negligent acts of the employee under the doctrine of respondeat superior, the principal may be liable for any intentional torts of the employee

   Agent Misrepresentation

i)        If an agent misrepresents himself or herself to a third party, the principal may be tortiously liable for the agent’s misrepresentation

ii)      Depends on whether the principal authorized the agent’s act

   Principal’s Liability and the Independent Contractor

i)        An individual who hires an independent contractor cannot be held liable for the independent contractor’s tortuous actions under the doctrine of respondeat superior

ii)      However, the independent contractor engages in extremely hazardous activities such as blasting operations for the principal, the principal will be responsible for any damages by the independent contractor

      Crime and Agency Relationships

i)        There must be the element of intent

ii)      The only time the principal can be liable for the crimes of an agent is when the principal has authorized the criminal act

    Termination of the Agency Relationship

i)        Actual notice of termination is given when third parties are directly informed, orally or in writing, that an agency agreement has terminated

    Termination by acts of Parties

i)        Lapse of time

(a)    If an agency agreement specifies that the agency relationship will exist for a certain amount of time, the relationship will end when the amount of time expires

ii)      Fulfillment of purpose

iii)    Occurrence of a specific event

(a)    Depending on the purpose of the agency relationship, the relationship could be terminated on the occurrence of a specific event

iv)    Mutual Agreement by the parties

(a)    If two parties mutually decide they do not wish to continue in the agency relationship they can cancel the agreement and therefore terminate the agency relationship

v)      Revocation of authority

vi)    Renunciation by the agent

(a)    The agent can terminate the agency relationship by renouncing the authority given to the agent

vii)  Agency couple with an interest

(a)    Is a special kind of agency relationship, agency coupled with an interest created for the agent’s benefit not for the principal’s

      Termination by Operation of Law

i)        Death

(a)    If either the principal or the agent dies, the agency relationship is automatically terminated

ii)      Insanity

(a)    If a principal or agent becomes insane, the agency relationship is finished

iii)    Bankruptcy

(a)    If the principal or agent files a bankruptcy petition, the agency relationship is generally no long in existence

iv)    Changed Circumstances

(a)    If there is an unusual change in circumstances that leads the agent to believe that the principal’s instructions do no apply, the agency relationship terminates

v)      Change in law

(a)    When a new law is passed subsequent to the formation of an agency agreement that makes the commission of the agency agreement illegal, the agency agreement is terminated

vi)    Impossibility

vii)  Disloyalty of agent

(a)    An agent agreement is terminated whenever the agent unknown to the principal acquires interest against the principal interest

(b)   The agency agreement is also terminated if the agent breaches the duty of loyalty he or she has to the principal

viii)            War