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| The Law of Contract Reflects: |
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1)Social Values (committment)
2)Expectations (keeping promises)
3)Interests (consumerism) |
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| An agreement that can ne enforced in court; generally entered into privately without government; may be oral, written, or implied |
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| Contracts are legally binding links between producers and consumers; contracts are promises that get worlds work done |
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| Contracts involve the sale or purchase of goods (Article 2) |
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| 4 Classifications of Contracts |
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1)Method of Expression
2)Parites Bound
3)Legal Effect
4)Extent of Performance |
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1)Express vs. Implied
2)Quasi-Contract
3)Formal vs. Simple contracts |
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| Express vs. Implied Contracts |
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| Made in words/written vs. conduct/body language |
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| Unjust enrichment of one person unless he or she pay a value for a benefit recieved |
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| Formal vs. Simple Contracts |
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| perscribed terms and language vs. oral/written |
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| Bilateral Contract vs. Unilateral Contract |
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| one person makes a promise or offer to induce some completed act by another party |
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| promise made in exchange for another promise |
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| Valid, Void, Voidable, Valid yet unenforceable |
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| if a contract complies with all essential elements |
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| attempt to create contract is totally ineffective |
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| essential element of a valid contract is missing (party can withdraw) |
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| a proper contract claim for $ or performance becomes stale because statue of limitations passed |
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| Executed Contract, Executory Contract |
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| if contract fully performed by both parties (including promises within contract) |
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| if something remains to be done by either or both parties |
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| What are requisites for a valid contract? |
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1)Competent parties
2)Mutual agreement
3)Reciprocal consideration
4)Genuine Assent
5)Legality in formation and execution
6)Form Perscribed by law |
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| parties who have legal capacity to contract |
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1)infancy or minority
2)incapacitating mental condition
3)incapacitating intoxication
**Contract made voidable but only at option of incompetent person |
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| Exception for necessaries |
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| agreement to purchase goods or services that are necessaries is enforceable as a quasi-contract |
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| parties must come to a mutual agreement |
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1)must manifest an intention to be legally bound
2)terms must be reasonable definite and certain
3)offer must be communicated to offeree |
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| Amoung the terms the court expects to find in a valid offer: |
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1)parties
2)subject matter
3)time of performance
4)price |
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| must be mirror-image response to offer |
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| acceptance is effective, when it is properly posted |
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| How long does offer last? |
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1)ended by lapse of time
2)ended by destruction of subject matter |
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| Oferee may pay offeror to keep offer open for an agreed length of time |
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| Value given in exchange for a promise or an act (value must go both ways) |
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| No genuine assent when... |
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1)duress
2)undue influence
3)fraud
4)mutual mistake |
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| happens when one party is prevented from exercising judgement and free will by some wrongful act or threat of the other party |
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| depriving a party of freedom of will in choosing a course of action through wrongful persuasion or persistent pressure |
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| false representation of a material fact known to be false made with intent to decieve the victim and induce the victim to contract as a result of which the victim is decieved and contracts in reliance on the lie and the victim is thereby injured; victims can sue or rescind a contract |
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| Compensatory damages for Fraud |
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1)out of pocket loss suffered
2)benefits of the bargain rule |
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| difference in value between what she gives and what she got |
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| benefit of the bargain rule |
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| difference between value of what she recieved and value of performance misrepresented) |
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| when both parties have an erroneus idea or understanding about some fact that is an important element of the contract; renders agreement void or voidable |
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| Legality in formation and execution |
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| an agreement may fail to qualify because it is contrary to some statute (ex: gambling, licensing, blue laws, usury) and it violated public policy (if not--void) |
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| illegal when there are payments by the gambler to win some prize |
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| prevents gambling on a life; only someone with insurable interest is allowed to recover on an insurance contract |
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| contracts made by unlicensed persons are generally unenforeable |
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| restrict the right to make or perform various contracts on Sundays |
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| practice of charging excessively high rates on loans |
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| Consumer Credit Protection Act of 1968 |
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| requires full disclosure of the terms of contracts for sales on credit or for loans |
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| Violations of Public Policy |
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1)cannot bribe persons in court
2)cannot committ perjury
3)lobbying |
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| pay a witness to lie under oath |
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| an illegal agreement is void and courts will not aid either party to the transaction |
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| **FACT: agreements to restrict trade and competition are illegal |
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| 2 Exceptions to illegiality |
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1)When restraint of free trade is part of an otherwise enforeceable contract for the sale of a business
2)when a new employee agrees as part of an employment contract, not to accept another employment position with any other employer who is a competitor of the present employer |
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| Statute of frauds and perjuries |
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| provides that certain designated contracts, to be enforeceable in court, must 1)be in writing and 2) be signed by the party against whom enforecement is sought (ex: contracts for sale of land, goods, or a contract that is not to be performed within 1 year, promise in consideration of marriage, etc.) |
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| things that are owned and rights of owner to posess, use, and dispose of that thing |
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| land and things "permanantly attached to the land, like buildings |
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| all movable property other than land (tangible vs. intangible) |
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| right to use another persons real property without removing anything from the property |
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| parties in privity have rights and duties because of contract; if you have a contract with someone then you have privity with them |
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| 3rd Party Beneficiary (donee or creditor) |
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| can sue to enforce a contract that was made purposely for their benefit |
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| **FACT: after a contract has been made, the original parties generallymay assign their contractual rights and/or delegate their contractual duties to others |
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| How are contracts discharged? |
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Definition
1)performance
2)waive or renounce legal contract rights
3)material alteration
4)breach
5)illegiality
6)bankruptcy
7)running of statute of limitations (3 yrs for oral and 6 for written)
8)literal impossibility
9)commercial impractiacbility
10)recission |
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| failure or refusal to perform a contract (results in civil lawsuit; damages are compensatory=restitution, reliance, expectation, or specific performance)no PUNITIVE damages |
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| substitution of a new contract for an existing one |
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| prevent unjust enrichment |
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| an assurance given by the seller of goods concerning the quality and performance of a product |
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1)warranty of conformity to description, sample or model
2)warranty of conformity to sellers statement or promise |
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1)warranty of title
2)warranty against encumbrences
3)warranties of fitness for a particular purpose |
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1)warranties against infringement
2)warranties of merchantability (goods fit for ordinary purposes) |
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| **FACT: UCC and competition prevents a seller from disclaiming all warranties |
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| presumes that the contracting parties have included all previous desired oral or written understandings in their final written agreement |
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| Privity laws have been modified to favor who? |
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| Consumers/plantiff or buyer |
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| Magnuson-Moss warranty Act of 1975 |
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| protect consumers of goods costing $10 or more |
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| contract upheld for nephew |
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| unfair contract, ex: plymouth contract |
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