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Contracts Module 1-4

Contracts 1L Mod 1-4 Things to know

QuestionAnswer
What is a Contract? A promise or set of promises for which the breach of same, the law gives recognizes remedy and a promise to perform.
Name the 4 elements of a Contract Promise; Physical Act; Recital of Fact; and, Immediate Transfer of Property Interest.
What is a Contract of Adhesion Where one party has more control than the other in the bargaining process (i.e. purchasing a car or LSAT Test Taking Agreement)
Define Express Contracts An agreement manifested by words.
Define the 2 Types of Implied Contracts. Implied In Fact-An agreement manifested by conduct. Implied in law (Quasi-contract)-not a true contract but an obligation imposed by the court to avoid an injustice.
Name some SOURCES of Contract Law. Common Law, Restatement, Uniform Commercial Code (UCC); CISG; UCITA; UETA, etc.
Discuss COMMON LAW. Rules developed by cases and case interpretation. Governs services and real estate transactions.
Discuss RESTATEMENT OF CONTRACTS. Written by the American Law Institute (ALI); provides guidance to the bench and bar; has no legal force but is a highly pursuasive authority.
Discuss the UNIFORM COMMERCIAL CODE. (UCC)-Created by American Law Institute and the National Conference of Commissioners. A statutory body of law that governs the sale/transactions of goods. (Namely: Articles 2 and 9)
Per the UCC - What are GOODS? Any tangible items that is moveable. NOT: Investment securities; money that's medium of payment; intangible rights; and minerals that are to be severed by the buyer.
Define SALE. The transfer of title for a price. Contracts that involve both goods and services must be evaluated to see which constitutes the primary purpose of the contract.
Define MERCHANT. One who deals in goods of the kind or holds himself out as having knowledge or skill particular to the practices or goods involved in the transaction OR who employs an agent/broker in such occupation.
Define BREACH OF CONTRACT. A breach of contract is when a binding agreement is not honored by 1 or more of the parties to the contact. (minor, material and fundamental breaches).
What are the 4 different TYPES OF CONTRACTS? Contracts based on: 1. Governing law 2. How the parties communicate 3. How the contract is formed 4. Performance of the contract
Discuss Contracts FORMED based upon governing law Rules come from: A) Common law (real estate and services and, B) UCC-transactions in movable goods
Discuss Contracts FORMED based upon how the parties communicate. 1. Express Contract-Written or spoken the contract to one another. 2. Implied in fact- The conduct of any party is necessary to show assent to the contract. 3. Implied in Law-NO WORDS OR CONDUCT-imposition to avoid unjust enrichment.
Discuss Contracts FORMED based upon FORMATION 1. UNILATERAL-One party makes a promise in exchange for a complete performance in order to form the agreement. 2. BILATERAL- Formed with mutual promises ( a promise for a promise)
Who is the MASTER of the contract? The OFFEROR is the master of the contract and controls how the contract is formed.
DISCUSS Unilateral Contracts. A promise in exchange for a complete performance; the promise requests a performance expressly; if the offer is made and unsure as to who it is being communicated-it is generally a unilateral contact (I.E. Billboard, bulletin )
DISCUSS Bilateral Contracts. A promise in exchange for a promise. Note: If the offer is ambiguous it is presumed bilateral. Additionally, if the offer is indifferent, it can be accepted by a promise or performance.
Discuss Contracts FORMED based upon PERFORMANCE. 1. ENTIRE CONTRACTS-Requires each performance in the contract to be substantial complete to avoid a breach. 2. DIVISIBLE CONTRACT- There is a separate divisible performance for separate divisible consideration. ( i.e. employment contracts)
Define MUTUAL ASSENT. A mutual manifestation of agreement to the same terms. (Established by an offer and an acceptance)
Define MENTAL ASSENT. Meeting of the minds.
Define OBJECTIVE ASSENT. What a party says or does to manifest assent.
Define SUBJECTIVE ASSENT. What a party intends or believe to manifest assent.
Define Negotiation. The discussing and modifying of terms preliminary to a final agreement. Following negotiations parties often the formalize the agreement
Discuss INTENT TO TO BE BOUND. Intent to be bound-When both parties' actions or words show and intent to be bound BEFORE a legal doc. is drafted.
Discuss INTENT NOT TO BE BOUND. When the parties' actions/words show they do not intend to be bound UNTIL the doc. is drafted.
Discuss WHERE NO INTENT IS MANIFESTED. Parties have not expresly manifested their intent to be bound before a legal doc. is drafted, BUT both agree that they wish for the doc. to be drawn up.
Define ACT INTENTIONALLY To act with the intent to do so and not necessarily desire the consequences.
What test is used in dertermining SERIOUSNESS as a consideration It depends on whether you look at the circumstances objectively or subjectively. Either.
Discuss OBJECTIVE MANIFESTATION. 1. Should generally be viewed from the vantage point of a resonable person in the position of the other party. 2. A party's intention will be held to be what a reasonable person in the position of the other party would believe it to mean.
Define PROMISE. A committment or undertaking that a given event will or will not occur in the future. A manifestation of intent to act or refrain from acting a certain way; so made as to justify a PROMISEE understands.
Define and Discuss OFFER. A promise to do or refrain from doing something in the future conditioned upon the other party's acceptance. The OFFEROR makes the offer. The OFEREE can either accept or reject the offer.
Name the 4 elements to an OFFER 1. Committment 2. (Containing) Definite Terms 3. Communicated 4. To an identified OFFEREE
Define and Discuss COMMITTMENT. Whatever is said or done must be a committment to be entered into a contract-MUST be able to judge the word or the conduct; use the objective theory.
Give EXAMPLES of what is NOT a committment. opinions, predictions, intentions, hopes, inquiries and considerations.
If an Advertisement states all relevant material terms can it be considered a COMMITTMENT? Yes or No? YES
Discuss Auctions as it relates to committments. The autioneer invites persons to place a bid; the bidder makes the offer. The bidding stops once the auctioneer smacks his hammer on the table or yels SOLD!
Define and discuss DEFINITE TERMS. The terms of the offer are certain and not ambiguous. (A) States all material terms with certainty. (B) Full description (i,e, price, quantity, duration or how many tasks re: service agreements).
Is an "AGREEMENT TO AGREE" binding? Yes, because the partie simpose an obligation to negotiate in good faith toward the new agreement.
Discuss "COMMUNICATED TO AN OFFEREE." MUST be communicated to offeree; offeree MUST know about the offer in order to accept; and communication can be done by a third party.
Define CROSSING OFFERS. Offers exchanged by two parties at the same time with the same terms. NOT A CONTRACT-LACKS ACCEPTANCE!
Discuss the key element of Unilateral Offers. The Oferee MUST learn about the offer before you can complete the performance.
Discuss IDENTIFIED OFFEREE. The offer must be communicated to an identified offer (who the offor wnats the acceptance from). Offer can only be accepted by the offeree.
Discuss PUBLIC OFFERS. The do not specifically identify an offeree. THUS, whoever completes the task and hasknowledge of the offer becomes the offeree. REMEMBER: Public offers are unilateral offers.
Discuss OFFER REVOCATION. Generally revocable anytime prior to acceptance with limited exceptions. Offer can be revoked by words or conducr told to the offeree. Effective when communicated to the OFFEREE.
Discuss OFFER TERMINATION. Any offer can be terminated in the following ways: A) Death/insanity of the OFFEROR; B) Death/insanity of OFFEREE (unless the offer is irrevocable; C) Death/destruction of a person or thing essential to performance; D) Revocation/Rejection/Expiration.
WHAT ARE FORMAL CONTRACTS? Contracts that are accompanied by certain formalities. (Contracts under seal; Recognizances; negotiable instruments and letters of credit.
WHAT ARE INFORMAL CONTRACTS. Contract that are not FORMAL. These contracts are enforceable because of their substance (i.e. Simple contracts and Parol Contracts).
Define ENFORCEABLE CONTRACTS. When a PROMISEE is entitled to a money judgment, injunction, etc. becuase of a breach it is enforceable.
What is a VOID CONTRACT? These contracts produce no legal obligation. Because they actually ARE NOT CONTRACTS AT ALL.
What is a VOIDABLE CONTRACT. A contract where either party has the pwer to elect to avoud the legal relations created by the contract. (Minor, Persona induced by Fraud, duress or mistake). These contracts have legal consequences but may not be enforces for damages.
Define Indefiniteness (A Matter of Degree). In a communication there is some evidence of an intent NOT to contract. (i.e. terms that are omitted or the context of the agr. is uncertain.
List the 4 Material Terms. Subject Matter; Payment Terms' Quantity; and, Duration.
Define Subject Matter. The purpose for which the agreement was entered into. The situation and relations of the parties and the circumstances in which it was made.
List the 3 types of INDEFINITENESS. 1. Parties purport to agree on material terms but LEAVE IT INDEFINITE. 2. Parties are SILENT as to material terms. 3. Parties AGREE TO AGREE later as to a material term.
How can purported indefinite agreements be cured? Parties purport to agree on material terms but leave it indefinite. CAN BE CURED BY: Conduct or by agreement.
Discuss SILENCE AS TO MATERIAL TERMS. The parties are silent as to a material term OR discuss the material term but not purport to agree on it. Term may be implied from surrounding circumstances OR by the courts using a "gap filler."
Discuss GAP FILLER. Is a term used by the court because: A) The courts think the parties would have agreed on the term if brought to their attention and B) It's a term which comports with community standards of fairness and policy.
What will courts consider in determining the Gap Filler? 1. The intention of the parties and 2. The nature and purpose of the contract.
What potential problems could result regarding DURATION not specified in an agreement? If the duration term is not supplied either party may TERMINATE AT WILL. Most courts will decide a reasonable time is intended that he parties may not approve of. Courts will assume a renewal/extension of the agreement when not desired.
Discus public policy exceptions to termination of employment. Can’t terminate an employee because of retaliation, in bad faith or with malice.
Discuss Agreement to Agree. Prevents the formation of a contract because: A) Leaves a material term to vague and indefinite to enforce; and b) Shows a lack of present agreement.
Discuss Agreement to Negotiate. The Agreement to negotiate and to use reasobable efforts to reach an agreement is enforceable.
Name the 3 ways to terminate an offer. Because of: Terms; The acts of the parties; or, Events after the offer is made (operation of law).
Discuss TERMINATION BY OWN TERMS, A) The OFFEROR to say how long the offer will last B) Expiration time/lapse of offer; or If the time period is silent- the law imposes a resaonable time.
Discuss TERMINATION BY ACTS OF THE PARTIES. Revocation of Offer by OFFEROR can be done before OFFEREE accepts offer (Express or Conduct Revocation) OR Rejection by OFFEREE-say "NO" or submission of counteroffer.
Define Express Revocation. By words or statement the OFFEROR syas when thye no linger wish to form a contract. The revocation terminates the agreement when the OFFEREE RECEIVES or when someone in control of the OFFEREE receives the revocation. (DOESN'T HAVE TO BE READ OR SEEN).
Discuss Public Offer Express Revocation. Must communicate revocation by publoizing the revocation with the SAME publicity and the same medium which the offer was made. If initial way is no longer available-may be done by another reasonable public means.
Discuss CONDUCT REVOCATION. The OFFEROR doesan act that prevents the performance of the contract and the OFFEREE learns about the act from a reliable source-that terminates the offer.
Name the 4 EXCEPTIONAL OFFERS THAT CANNOT BE REVOKED BY THE OFFEROR. Option Contracts; Equitable options; Merchant's Firm offers; Unilateral Offers.
Define OPTION CONTRACTS. Offeree pays the Offeror to keep the offer open for an agreed upon time. )I'll pay you 5k if you agree to keep the offer open for 30 days."
Define EQUITABLE OPTION. An implied option contract. The OFFEREE detrimentally, reasonably and forseeably relies upon na offer. Offer must stay open for a reasonable period of time.
Discuss MERCHANT'S FIRM OFFER. Under the UCC. A MERCHANT puts an offer in writing stating that the offer will be "HELD OPEN." Irrevocable offer for the specified time stated in the offer OR a reasonable time, if no time is stated. NEVER to exceed 3 months without consideration.
Created by: Rochelle28nm