contract

1. offer and acceptance
2. consideration
3. capacity of parties
4. legality
5. writing (when required under Statute of Frauds)

1. common law
2. Article 2 of Uniform Commerical Code (UCC)

• if contract involves sale of good and services, UCC applies if the purpose is primarily for sale of goods
• if contract's primarily purpose is installation of the goods, it is governed by common law

1. express 
2. implied-in-fact
3. quasi-contract
4. bilateral
5. unilateral

1. intent
2. definite terms
3. communication of offer

• offer must be made with serious intent (objective intent)- same for acceptance
• objective intent is measured by a reasonable person's interpretation from the acts and words of the parties and the circumstances surrounding the transaction
• offers made in an apparent moment of anger, jest, or undue stress do not meet the objective theory test

• not offers.  just an invitation to the reader to make an offer
• if it only invites acceptance, then it is an offer

1. revocation
2. rejection
3. counter offer

1. options
2. UCC Sale of goods-firm offers
3. irrevocable by estoppel

• if promised to keep open for specified period, but max of 3 months
• firm offer requires 3 elements:

1. offeror is a merchant and
2. offeror, using a signed writing;
3. gives EXPLICIT assurance offer will remain open 

• revocation is not effective until received or known by the offeree
• public offers can be withdrawn without the knowledge of the offeree if the revocation is made in the same medium the public offer was made

• an offer can be rejected or a counteroffer made at any time prior to acceptance
• rejection and counteroffer is made by the offeree terminating the original offer and making a new one

1. lapse of time
2. death or insanity of the offeror or offeree
3. destruction of the specific subject matter of the offer
4. intervening illegality

• acceptance takes place upon completion of the act required by the offer
• no notice is required to the offeror unless it is required by law, or he wouldn't otherwise know its done

if no method is specified- use of the same or faster method of communication used by the offeror 

means of acceptance is specified in offer- the only authorized means is that specified means

• if offer has an authorized means that is stated as means of acceptance and offeree uses mean other than the specified means- there is a counteroffer and rejection because the offeree has violated the terms of the offer and the mirror image rule
• offer has no authorized means specified and the offeree sends acceptance using an unauthorized means- acceptance is effective only when received by the offeror

• benefit promised or performed by the offeror and the legal detriment promised or performed by the offeree
• in bilateral contract, both the offeror and offeree have benefit AND detriment

• promise to do whatever one is already legally obligated to do
• not legally sufficient consideration

1. recission and new contract- tearing up of old contract and making a new one
2. unforseen hardship- acts of god (natural dissaster)
3. UCC modification for contracts for the sale of goods- parties are permitted to, in good faith, modify their contracts even without additional consideration (detriment) on both sides

• the contract is with consideration if the requirements contract is based on the needs of the buyer and the contrct requires the buyer's need to be purchased from seller
• good faith rule applies to estimating how much will be needed

• contract is with consideration if the contract is based on an established production or ability to produce by the seller and the seller must sell the seller's production to the buyer
• good faith applies

1. release of further liability
2. convenant not to sue
3. accord and satisfaction
4. past consideration 

• accord- acceptance by creditor of a lesser sum of debt knowing this is all the debtor intends to pay
• if payment is returned, no legal issue
• accord is not satisfication of debt if debt is liquidated (a debt reasonable persons would not argue over) and creditor can sue
• accord is satisfication if debt is unliquidated (a debt reaonable persons would argue over) and debt is cancelled

1. legal age
2. mental capacity
3. free from a level of intoxication

• not prohibited by law from entering into contracts but the law does provide protections for minors who enter into contracts
• right to dissafirm: can at any time before reaching majority and for a reasonable time thereafter, dissafirm the contract and avoid liability by returning any consideration derived from contract that the minor still has  (if nothing left, can still dissafirm)

1. contract is for an item of necessity
2. must be in value what the minor is accustomed to, and
3. minor must not be under the care of a parents or guardian

if all 3 above are met, minor can still disaffirm, but he is liable for the reasonable value (not necessarily the contract price) of the goods used

minor's contract affirmed by the minor after reaching age of majority makes minor fully liable

1. marriage of a minor removes right
2. marriage contract, an enlistment in the armed services, certain types of insurance by statue, etc. can't be disaffirmed

• minor is liable for torts and it enforces contracts
• parents can be held liable for a minor child's torts by statute or where failed to exercise proper parental control

• contracts made by a person while mentally competent, but before a court has adjudged that person is incompetent, are voidable by the person or legal guardian during period of incompetency and for a reasonable time after regaining his or her competency (incompetent party must return consideration given if wanting to void contract)
• contract made after the person has been adjudged incompetent by the court, contract is void

requires following types of contracts to be in writing to be inforceable:

M: Marriage (dad pays man to marry daughter)

Y: conracts impossible to perform within one Year

L: contracts involving Land

E: promise of Executors for personal liability for debts of the deceased

G: contracts for the sale of Goods priced at $500 or more

S: surety of debt contracts (assure someone elses debt)

• doesn't apply to original promises to repay debt
• must be a collateral promise by someone other than the original promisor

can get away without a written contact but requires all 3 criteria below:

1. Payment of some part or all of the purchase price
2. buyer in possession of the land by living there or proceeding to develope it; and,
3. buyer has made valuable improvements

• from date of contract formation (acceptance)
• if COULD be performed within one year but parties aren't sure, it doesn't need to be in writing

1. marchant's confirmation memorandum- between 2 merchants only.  writing requirement met under UCC statue of frauds if one merchant sends the other a written confirmation and the receiving merchant doesn't object in writing within 10 days.  both parties can enforce.
2. special ordered goods- goods that a seller cannot resell in ordinary course of business. oral contract is enforceable if the seller has substantially begun performance or as made irrevocable commitment to do so, before the buyer cancels the order and claims Statue of Frauds
3. admission under oath- admission under oath that an oral contract was made removes the Statue of Frauds as a defense
4. performance by buyer- buyer takes possession or makes a payment accepted by the seller, Statute of Fraud is removed at least to the quantity accepted or paid for

1. identity of parties stated
2. object of contract stated (real property= need legal description and in some states, price. sale of goods=need quantity)
3. signed by party to be held liable on the oral contract (except merchant's confirmation memo)

applies to a fully integrated contract (complete and unambigous) but...

1. ambiguous terms- if a record of a contract has ambiguities, it is not fully integrated and parol evidence can be introduced only to clean up the ambiguity
2. obvious clerical or typographical error- parol evidence can be used for typos and clerical errors
3. incomplete contracts- parol evidence can be admitted to "fill in" gaps because of an incomplete conract is not a fully integrated conract

1. mistake
2. fraud or misrepresentation
3. duress
4. undue influence

if only one of the parties makes a mistake, the mistake is binding on the mistaken party, unless:

1. the other party knows or should have known of the mistake; or,
2. the error was due to a mathematical calculation and such was done inadvertently and without gross negligence

• if both parties are mistaken and the mistake goes to the value or quality of the subject matter of the contract, the contract is fully binding on the parties
• if mistake goes to the i.d., existence, or quantity of the subject matter, contract cannot be enforced by either party

1. intentional deceit
2. deceit rgarding a material fact
3. reliance by the part deceived on the other party's representations

1. untrue statements
2. concealment
3. half-truths
4. duty to disclose (only when parties are in a fiduciary relationship, or its about knowledge of a serious defect or damages)

• statements of value, opinions of nonexperts, puffing, or predictions for the future are not fact, and thus their falsehood is not actionable fraud
• expert's opinois may be a fact 

• exists when a relationship of trust and dependence and one party takes advantae of the other party because of the dependence
• these contracts are voidable

1. contracts in violation of statues
2. contracts contrary to public policy

• charging a higher interest rate than permitted by law are void
• remedy may be the entire contract is void, interest is voided, or the interest charged above max rate is void

• clause in a contract which disclaims any liability regardless of fault
• clause is usually void if bargaining power is one-sided
• legal if conspicuous and reasonable

1. assignees and delegates of a contract underassignment and/or delegation of contracts
2. third party beneficiairies: a contract between two people is set up with the intent of providing benefit to a 3rd party

• any right can be assigned or delegated unless an exception applies
• assignments of rights is a contract separate from the original agreement

1. contract terms prohibit assignment
2. statute prohibits assignment
3. personal contracts (unique to person receiveing services)
4. assignments which materially increase the risks of the obligor (party obligated to perform contract)

• contract terms prohibit delegation
• contract is based on personal skill of the obligor
• contract performance will materially vary that expected by obligee

1. assignee can acquire no better rights than those possessed by the assignor
2. assignment is not binding on an obligor until the obligor has notice of the assignment (before notice, can discharge the contract by performance to the assignor)
3. any defense the obligor has against the assignor is also a defense against the assignee
4. any defense the assignor has against the other contracting party, except the assignor's minority or bankruptcy, is also a defense which is available to the assignee
5. unless released, assignor remains liable to the other contracting party

U.S. Rule- first in time of assignment gets job

English rule- first to give obligor notice gets job

1. remedies at law (damages-monetary recovery)
2. remedies in equity

1. specific performance
2. recission and restitution
3. reformation
4. quasi-contract recovery

• damages awarded to punish a wrongdoer
• rarely given in breach of contract cases

• specific sum is agreed to be paid in the formation of the contract in the event that the future contract is breached
• enforceable as long as a time of formation of the contract it is apparent damages would be difficult to estimate in the event of breach and the amount stated is a reasonable sum estimate

• if either party repudiates a contract prior to the time of performance, the nonbreaching party may treat the repudiation as an anticipatory and immediate material breach
• party can pursue remedies prior to stated date of performance

1. release
2. waiver
3. mutual recission
4. novation
5. accord and satisfaction

• by nonbreaching party and is a relinquishment of a right due to a party's breach
• binding without consideration

1. material alteration
2. statute of limitations (4-year period for sale of goods)
3. bankruptcy decree
4. objective impossibility or impracticability of performance 

• contracts with one of these 2 issues are discharged
• must be extremely difficult or cost must meet objective standard test