Chapter 9 – Introduction to Contracts
Elements of a Contract:
1- Offer
2- Acceptance
3- Consideration
Defenses of a Contract:
1- Statute of Frauds
2- Capacity
3- Illegality
4- Misrepresentation, Fraud, Mistake
Contract Classifications:
1- Bilaterial v. Unilateral Contract
-Bilateral Contract: each side makes a promise to one another (promise for a promise)
-Unilateral Contract: only one party makes a promise and demands a performance (a promise for an
act); rare
2- Valid v. Unenforceable Contract
-valid contract = binding and enforceable agreement
3- Void v. Voidable Contract
-Voidable Contract: agreement otherwise binding, but due to circumstances surrounding execution or
lack of capacity, may be rejected at option of one party
-Void Contract: agreement without legal effect because prohibited by law
4- Express v. Implied Contract
-Express Contract: agreement of parties manifested by words, written or oral
-Implied Contract: agreement not shown by words, but by acts and conduct of parties
5- Executed v. Executory Contract
-Executed Contract: contract in which promises made and completed immediately, like purchase of a
product/service
-Executory Contract: promises of the contract are not fully performed immediately
Uniform Commercial Code (UCC): statutory law in every state; nine articles
-UCC 2-102: expressly applies to contracts for the sale of goods
-UCC 1-105: goods are tangible, movable, personal property
-DOES NOT apply to sale of services, intangible property, or real estate
-UCC 2-104: special rules apply for “merchants” (people who regularly deal in certain types of goods)
Hybrid/Mixed Contracts: use Predominant Factor Test to determine UCC or Traditional Common Law Four Factors:
-language in parties’ contract;
-nature of business of the supplier of goods/services
-reason the parties entered into contract; and
-respective amounts charged
International Contract Law: United Nations Convention on Contracts for the International Sale of Goods (CISG) is body
of contract rules that harmonizes contract principles from many legal systems
-77 nations, including Canada and US
-automatically applies to contract for the sale of goods between commercial parties from nations that agreed to
CISG unless the parties expressly opt out of the CISG in their contract
Non-Contract Obligations: sometimes law enforces obligation to pay for certain losses or benefits even in absence of
mutual agreement and exchange of value; court then applies:
-Quasi-Contract: avoids unjust enrichment
, -Promissory Estoppel: protects reliance
Unjust Enrichment:
1- P confers benefit on D
2- D accepts and retains benefit
3- It is unjust to keep benefits without paying
Promissory Estoppel: when one party relies upon another party’s promise to his/her detriment (detrimental reliance),
but there is no contract
-court will force promisor to fulfill promise or pay compensation
1-Promise;
2- Foreseeable Reliance (by promisee);
3- Actual Reliance; and
4- Injustice
Chapter 10 – The Agreement: Offer
Three Requirements for an Offer:
1- Objective present intent to contract
-would TARP (in position of offeree) believe that offeror intended to contract? Words, Acts, and
Circumstances
-offer or preliminary negotiations? Surrounding circumstances?
2- Definiteness of the terms
-Traditional Common Law: all essential terms must be stated in offer (parties, price, description of
subject matter, quantity, time for performance)
-Restatement: terms must be “reasonably certain”
-UCC: “gap fillers” fill in open terms
-price [2-305]
-quantity [2-306]
-delivery [2-307 – 2-309]
-time for payment [2-310]
3- Communication of offer to offeree
-offeror specifies when, how, where offer is to be accepted and who may accept
Advertisements: generally NOT offers, but merely invitations to deal
-EXCEPTION: highly specific ad
1- Particular quantity of goods offered at advertised price; and
2- Specific steps needed for offeree to accept
-rewards for lost property, information or capture of criminals ARE offers for unilateral contracts
-to accept offer and receive reward, offeree must perform requested act
Terms of Offer:
-offerees bound to terms of offer of which they had actual or reasonable notice
Termination of Offers:
1- Lapse of Time: time stated in offer; if not time stated, reasonable time
2- Revocation: generally, offers are revocable at any time PRIOR to acceptance (even if offeree promises to hold
offer open); only effective when RECEIVED by offeree
-EXCEPTIONS:
1- Option Contract:
1- Offeror promises to keep offer open for stated time
2- In exchange for some valuable consideration
Elements of a Contract:
1- Offer
2- Acceptance
3- Consideration
Defenses of a Contract:
1- Statute of Frauds
2- Capacity
3- Illegality
4- Misrepresentation, Fraud, Mistake
Contract Classifications:
1- Bilaterial v. Unilateral Contract
-Bilateral Contract: each side makes a promise to one another (promise for a promise)
-Unilateral Contract: only one party makes a promise and demands a performance (a promise for an
act); rare
2- Valid v. Unenforceable Contract
-valid contract = binding and enforceable agreement
3- Void v. Voidable Contract
-Voidable Contract: agreement otherwise binding, but due to circumstances surrounding execution or
lack of capacity, may be rejected at option of one party
-Void Contract: agreement without legal effect because prohibited by law
4- Express v. Implied Contract
-Express Contract: agreement of parties manifested by words, written or oral
-Implied Contract: agreement not shown by words, but by acts and conduct of parties
5- Executed v. Executory Contract
-Executed Contract: contract in which promises made and completed immediately, like purchase of a
product/service
-Executory Contract: promises of the contract are not fully performed immediately
Uniform Commercial Code (UCC): statutory law in every state; nine articles
-UCC 2-102: expressly applies to contracts for the sale of goods
-UCC 1-105: goods are tangible, movable, personal property
-DOES NOT apply to sale of services, intangible property, or real estate
-UCC 2-104: special rules apply for “merchants” (people who regularly deal in certain types of goods)
Hybrid/Mixed Contracts: use Predominant Factor Test to determine UCC or Traditional Common Law Four Factors:
-language in parties’ contract;
-nature of business of the supplier of goods/services
-reason the parties entered into contract; and
-respective amounts charged
International Contract Law: United Nations Convention on Contracts for the International Sale of Goods (CISG) is body
of contract rules that harmonizes contract principles from many legal systems
-77 nations, including Canada and US
-automatically applies to contract for the sale of goods between commercial parties from nations that agreed to
CISG unless the parties expressly opt out of the CISG in their contract
Non-Contract Obligations: sometimes law enforces obligation to pay for certain losses or benefits even in absence of
mutual agreement and exchange of value; court then applies:
-Quasi-Contract: avoids unjust enrichment
, -Promissory Estoppel: protects reliance
Unjust Enrichment:
1- P confers benefit on D
2- D accepts and retains benefit
3- It is unjust to keep benefits without paying
Promissory Estoppel: when one party relies upon another party’s promise to his/her detriment (detrimental reliance),
but there is no contract
-court will force promisor to fulfill promise or pay compensation
1-Promise;
2- Foreseeable Reliance (by promisee);
3- Actual Reliance; and
4- Injustice
Chapter 10 – The Agreement: Offer
Three Requirements for an Offer:
1- Objective present intent to contract
-would TARP (in position of offeree) believe that offeror intended to contract? Words, Acts, and
Circumstances
-offer or preliminary negotiations? Surrounding circumstances?
2- Definiteness of the terms
-Traditional Common Law: all essential terms must be stated in offer (parties, price, description of
subject matter, quantity, time for performance)
-Restatement: terms must be “reasonably certain”
-UCC: “gap fillers” fill in open terms
-price [2-305]
-quantity [2-306]
-delivery [2-307 – 2-309]
-time for payment [2-310]
3- Communication of offer to offeree
-offeror specifies when, how, where offer is to be accepted and who may accept
Advertisements: generally NOT offers, but merely invitations to deal
-EXCEPTION: highly specific ad
1- Particular quantity of goods offered at advertised price; and
2- Specific steps needed for offeree to accept
-rewards for lost property, information or capture of criminals ARE offers for unilateral contracts
-to accept offer and receive reward, offeree must perform requested act
Terms of Offer:
-offerees bound to terms of offer of which they had actual or reasonable notice
Termination of Offers:
1- Lapse of Time: time stated in offer; if not time stated, reasonable time
2- Revocation: generally, offers are revocable at any time PRIOR to acceptance (even if offeree promises to hold
offer open); only effective when RECEIVED by offeree
-EXCEPTIONS:
1- Option Contract:
1- Offeror promises to keep offer open for stated time
2- In exchange for some valuable consideration
