Contract Law
description
Transcript of Contract Law
Jody Blanke, ProfessorComputer Information Systems and Law
Mercer University, Atlanta
Contract Law As Private LawWilling parties can agree to do most anythingFreedom of contract“Meeting of the minds”
Private LawContract between Major League Baseball and
the Players Association - Collective Bargaining Agreement (311 page PDF file)“free agent”“salary cap”“luxury tax”
NHL (a league that used to play ice hockey in Canada and the U.S.)
Uniform Commercial CodePoster child of uniform lawsAdopted in 49½ statesVery successfulFacilitates the ease of doing businessFirst place to look for “the law”
then, other state statutesthen, state case (common) law – safety net
Basic RequirementsAn agreement between the partiesConsiderationCapacityLegality
Agreement – The OfferOfferor must have intention to be bound by
offere.g., kick the tire
Terms must be reasonably definite and certaincan be written, oral or implied can come from prior dealings or usage of trade
Offer must be communicated to offereee.g., reward for lost dog
Figurative “Death” of an Offer“Natural causes” – lapse of time“Suicide” – revocation“Murder” – rejection
Counteroffer = rejection + offer“Execution” – by operation of law
change in law terminates offer
Literal Death of An OfferThe offeror diesThe offeree diesDestruction of subject matter
AcceptanceAt common law – “mirror image rule”UCC – more relaxed (and reasonable)
“battle of the forms”Generally effective upon receipt
exception – “mailbox rule”
Bilateral and Unilateral ContractsBilateral – a promise for a promise
e.g., Joe promises to paint Bill’s house and Bill promises to pay Joe $1000
Unilateral – a promise for an acte.g., Susan promises to pay $500 to the first
person who scales the outside of the Business and Education Building
performance of the act is acceptance
ConsiderationEach party must provide something of value
Money, property, services, forebearancee.g., Hamer v. Sidway – the “rich uncle” casee.g., Jennings v. KSCS
Courts will not examine the adequacy of the consideration
CapacityAge – law protects minors
Voidable contractException for necessaries
Mental competencyVoid contractVoidable contract
Intoxication
LegalityContracts must have a legal purpose
cannot take out a “contract” for that noisy neighbor
cannot purchase a gram of cocainegambling?
e.g., Durado Beach Hotel v. Jernigan
Genuiness of AssentDuress – “gun to the head”Undue InfluenceMistake
Unilateral – generally does not excuse performance exception – if nonmistaken party knew of the
mistakeMutual – generally does excuse performance
no meeting of the minds
Third-Party RightsEach party receives certain rights or benefits
in a contractEach party undertakes certain duties or
obligationsGenerally, rights can be assigned to third
partiesGenerally, duties can be delegated to third
partiesexception – when performance depends upon
personal skills
Statute of Frauds“An oral contract is as legally valid as a
written contract unless the law requires it to be in writing”
“…as good as…”if executed before 100 clergy people of all
faiths willing to come to court and testify
Must Be In WritingContract to transfer an interest in real
propertyContract that cannot be performed within 1
yearContract to pay the debts of anotherContract made in contemplation of marriage
dowry agreementprenuptial agreement
Contract for the sale of goods greater than $500UCC drafters recommend increase to $5,000
Parol Evidence RuleCourt will not permit evidence of prior or
contemporaneous oral statements if there is a complete written agreementexception – ambiguities
Morals of the story read the contract– get it in writing
Integration Clause“I have read the above agreement and
understand that it represents the entire agreement between the parties.”
Morals of the story read the contract– get it in writing
Standard Form ContractsRead themModify them
and get written approval from authorized representative
Use attachments if necessarye.g., letters, memos, specifications
Ambiguities interpreted against the drafter
Discharge of ContractDischarge by performanceDischarge by agreementDischarge by impossibility
Discharge by AgreementMutual rescission
key word – “mutual”Novation
new contractAccord and satisfaction
Discharge by ImpossibilityObjective impossibility
e.g., the car got hit by a meteoriteSubjective impossibility
“It’s impossible for me to go through with that contract”
Performance may be discharged by commercial impracticability e.g., school district milk case key – was event “reasonably foreseeable?”
Remedies – Money DamagesCompensatory damages
makes one “whole” under the contractprovides the “benefit of the bargain”measure of damages is usually the difference
between the value of the contract and the market value of what was actually received
Remedies – Money DamagesConsequential damages
must be reasonably foreseeablee.g., Hadley v. Baxendaleoften disclaimed by contract
Mitigation of DamagesNonbreaching party has duty to lessen the
amount of damagese.g., wrongful discharge
Anticipatory repudiation (UCC)Duty to “cover”
Liquidated DamagesActual amount of damages must be difficult
to calculateAmount specified must be a reasonable
estimate of those damagesMust not be a penalty
Equitable RemediesInjunctionQuasi-Contract (Quantum Meruit)Specific Performance
generally available for unique goods or property
not appropriate for personal services
Choice of Law/ForumWritten contracts often contain choice of law
and choice of forum clausesThese will generally be enforced as long as
there is a connection to the stateSome states may also require that the
choices be fair
Promissory Estoppel“Last ditch” remedy Four requirements (Restatement of Contracts
§ 90)A promiseJustifiable relianceForeseeabilityInjustice
e.g., Hoffman v. Red Owl Stores
Unconscionability“Last ditch” remedy UCC remedy
The court “would not be able to sleep at night”The court can ignore or fix an unconscionable
contractConsumer remedy
e.g., Frostifresh v. Reynosoe.g., PEPCO v. Westinghouse