Contracts Outline

CONTRACTS I OUTLINE

BERENDT FALL 2014

Section A—Overview

a. Sources of Contract Law

1. COMMON LAW- Judge made law

2. STATUTORY LAW- Legislative Law

3. The UCC- In every state but Louisiana, sales of goods are governed by a statute, Article 2 of the Uniform Commercial Code

aa. Purposes of Contract Law

1. Consent Theory- Intent to be bound; Responsibility is imposed to those who make promises

2. Will Theory- Individual liberty, autonomy, & freedom of transaction in the private sector. “Freedom of Contract”.

3. Promise Theory- (Moral, Ethics, and Conventions) When a promisor invokes the norm of promising, he or she should be held to his commitment.

4. Reliance Theory- When promisees act in reliance upon others’ promises, courts should protect them from injury due to broken promises to avoid injustice.

5. Utilitarian Economic Theory- Contract law should promote free markets and easy/efficient transactions

6. Critical Legal Studies Theory- Contract law should be designed to serve societal interests rather than the venal interests of others (Power and Coercion)

7. Relational Theory- Emphasis on the social and interpersonal relationships between the parties to the contract

I. Contract Law Definitions

A. What is a Contract?

A promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty.

ii. 5 elements of contracts

1. Contractual Intent

2. Offer

3. Acceptance

4. Consideration

5. Certain Terms

B. Gift- The product of donative intent

C. Barter- A present exchange with no future commitment ( no promise); Quid pro quo (Something for Something)

II. Causes of Action

1. Traditional Contracts – Duties are willingly undertaken and defined by parties

2. Promisory Estoppel– A promisee reasonably relies, to his/her detriment, on the promise of another

3. Contract implied at law– An equitable doctrine employed in the absence of consent to prevent unjust enrichment, bridging contracts and torts.

A. Remedies for Contracts

Plaintiff’s seek:

1. Expectation damages

One is entitled to recover an amount that would place them in a position as good as they would have been had the contract been performed.

2. Equitable relief

Examples—1. Specific Performance 2. Injunctive Relief 3. Restitution of Consideration

*More difficult to obtain. May be appropriate in extraordinary situations where damages do not provide a suitable remedy.

B. Types of Contracts

1. Unilateral –> A promise for an act

Offeror makes a promise, and Offeree accepts by actual performance.

2. Bilateral–> A promise for a promise

Offeror offers a promise in exchange for the offeree’s promise

II. Offers of Contractual Terms

1. Contractual Intent

2. Promise or Commitment

3. The Assent Process

A. Objective theory of contracts: A party’s intent is deemed to be what a reasonable person in the position of the other party would think that the first party’s objective manifestation of intent meant.

—–> * A party’s hidden or unexpressed state of mind is generally immaterial.

Example: Lucy v. Zehmer p.37

1.The court relied on “objective theory” of contracts to conclude that Zehmer made a serious offer.

2. Zehmer was not intoxicated to the extent of being unable to comprehend the nature of the instrument. —-> intention is determined by the reasonable meaning of words and acts

B. Preliminary Negotiations and Invitations for Offers

i. Preliminary Negotiation- An invitation or solicitation for an offer, rather than an offer

1. If a party who desires to contract solicits bids, this solicitation is not an offer and

cannot be accepted.

ii. Advertisements

1. The general presumption is that most advertisements appearing in newspapers, store

windows, etc., are not offers to sell.

Examples—(price lists, ci