Contracts Outline

Contracts Outline

Professor Carraballo

Fall 2013

Ch. 1 An Introduction to the Study of Contract Law

A. Contract Law in the First-Year Law Curriculum

a. Contract- ordinarily connotes and agreement between two or more persons-not merely a shared belief, but a common understanding as to something that is to be done in the future by one or both of them. (Usually referring to an agreement that has a legal effect)

i. Each may be called a contract: (1) the agreement-in-fact between the parties, (2) the agreement as-written (which may or may not correspond accurately to the agreement-in-fact), and (3) the set of rights and duties created by (1) and (2).

ii. §1. Contract Defined- A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.

b. UCC- §1-103. Construction of [UCC] to Promote Its Purposes and Policies; Applicability of Supplement Principles of Law- (a) [The Uniform Commercial Code] must be liberally construed and applied to promote its underlying purposes and policies, which are: (1) to simplify, clarify, and modernize the law governing commercial transactions; (2) to permit the continued expansion of commercial practices through custom, usage, and agreement of the parties; and (3) to make uniform the law among the various jurisdictions. (b) Unless displaced by the particular provisions of [the Uniform Commercial Code], the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions.

i. When looking through this lens the point is to see if it modernizes which is the goal of UCC

ii. This section is the authority for combing UCC and common law when dealing with issues that require the use of both.

NOTE: *ON EXAM* Start All essay answers with: “The applicable law is….& then say either UCC or common law…then the reason to apply is….”

B-D SKIP (Regarding Sources of Law and Schools of Thought)

E. Contract Law Through Case Study: Two Examples from Different Periods of Time

a. Any change over time? Not at all the contracts were made in the same way (entered into the same way) only the process or medium of doing this was different (letters v. internet click-wrap agreement) *An Expression of assent is still required.*

Allen v. Bissinger & Co., 1923: Letters to order new regulations on D’s business by D. The court says that the writing between the parties is unambiguous and using standard or reasonableness we judge intentions of outward expressions (objective). These letters suffice and mutual assent can be found and therefore a valid contract was entered into.

Feldman v. Google, 2007: P enters into click-wrap agreement with Google for advertising. He contests the clickwrap agreement saying that it is not a valid contract. Court finds that P is bound to the express agreement he made. P had reasonable notice of the terms of the clickwrap and freely entered into it, giving assent to its terms.

Ch. 2 The Basis of Contractual Obligation: Mutual Assent and Consideration

a. Restatement First of contracts: classical or traditional contract law emerged. This showed preference for clear rules over general standards. It also was relatively indifferent to issues of morality or social policy presented by contract cases.

A. Mutual Assent

a. Restatement Second: § 17. Requirement of a Bargain- states that formation of a contract requires “a bargain in which there is a manifestation of mutual assent to the exchange & consideration.”

b. Commercial Transactions: Under the traditional model of contract formation, applicable to many commercial transactions, parties engage in the give-and-take of bargaining through a process of offer and acceptance, ultimately either reaching a deal (manifestation of ‘mutual assent’ or breaking negotiations.)

a. *However, a contract can be formed even when the parties do not engage in bargaining.*

c. Noncommercial Transactions: involving family members, friends, or charitable entities may, but will not, necessarily, result in contracts even though the parties may not have engaged in a formal negotiation. * Normally promises between family members are not enforceable*

d. A bargain resulting in mutual assent is the traditional and most important way in which a contract can be formed.

e. It is possible for a party to incur legal obligations to another person even though they have not entered into a contract. Ex. Restitution and Promissory Estoppel.

f. A party who has entered into a contract may be relieved of that obligation if the other party has engaged in some form of bargaining misconduct: fraud, duress, undue influence. etc.

1. Intention to be Bound: The Objective Theory of Contract

a. Mutual assent: some courts say a formation of a contract requires a “meeting of the minds”

b. Distinction: Meeting of the Minds= “subjective” in the actual intention of the party. Mutual Assent= “objective” it looks at the conduct of the parties from the perspective of a reasonable person rather than their actual, subjective intentions.

c. Objetive Theory of Contractural Intent- The law has nothing to do with the actual state of the parties’ minds. In contract, or elsewhere it must go by externals, and judge parties by their conduct.

d. Note 4 p. 41: Classical Contract law ignored any imbalances in bargaining power in economic resources knowledge, and a host of other factors that may exist between the parties.

e. § 2. Promise, Promisor; Promisee; Beneficiary- (1) A promise is a manifestation of intention to act or refrain from acting in a specified way,