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Contracts
South Texas College of Law Houston
Page, Phillip E.

 
Contracts I
Professor Page
Fall 2015
Studies in Contract Law 8th edition
 
Outline
 
INTRODUCTION
 
A Contract as binding promise
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 a duty
A promise is the manifestation of the intention to act or refrain from acting in specified ways, so made as to justify a promise in understanding that a commitment has been made. Promise requires that the promisee takes it seriously and is regarded, as a pledge the promisee will honor.
            Binding Promise
 
Offer + Acceptance = Contract
 
Analysis of Contract Problems
1.      Is it a good or service?
2.      Offer
3.      Acceptance
4.      Consideration
5.      Alternative Vehicles
 
Questions to Ask
1.      Is there a deal (agreement)?
2.      How do the courts enforce these deals?
3.      Is there any reason not to enforce the deal?
4.      What is the deal?
5.      Did anyone not do what they agreed to?
6.      Is someone did not do what they agreed to, is there a legitimate reason?
7.      Does anyone other than the two parties have benefits?
 
 
TYPES OF CONTRACTS
 
1.      Formation
a.      Express Contract – formed by language, oral or written
b.      Implied in Fact Contract – Formed other than language, conduct
c.       Quasi-Contract or Implied in Law Contact – not really contracts but are construed by courts to avoid unjust enrichment
2.      Acceptance
a.      Bilateral Contract – Exchange of mutual promises
b.      Unilateral Contract – Acceptance by performance
c.       Modern view – most contracts are bilateral
3.      Validity
a.      Void Contract – without any legal effect from the beginning
                                                              i.      Cannot be enforced by either party
b.      Voidable contract – one or both parties may elect to void
c.       Unenforceable Contract – agreement is valid but cannot be enforced due to other various defenses extraneous to the contract
 
 
CREATION OF A CONTRACT
 
1.      A court will ask 3 questions to determine if contract was created
a.      Was there mutual assent?
b.      Was there consideration or a substitute for consideration?
c.       Are there any defenses to the creation of the contract?
 
 
GOODS OR SERVICES
 
1.      Good or Service?
a.      Goods – UCC
                                                              i.      All things moveable such as cars, horses, hamburgers
                                                            ii.      Does apply to real estate, services, intangibles or construction contracts
b.      Service – Restatement, Common Law
 
2.      Predominate Factor Test
a.      When determining whether the contract is for goods or services, the main method used id the predominant factor test.
                                                              i.      Which is the predominate aspect of the contract? Good or Service
 
3.      Test for Inclusion or Exclusion
a.      Is not whether they are mixed, but, granting that they are mixed, whether their predominant factor, their thrust, their purpose, reasonably stated, is the rendition of service, with goods incidentally involved.
b.      Look at the transaction and try to figure out which aspect of the deal predominates
                                                              i.      What makes the deal a “goods” deal?
1.      All “goods” must be moveable
2.      Must be moveable when they are identified to the contract
                                                            ii.      Does moveable “junk” predominate or not predominate?
1.      HYPO: Painted canvas
a.      Custom made goods are still goods
2.      Service agreement: Hair Construction Contracts
 
4.      Things to think about
a.      What is the language of the contract?
                                                              i.      Such as equipment or goods
b.      Are there goods in the deal that are moveable or not moveable?
c.       Is the service billing separate from the billed object?
 
 
REMEDIES
 
1.      Expectation Interest – Damages are measured in terms of what non-breaching party should have gotten from the contract had it been performed as promised; Moves the π where they were promised.
a.      Sullivan – Price between best nose and worse nose
 
2.      Restitution Interest – Provides damages to the non-breaching party by returning from the breaching party whatever benefit the breaching party received from the contract; Moves ∆ back to where he was.
a.      Sullivan – Doctor wanted to return all the fees back to patient
 
3.      Reliance Interest – Damages are measured according o what it would take to return the non-breaching party from where they are as a result of the breach to where they were before there was a contract; Moves π back to where he was.
 
4.      Specific performance – Court orders parties to perform contract
a.      Mainly used in circumstances where benefit from the contract is unique and cannot be obtained on open market
 
5.      NOTE: No Punitive Damages in contract law!
 

.      The consideration cannot be such that either party is indifferent to it
a.      In re Greene – Cheater breaks up with Hussy but agrees for $1 he will do and give her all these things (money, house and stuff), He goes bankrupt, Hussy sues for stuff promised, Court says $1 is nominal, Court says $1 not an inducing force
b.      Court dismisses other inducing force, that she waived any claims to the guy
c.       In theory if she believed she had a valid claim that she waived for stuff that would be consideration – court does not go into this in this case
d.      Plaintiff has burden to show the consideration
e.      Performance may consist of
                                                              i.      An act other than the promise
                                                            ii.      A forbearance
1.      Hammer v. Sidway – Uncle promised nephew $5k if he did not smoke, drink or do drugs for 5 years, Nephew followed through and Uncle said he would pay, Died before he could, Estate said Nephew gave no consideration, Court said forbearing a legal right is a detriment to the promisee so there is consideration
                                                          iii.      Creation, modification, or destruction of a legal relation
                                                          iv.      Performance or promise may be given to promisor or someone else
 
4.      Past Performance
a.      Not sufficient for consideration because the past behavior is not prompted by the promise
b.      Does not satisfy the “bargain” requirement
c.       HYPO – New parents named their new born baby August after the father’s grandfather. A week later the grandfather called the couple to say congratulations and to tell them if they name the baby after him he will give them an expensive painting. He then learns they already named the baby after him and he does not give the parents the painting. Consideration?
                                                              i.      No, the promise of the painting did not prompt the behavior from the new parents.