Contracts Outline

I. Introduction
a. A contract is a legally enforceable promise. We will discuss how to decide which set of promises are contracts—which you can get the courts and the state to enforce; when one of these legally enforceable promises is satisfied or excused; and what remedies we have if that promise is not satisfied or executed.
Legally Enforceable Promise:
1. We can ascertain whether there was detrimental reliance by the promisee
2. We can look at a more traditional consideration bargaining model—if certain elements are present in addition to the promise (classical model considerations)—then there is an understanding of mutual consent
3. We can look at the excused performance piece of contracts—it may be that someone made a promise on the mistaken belief and you may use that as an excuse to not to abide by the contract
4. As a general matter, it is not essential that an agreement be written. There are some instances, however, where the agreement must be written (for example the statutes of fraud).
5. When trying to determine the intention, we ask: What would most people in that situation do? What would a reasonable person in that situation do?
6. For a promise to become a contract, there must be a promise + something else, for example:
a. Promise + detrimental reliance
b. Promise + mutual consideration
c. Promise + obligation (or moral obligation)– perhaps the trickiest area
7. Contracts are exchanges among individuals. On one end of the spectrum are discrete exchanges, which are one shot and do not include reputation, trust, or expectation for future exchanges. On the other end are relational exchanges, which have an expectation of future exchange, in which beliefs and social norms are important, even if it is a one time exchange, and it happens over a long period of time.
a. For relational exchanges—for example, employer and employee—we may need a different type of law (like employment law.)
b. If two parties are going into a joint venture, would need partnership law.
c. For discrete exchanges, we may need classical or neoclassical contract law.
1. Our primary source of law for our neoclassical contract law is in common law. The Restatement of Contracts was intended to be a codification of the laws in the 50 states. It turns out that the Restatements didn’t really turn out to be truly restatements; rather than “the law”, the Restatements what the legal scholars etc. believed should have been the law.
2. We will also be looking at the UCC, specifically Article 2 (which is currently being revised).
3. There are some aspects of contract law that have been legislated which cannot be contracted around, such as a duty to disclose if you know something is wrong when selling your house.
4. You can have a default rule that is a majoritarian rule, which is what most people would want.
5. Another type of default rule may be called the penalty default rule, meaning we will penalize you to encourage you to be more specific in your contracts because it is a burden to the courts to have to work out poorly defined rules.
b. Contract Example: “The Ricky Lake Show”
1. A guest of the show was a man, Alvin, who promised to pay child support if the woman promised not to disclose that she was carrying his baby. He had political aspirations he though may be hurt if the community found out he had fathered the child. It turns out that the child wasn’t Alvin’s. After he found out, he stopped paying child support.
a. Q: Was the contract enforceable? A: Was the promise conditional? Did he say that he will pay for