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Contracts II
University of Alabama School of Law
Lee, Grace

THE CONTRACTS II LEE SPRING 2014

Grace Lee Spring 2014 Contracts II

Questions to ask when looking at a Contract

Do you have a contract? (Contracts I)

Offer & Acceptance

Consideration

Can the contract be avoided because of problems related to its formation?

Statute of Frauds

Capacity

Mistake

Fraud

Duress

Unconscionability

Are there problems with the performance of the parties under the contract?

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CHECKLIST

Do you have a contract?

Is it indefinite?

Is it incomplete?

Is the contract void or voidable?

Incapacity

Bowling v. Sperry

Lucy v. Zehmer

Mistake

Fraud

Duress

Unconscionability

What does the contract mean?

Parol Evidence Rule

Interpretation Rules

Have the parties acted in good faith under the contract?

Are there any warranties, representations, or conditions?

Yes à Have they all been met?

If not à have they been waived?

If neither met nor waived, was there substantial performance?

Has performance been rendered impossible or has the purpose of the contract been frustrated?

No clear statement of what we do under this situation- we do have starting point and basic rule for each doctrine (ex- contract based on mutual mistake- which is material- and hasn’t assumed the risk of the mistake) State rule for mistake. Should apply the rule the way you learned in legal writing. You may decide that your application of the rule is going to be narrow, and explain why and address that someone might come out differently.

GOALS OF CONTRACT LAW

To give the parties what they would have stipulated for expressly if at the time of making the contract they had complete knowledge of the future and the costs of negotiating and adding provisions to the contract had been zero. Market Street

Forfeiture should be avoided whenever possible

AVOIDANCE OF CONTRACTS

FORMATION DEFENSES

Ways party can avoid, due to events or conditions at the time of formation, a legal obligation to perform an agreement that otherwise satisfies conditions of contractual validity.

There are various ways in which a party can avoid legal obligation for promises that seem to satisfy the requirements for contract.

Reasons to refuse: absence of a required writing, lack of capacity, mistake, fraud, duress, unconscionability, or because the terms of K violate law or public policy. These rules are mandatory in that the contracting parties do not have the freedom to waive these defenses.

AVOIDANCE OF CONTRACTS/FORMATION DEFENSES

· Ways a party can avoid, due to events or conditions at the time of formation, a legal obligation to perform an agreement that otherwise satisfies the conditions of contractual validity

· Courts distinguish between “void,” “voidable,” and “unenforceable”

o “Void” – transaction has created no contractual obligations at all

o “Voidable” – one or both of the parties have the power to dissolve the legal relationship

§ The exercise of that power is termed “rescission,” “disaffirmance,” or “avoidance”

o “Unenforceable” – contract remains in existence, but under certain circumstances courts will not enforce it

STATUTE OF FRAUDS

What do the Statute of Frauds Do?

– Require certain types of agreements to be in writing. Formal writing is necessary for legal enforcement of an agreement for consideration.

– If

)

b. What does the SOF do?

i. Requires certain types of agreements to be in writing in order to be enforceable/valid contracts

ii. If an agreement falls “within the Statute,” it must be in writing (or else it’s void); if an agreement is not within the statute, then the contract may still be valid even if it’s not in writing

iii. Balance of justice:

1. Requiring writing when stakes are high or when there is potential for confusion or duplicity

2. Not voiding Ks simply for lack of writing when possible

c. What type of contracts fall under the SOF?

i. MYLEGS—These Ks have to be in writing

ii. Marriage

1. Refers to pre-nuptial agreements (how assets will be divided in a divorce, amount of alimony to be paid, etc.) and contracts in consideration of marriage.

2. Marriage k= A contract under which one party promises something of value to the other party on the condition that they become married.

3. HAS TO BE IN WRITING because when the marriage falls apart the parties will not be agreeing on anything

a. The stakes are too high—too much emotion between the parties

iii. Year

1. Services will be performed over the course of a year or more (i.e., contracts that cannot be completed in a year)

2. Rationale: talking about a year or longer; likely the parties will forget what the original terms of the contract were

3. Modern take: trend against requiring it to be in writing

a. Don’t want to be too rigid or formalistic

4. RULE: despite the modern trend, they still have to be in writing