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Contracts
University of California, Davis School of Law
Imwinkelried, Edward J.

I. SOURCES OF CONTRACT LAW
a. Primary source: statutes, including UCC (for goods), and cases
b. Secondary source: Restatement, treatises

II. DEFINITION OF CONTRACTS
a. §1-201(11): the total legal obligation; a legally enforceable commitment, a legal duty
b. Why do we enforce contracts? The specific facts of a case trigger a decision based on social policy
i. Legal protection for honest, reasonable expectations of future performance
ii. Basic economic necessity to have a some legal mechanism to protect expectations of future performance so trade, barter, economic systems can function

III. TYPES OF CONTRACTS
a. Formal
i. Legally enforceable because certain prescribed formalities met; defined by procedure
ii. Incentive to provide the courts with a more reliable basis for fact finding
b. Informal
i. Derive their legal obligation from their content
ii. Certain elements that show a promise made with binding intent present, like mutual assent and consideration
c. Unilateral
i. One-sided; no party is both a promisor and a promisee
ii. “I promise to pay you $10 tomorrow if you cross the bridge right now.” One person making a promise (to pay $10), the other is just performing an action; a promise for an act
d. Bilateral
i. Two-sided; mutual promises; both parties are promisors and promisees
ii. “I promise to pay you $10 tomorrow if you cross the bridge tomorrow.” One person promising to pay $10 tomorrow, the other promising to cross the bridge tomorrow.
e. Express: parties manifest their assent by words (everything is written or spoken)
f. Implied-in-fact: assent by voluntary, non-verbal conduct
g. Implied-in-law
i. Parties do not manifest their intent, but courts imply a fictitious promise to achieve desired result
ii. Done in the interests of justice and equity: If parent drops child off at pool, child hurts head, lifeguard takes child to hospital, physicians administer care, and bill sent to parents—should they have to pay? Yes, want to encourage physicians to administer such care (social policy)
iii. Quasi contract: not real contracts, but treated as so just for procedural purposes
h. Enforceable: if breached, other party can obtain direct legal remedy (money damages, performance, etc.)
i. Unenforceable: party can’t obtain direct legal remedy because of something like statute of frauds, court may indirectly recognize that a K still exists even though it can’t be enforced
j. Voidable
i. At least one party has the power to avoid or terminate the contract
ii. Innocent party can avoid or disaffirm, OR, ratify or affirm
k. Void
i. No contract
ii. Court says there is no sanction whatsoever to enforce a contract; ex: when the subject matter is illegal
l. Executed: all the promised performance has been rendered; after performance is completed
m. Executory: before performance (completely executory) or during performance (partially executory)
n. Divisible: K is divisible if the performance on each side is divided into parts and one part of one party’s p

eld: K because it was reasonable for P to believe that D did intend to enter into a K (However this was not necessary to decide the case because courts determined that D was serious)
1. Note: Lucy won because of superior factual advocacy: he demonstrated the relevancy of the facts in terms of social policy. SHOW WHY A FACT PATTERN IS A PERFECT ILLUSTRATION OF A PARTICULAR SOCIAL POLICY. Marshal the facts to generate equities and motives at trial level; marshal the facts to support the policy of the trial court decision at the appellate level
c. Direct evidence is used to prove intent and will overrule circumstantial evidence to the contrary (ex: Lucy where written agreement overruled D’s testimony that he was joking)
2. In all cases, P must prove agreement was both subjectively honest and objectively reasonable
3. Social policy: protects people’s expectations, promotes certainty, protects long term planning and reasonable expectations in commercial transactions
4. Dominant theory today, after historical shift (Lucy was turning point)
5. Problems: if there was a mistake in transmission, parties may end up with consequences they never foresaw or planned

c. Family and Social agreements: not held to same standards