BASIC INFORMATION
Contract: A promise or a set of promises that the law will enforce or at least recognize in some way.
In Typical Contacts Case, 2 Elements:
(1) Liability: Δ transgressed some legal norm.
(2) What is the remedy to show the Δ has transgressed a legal norm? Monetary or non-monetary.
Distinctive Character of Contract Law:
Does not tell people what to do/what not to do; not prescriptive.
Its function is to facilitate private exchange/ordering.
Differences Btw Negligence & Contracts:
Neg.: Behavior is set externally, the law sets it. Have to behave as a reasonable man would.
Contracts: Parties define what is to be expected.
Written agreements, 2 Functions:
1. Interest in evidentiary security- Know terms of the agreement
2. Cautionary function- Brings home to the person that something significant is happening and hopefully deter impulsive behavior.
MANIFESTATION: Many rules in contract are default rules. Exist only if parties do not address rule and institute own rule instead.
3 policy issues that run through the law of contracts.
1. Should the rule be a mandatory rule or a default rule
2. If default rule, what is appropriate default rule.
3. What conditions must parties meet to contract around it. e.g. do it in writing, use certain words.
EXAMPLEà
STATUTE OF LIMITATIONS:
UCC § 2-725. Statute of Limitations in Contracts for Sale.
(1) Except as otherwise provided in this section, an action for breach of any contract for sale must be commenced within the later of four years after the right of action has accrued under subsection (2) or (3) or one year after the breach was or should have been discovered, but no longer than five years after the right of action accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it. However, in a consumer contract, the period of limitation may not be reduced.
1. P & D enter an agreement in 2000. Breach-2002. P sues in 2006. Result?
∆ pleads UCC §2-725(1). Within statute of limitations because action brought within 4 years.
2. Agreement provides action must be commenced within 3 years of breach. Breach 2002. P sues- 2006. Result?
P loses because altered rule. Provision in UCC says parties may reduce the period.
3. Provide action must be commenced within 6 years of breach. Breach 2002. P sues 2007. Result?
Cannot extend to more than four years. Goes back to 4 years and P loses.
4. Provides action must be commenced within 6 months of breach. Breach 2002. P sues in 2004. Result?
Cannot limit it to under 1 year. Back to default 4 year rule.
*If the parties attempt to modify the agreement fail, defaults back to UCC rule**
This is the rule if you do not specify differently in your contract.
Can alter it if you choose to address the matter.
But there are some limits to what is a permissible alteration.
If draft own provision, subject to review by a ct. against the following standards (whether it is a reasonable estimate).
Purposes of a Statute of Limitations.
1. Interest in finality;
2. Evidentiary problems (people forget & people die);
3. If breach goes unnoticed no time to prepare if time limit is short.
Why can’t it be extended beyond 4 yrs.?
Legal system has interest in getting things right and doing things in a certain way.
THE BARGAINING PROCESS
THE NATURE OF ASSENT:
**A REASONABLE BELIEF IS CRITICAL**
Lucy v. Zahmer (S.C. Appeals Va 1954): P suing for specific performance of contract where ∆ so
IAL except when unreasonable meaning he attaches is known to other party.
Binding contract.
**REMEDY=SPECIFIC PERFORMANCE**
Another obvious possible defense here:
Statute of Frauds. Sale of land so comes under Statute of Frauds so need to have a writing.
Does this writing satisfy the Statute of Frauds?
Yes. Signed by person being charged (Zehmer), states land subject to agreement, price, condition of satisfactory title.
What terms does it not have?
When sale is going to take place.
Is this fatal? Implied-Title condition shows timeframe. Law would imply that the time for performance is a reasonable time. If parties do not address it, the law will (background term).
If seeking damages, what would be the recovery?
Market value- contract price.
Lawyer for Zehmer: Argument not reasonable for Lucy think had deal?
Contract for sale of house typically not on back of restaurant check, but is a lot of pages.
Suppose ∆ jesting & P had reason to know he was jesting? Result?
Why protect him if knew was a joke.
*********Objective Theory: The reasonable belief of LUCY IS CRITICAL.
What is the justification for the objective theory of contract formation? Even if ∆ jesting, Ct. would still decide case in favor of P on grounds that a reasonable person his position would have understood ∆ to be serious.
1. Administrability of court in not inquiring into persons’ subjective state.
