Chapter 1: Introduction to the Study of Contract Law
Contract – 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 as a duty.
Types of Contracts as to Formation:
o Express Contract: Formed by language, oral or written.
o Implied Contract: Formed by manifestations of assent other than oral or written language (conduct)
Legal Effect – it creates obligations for which some sort of legal enforcement will be available if performance is not forthcoming as promised.
· Sources of Contract Law:
o Primary authority – statutes and ordinances
o Secondary authority – ALI restatements of the law
Statute of Frauds – requires certain types of contracts to be evidenced by a signed writing to be enforceable in court.
Roles played by a lawyer:
UCC 1-201. General Definitions.
(3) “Agreement”, as distinguished from “contract”, means the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade as provided in Section 1-303.
(12) “Contract”, as distinguished from “agreement”, means the total legal obligation that results from the parties’ agreement as determined by [the Uniform Commercial Code] as supplemented by any other applicable laws.
ARTICLE 2 – UNREVISED UCC – ONLY APPLIES TO TRANSACTIONS AND GOODS.
§ 2-102. Scope; Certain Security and Other Transactions Excluded From This Article.
Unless the context otherwise requires, this Article applies to transactions in goods; it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction nor does this Article impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.
§ 2-105. Definitions: “Goods”;
(1) “Goods” means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action. “Goods” also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (Section 2-107).
Chapter 2: The Basis of Contractual Obligation
A. Mutual Assent:
o A meeting of the minds. The process parties reach this is by negotiation, during which one party makes an offer and the other accepts.
o Courts use an objective measure, by which each party is bound to the apparent intention that he manifested to the others.
o A party is bound to a signed document, which he has read with the capacity to understand it, absent fraud, duress, and mutual mistake.
§ 21. Intention To Be Legally Bound
Neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract, but a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract.
2-204. Formation in General.
(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
(3) Even though one or more terms are left open, a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
1. Bilateral Contracts:
o Bilateral contract – a contract in which each party promises a performance, so that each party is an obligor on that party’s own promise and an obligee on the other’s promise.
o There is no meeting of the minds, and, therefore, no enforceable contract, where communications between the parties do not evidence a definite offer and acceptance.
o Generally ads are not held to be offers. If an offer is conveyed by the objective reading of an advertisement, it does not matter that the advertiser may subjectively have not intended for its chosen language to constitute a binding offer.
o Whenever there is a bait and switch (craftily designed to make people think something) then the ad is held to be an offer. The true interpretation of an offer is not what the party making it thought it meant or intended it to mean, but what a reasonable person in the position of the parties would have thought it meant.
nd by any medium reasonable in the circumstances.
• § 49. Effect Of Delay In Communication Of Offer
If communication of an offer to the offeree is delayed, the period within which a contract can be created by acceptance is not thereby extended if the offeree knows or has reason to know of the delay, though it is due to the fault of the offeror; but if the delay is due to the fault of the offeror or to the means of transmission adopted by him, and the offeree neither knows nor has reason to know that there has been delay, a contract can be created by acceptance within the period which would have been permissible if the offer had been dispatched at the time that its arrival seems to indicate.
• Restatement 63
Unless the offer provides otherwise,
(a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree’s possession, without regard to whether it ever reaches the offeror; but
(b) an acceptance under an option contract is not operative until received by the offeror.
2. Unilateral Contracts:
· Executory Contract – one or both parties’ obligations are performed in the future.
o Bilateral =exchange of promises – exchange promises and fulfill duties in the future
· Unilateral – exchange of action for promise – one-way performance obligation
o The offeror would promise to pay upon completion of the requested act by the promisee. Once the act is completed, the contract is formed.
· 2 Ways Courts will Limit Revocation: Difference between common law and UCC is some courts require only “tendering” of performance and others require “substantial” performance.
· Default Rules: If you forget to mention something while forming the contract then you are not stuck without specification.
o Ex. R30 (2) and UCC 2-206 (standard for opting out)