Common Law Contract for Civil Lawyers
Fall 2007 Professor Marston
No federal common law, each state develops its own common law of contract.
By whom made common law? Judge.
How made? By deciding individual cases (applying law to particular facts).
I. Source of contract law:
UNIFORM COMMERCIAL CODE
Every state except Louisiana has adopted UCC.
(a) RESTATEMENT (SECOND) OF CONTRACTS (Modern)
Decide “what the law is”, i.e. “what the law should be” (the task is to reduce the mass of case law to a body of readily accessible rules in the form of a Restatement of the Law)
(b) COMMON LAW OF THE VARIOUS STATES (Older)
UNITED NATIONS CONVENTION ON THE INTERNATIONAL SALE OF GOODS (not yet widely accepted in US)
The first question in every situation to ask is what law should be applied in the contract.
Article 1 is General Provision and Article 2 is Sales
1-201 general definition applies to the all UCC including Article 2, and a lot of definitions are defined in a different way from “common sense”, e.g. (27) “person”; (37) “signed” includes any symbol executed or adopted by a party with present intention to authenticate a writing.
If the code is silent, then go to the common law.
Code applies to sales of goods.
1. Goods: different from “service”
U.C.C. § 2-105(1) GOODS
“Goods” means all things 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 . . . And things in action [claims].”
Is computer software goods? Yes, under this definition. Electricity: measurable? Yes. It is held as goods. Downloaded music: ?
2. Sale: passing of titles
U.C.C. §2-106(1) – “Sale”
“A sale consists in the passing of title from the seller to the buyer for a price.”
Title: defined by ordinary property law, a right of ownership that the law enforces.
3. U.C.C.§1-103: How does U.C.C. interact with the Common Law?
“Supplementary General Principles of Law Applicable”
“Unless displaced by the particular principles of this Act, the principles of law and equity [i.e. the common law] . . . shall supplement its [i.e. the U.C.C.’s] provisions.”
Chart of source of contract law
State Statute Common law
UCC Restatement sections – adopted section by section by courts in each state
Sale of goods, UCC apply, not sale of goods, not apply.
UCC does not have any provision about “fraud”, you have to go to common law.
l Quality Guaranteed Roofing v. Hoffmann (Bulk 3)
Facts: Contractor sued owner to recover the due payment under contract for goods and services rendered in connection with installation of roof.
Rule of law:
1) Whether UCC governs a mixed goods and service contract depends on which aspect, sales or services, predominates the contract. As for contract that was predominately for services rather than sales of good, UCC is inapplicable.
2) In determining the predominant nature of a mixed contract, it is helpful to look at the language, compensation structure, purposes, relation between good and services.
3) In this case, for three reasons that it is a contract for services
a) The parties are described as “owner” and “contractor” and the contract s “Construction Agreement”.
b) The price is paid on a schedule basis as the installation work progressed.
c) The dominant purpose of the contract is to install the roof and the purchase of roofing material is incidental to such purpose. [Buying roof not roof material] UCC 2-607: opportunity to cure the defect [In this case, no notice of any kind was given to the plaintiff of the alleged defects, nor was the plaintiff given any opportunity whatsoever to cure any such defects.]
4. What is a contract?
i. Restatement, Section 1:
“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.”
ii. U.C.C. Section 1-201(3): [2000 version] “Agreement” means the bargain of the parties in fact as found in their language or by implication from other circumstances…Whether an agreement has legal consequences is determined by the provisions of this Act, if applicable; otherwise by the law of contract.
iii. U.C.C. Section 1-201(11):
“Contract” means the total legal obligation which results from the parties’ agreement as affected by this Act and any other applicable rules of law.
contract ≠ promise ≠ agreement
1) Contract & agreement: all contracts are agreement but only those agreements which have legal effect are contract.
2) Contract & pr
t discussed in any of their correspondence.
Rule of Law 1:
A contract, implied in fact, is an actual contract which arises where the parties agree upon the obligations to be incurred, but their intention, instead of being expressed in words, is inferred from their acts in the light of the surrounding circumstances.
The court here looked at the letters, and found nothing said about payment.
There was no basis to infer the existence of a unilateral contract, since where one’s work effort has been voluntarily to given to another, no intention of payment can be inferred.
But the courts struggled in this case
Implied in fact Contracts – Martin
• A promise to pay may be implied
• One performs a services or gives a good
• The other party knows of the service or good
• The service or good is useful; has value
• It is of the type usually charged for
• The other party EXPRESSES NO DISSENT or takes advantages of the service AND
• Takes some action from which a promise to pay maybe reasonably implied
Rule of Law 2: Volunteers have no right to restitution [since no promise to pay] [unjust enrichment which is a key to restitution is not established].
4) valid & void & voidable
a) valid: a contract with all four elements
b) void “ab initio” [void from the beginning]: a void contract never exists at all, b/c it can not be called contract for lack of one or more of the 4 elements
c) voidable: a voidable contract is an existing contract fulfilling four elements, but the manner in which it is formed (e.g. fraud, misrepresentation). A voidable contract grants an option to one party made it unenforceable.
Hypo: Hire new lawyer, resume he tells me graduate from top 10% of the law school, hire him. Contract for two years. Six months later, clients love him. But later found that he was at the bottom of that school, i.e. he lied. At this stage, do we have a contract?