Contracts- Spring 2004 Professor Sokolow (UT)
1) General
a) Contracts usually involve two different promises (a bargained-for exchange)
b) Not all promises should be enforced; which ones should be? (the overlying question of this course)
c) Definitions
i) Contract- agreement that the law will enforce
(1) Written v. oral contracts
(a) Writing is not always necessary to create a contract
(i) An agreement may be binding on both parties even though it is oral
(b) Some contracts must be in writing under the Statute of Frauds
ii) K= contract
iii) Promisor- one who promises
iv) Promisee- one who is promised to
v) Offero-+++++++r- one who offers
vi) Offeree- one who is offered to
d) Contracts usually involve two different promises (a bargained-for exchange)
i) We do not require consideration (benefit + detriment to form a K) (Hamer v. Sidway)
e) Unilateral/Bilateral
i) Unilateral contract
(1) one party promises; promisor wants performance and performance only; contract is entailed when promisee has completed performance
(2) Contract is not formed until backend when promisee has fully performed
(3) People normally want promise followed by performance
(a) When would a party want performance without a promise?
(i) You don’t care who performs (bounty, reward, contest, etc.)
(ii) Situation where performance is difficult (climbing a greased flagpole)
(iii) Agency relationships (realtors)
(4) Consider whether promisor would want rights in the event of failed performance
ii) Bilateral contract
(1) both parties promise
(2) In a promise for promise exchange, both parties are bound from the outset
(a) Each party must perform later on
(3) It is bilateral because both parties are bound from the outset
iii) How do you know whether someone seeks a performance or a promise?
(1) It can be obvious from language or circumstances
(2) Often, it isn’t too clear
(3) Under the UCC, the unilateral/bilateral distinction does not matter much
(4) In the real world, most people want a promise followed by performance
f) Questions we ask
i) Is there a K?
ii) Has K been breached?
iii) Are there remedies?
g) Arbitration
i) alternative to court; procedure is flexible and informal
ii) Both parties must voluntarily agree to arbitration
iii) Remedies and relief are less constrained than in court
iv) Arbitrators can usually award punitive damages (though this is disputed)
not match the terms of the offer; this is most complex section of Article 2
(2) Drafters of the UCC as a general matter place very few constraints on contract formation
(a) Unlike the common law, there are not a lot of rules governing contract formation
e) Cases
i) Eastern Air Lines v. Gulf Oil
(1) Δ claimed that contract was not a binding requirements contract; Δ argued that contract was void for lack of mutuality and was “commercially impracticable” within meaning of UCC §2-615
(2) This is a requirement contract because Π must purchase fuel requirements from Δ; Δ must make an attempt to provide this fuel
(a) When party operates a business, requirement contracts can be valid
(b) Court can determine the volume of goods provided for under the contract with objective evidence of volume of goods required to operate business
(c) Document is a binding and enforceable requirements contract
(3) UCC sections
(a) Goods: §2-05(1), §2-107
Oil is a good under UCC
