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contract

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a legally enforceable agreement that is created when two or more competent parties agree to perform, or to avoid performing, certain acts that they have a legal right to do and that meet certain legal requirements; "a promise for a promise"; state law enforces contracts

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tangible personal property

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part of the UCC that is relevant to contract law; Article 2; only applies to personal property, which can be moved, such as a vehicle, kitchen table, or computer

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common law

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source of contract law regarding the sale of fixed assets, services, and intangibles

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six elements necessary to have a contract

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offer and acceptance, mutual agreement, consideration, competent parties, legality of purpose, and proper form

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offer (instructor combines this with mutual agreement)

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proposal made by one party, the offeror, to another party, the offeree, that indicates a willingness to enter into a contract.

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mutual agreement (instructor combines this with offer and acceptance)

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the state of mind that exists between an offeror and an offeree when a valid offer has been accepted, and the parties know what the terms are and have agreed to be bound by them; mutual agreement is also known as "a meeting of the minds"

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consideration

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the promise to give up something of value that a party to a contract has a legal right to keep, or to do something that the party is not otherwise legally required to do

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competent parties

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being mentally capable of understanding the terms of a contract

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legality of purpose

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the requirement that the intent of a contract be legal for the contract to be enforceable

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proper form

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the requirement that the form of a contract be correct for the terms of the contract to be enforceable

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oral contract

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an agreement that is not in writing or signed by the parties

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written contract

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an agreement that is reduced to writing on a permanent surface

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express contract

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a contract that explicitly states the agreement of the parties, either orally or in writing

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implied contracts

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a contract that does not explicitly state the agreement of the parties but in which the terms of the agreement can be inferred from the conduct of the parties, the customs of the trade, or the conditions or circumstances.

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formal contract

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a specialty contract that is written and under seal;bonds, mortgages, and deeds conveying title to real estate, are required to have a seal

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simple contract

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an informal contract made without seal; even though the subject matter of the contract may be extremely complex and may involve huge amounts of money

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entire contract

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an agreement that is made up of two or more parts, in which each part is dependent upon the others

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divisible contract

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an agreement that is made up of two or more parts, each part being independent of the others

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executory contract

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an agreement in which some future act or obligation remains to be performed under its terms

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executed contract

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a record of an agreement that has been completed in all respects by all the parties; not really a contract at all but a mere record of an agreement that has been completed in all respects by all parties

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valid contract

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an agreement resulting in an obligation that is legally enforceable; meets all six essential elements

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void contract

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a contract that is not enforceable from the beginning because it lacks one of the requirements of a valid contract

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voidable contract

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an agreement that can be rejected by one of the parties for a legally acceptable reason

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Why is a contract important?

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because of consequences

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Why are states so adamant about enforcing contracts?

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to avoid chaos they rely on agreements

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Where did basic contract laws originate?

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common law from England

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UCC Universal Commercial Code

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governs contracts with sale of goods; modern times has seen an explosion of goods; all states have adopted rules that apply from UCC so that the same laws apply to cases regarding contracts involving the sale of goods; does not cover services; common law covers services

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Statute of Frauds

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Promises that involve marriage as consideration Contracts that can't be performed within one year Contracts that involve the sale or transfer of land Contracts that involve promises by executors to pay estate debts Contracts that involve a promise to act as a guarantor or surety Contracts that involve the sale of goods worth more than $500

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Zappos.com customer data security breach litigation

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customers were not held to the browsewrap terms of use because of their obscure nature. The courts also held that the agreement was unenforceable because Zappos had reserved the right to change it at any time without informing the customers; This court decision set precedence for businesses that use browsewrap agreements and/or include a clause in their agreements that allow them to change the agreements at any time. The decision encouraged conversation on how a business should most fairly display its terms of use and how to avoid unfairness and ambiguity when writing them; court explained that if a party retains the unilateral, unrestricted right to terminate the arbitration agreement it is illusory and unenforceable

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Pache v Aviation Volunteer Fire Co

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working for volunteer fire co., fire chief dies of heart attack at the scene of a fire; wife applied for Workers' Comp. and granted benefits based on implied contract between the city and Aviation; courts upheld based in implication of contract by actions

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Reisenfeld v The Network Group, Builders Square, Kmart Corp

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Quasi Contract Theory - created by courts to eliminate unjust enrichment "something for nothing" dealt with the relationship between a party that had a contract with a contractor that was eliminated, along with his commission debt, due to fraud; a subcontractor, Reisenfeld, sued Builders Square for his commission from The Network Group, claiming under the Quasi contract theory. Ohio cases cited were Ross v Steveco, Brower v Musilli, Steel Quest v City Mark Const. These cases involved property owners who had not paid the contractors and therefore were held accountable for payment to the subcontractors.

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Requirements for a valid offer

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1. definite and certain - should specify all the terms and conditions of the contract 2. communicated oral, written, purchase order 3. intend an enforceable obligation (not in ager or jest)4 items: parties, subject of matter, price, quantity

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request for proposal

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a request for an offer or an invitation to negotiate that can be accepted or rejected by the person calling for a bid; main purposes are to ensure that the purchaser gets the most economical price and to prevent dishonesty in the form of bribery and kickbacks.

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invitation to trade

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an announcement published for the purpose of creating interest and attracting a response by many people. It is not considered a valid offer because it does not contain sufficient words of commitment to sell; however if an advertisement contains a positive promise and a positive statement of what the advertiser expect in return, the occurs will usually hold that the advertisement is an offer.

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public offer

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a general offer to the public at large

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requirements for a valid acceptance

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1. must be communicated to the offeror 2. must be unconditional

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mailbox rule

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states than an acceptance sent via the postal system or by courier is effective when sent; acceptance sent by telephone, fax, or telex is effective when received;

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counteroffer

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a response to an offer in which the terms and conditions of the original offer are changed

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termination by lapse of time

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when an opportunity to form a contract ends because the offeree fails to accept an offer within the time specified

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revocation

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the calling back of an offer by the offeror before the offer has been accepted or rejected

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rejection

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the express or implied refusal by an offeree to accept an offer; terminates

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option contract

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has a provision to keep an offer open for a certain period of time

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termination by destruction or illegality

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if the subject matter of a contract is destroyed or declared illegal after the offer has been made but before it has been accepted, the contract is terminated

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custom and usage

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in bidding, a certain customary action

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Andrus v DOT

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Plaintiff sued the city and DOT claiming wrongful discharge after receiving a pone call offering him a position, only to be withdrawn the next day by another phone call, based on unsatisfactory job reference; court ruled that there was no offer because it lacked "reasonably certain terms" such as salary or benefit info

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Alexander v Lafayette CrimeStoppers

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victim of assault tries to claim reward money because her description of her attacker helped investigators catch the suspect; court ruled that that the Plaiintiff's acceptance of the reward offers must have been received via the telephone number stated in the offer and by the time and date stated by the offerer; no contract was formed

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defective agreements

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if there is any misunderstanding or if any force or deception is used by either party to obtain the necessary agreement of the other party, the contract is voidable and may be disaffirmed at the option of the injured party; a voidable contract results if ageement of either party is obtained by fraud, misrepresentation, mistake, undue influence, or duress, or if the contract is one of adhesion or is unconscionable

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fraud

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intentional misstatement or nondisclosure of a material (essential) fact made by one party in an attempt to influence the actions of another party

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puffing

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mere expression of opinion of exaggeration

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misrepresentation

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a misstatement of a material fact that results in inducing another to enter into an agreement to his or her injury

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difference bw fraud and misrepresentation

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injured party who can successfully prove fraud may have the contract cancelled and bring suit for damages; if only misrepresentation, the contract can be cancelled, but the injured party cannot sue for additional damages

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mistake

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a belief that is not in accord with the facts; for a contract to be dissolved because of a mistake, the law usually requires that both parties be a part of the misunderstanding; mutual

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undue influence

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the improper use of excessive pressure by the dominant member of a confidential relationship to convince the weaker party to enter a contract that greatly benefits the dominant party; employer/employee, physician/patient, teacher/student

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duress

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the act of applying unlawful or improper pressure to a person to gain his or her agreement to a contract

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contract of adhesion

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contract drawn by one party that must be accepted as on a take-it-or-leave-it basis; insurance policies or disclaimers on tickeg stubs and dry cleaning

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unconscionable contract

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is so one-sided that is is oppressive and gives unfair advantage to one of the parties

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