LGST 101 Contract Law Flashcards
Contract
A promise or 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
Contract Law
Rules that show the consequences of what happens when a binding promise isn’t imposed on the parties
4 Basic Requirements of a Contract
- Mutual Assent (must manifest by words or conduct they have agreed to enter into a contract–> offer and acceptance)
- Consideration (each party must intentionally exchange a legal benefit or incur a legal detriment int he contract)
- Legality of Object (Purpose of the contract must be legal)
- Capacity (Parties in a contract must have contractual capacity–must be competent)
Express v. Implied
Express are created by parties’ words, oral or written
Implied are created by parties’ conduct
Stepp v. Freeman
Stepp is implied to be in a contract with Freeman for lottery tickets, so when Freeman wins, he must pay Stepp as well.
Bilateral v. Unilateral
Bilateral contracts can be accepted any reasonable way
Unilateral can be accepted only by complete performance
Valid, void, voidable, and unenforceable contracts
Valid–> Meets all requirements
Void–> Doesn’t meet all requirements of a binding contract
Voidable–> One party is allowed to void a contract
Unenforceable–> Contract for the breach of which the law provides no remedy
Executed and Executory
Executed: Contract that has been fully performed by all of the parties
Executory: Contract that has yet to be fully performed
Formal and Informal
Formal: Agreement that is legally binding because of its particular form or mode of expression
Informal: All other contracts besides formal contracts
Ways to enforce promises
Consideration, detrimental reliance, statute
Consideration
Something bargained for and received by a promisor from a promisee (thing for another thing)
Consideration or a valid substitute are required to have a contract
Detrimental Reliance
Promise + foreseeable + detrimental + reliance
Forcing someone to perform their obligations under a contract under promissory estoppel, applying when:
A promise was made, relying on the promise was reasonable or foreseeable, there was actual and reasonable reliance on the promise, the reliance was detrimental, and injustice can only be prevented by enforcing the promise
–> There was a promise and someone relied on it to their detriment. This principal forces the other party to perform the contract when this applies
Unjust enrichment
Different from detrimental reliance in that this is an equitable remedy while detrimental reliance is a principal in law forcing contracts to be performed
Statute
Statue can enforce promises as well
Promisor and promisee
Promisor is the person who promises to do something
Promisee is the person to whom something was promised
Hamer v. Sidway
Consideration applies when Hamer promises his nephew that he will get money when he is 21 if he refrains from drinking, using tobacco, etc. despite these being things that Hamer would be expected to do anyway. Both sides give up something, so consideration
Equitable remedies (moved to class 26)
Only use when at-law can’t be applied
- Specific performance (D must perform the promise himself)
- Rescission (Court rescinds the contract, get money back from unjust enrichment)
- Injunction (Court requires or prohibits a person from doing something)
- Promissory estoppel (see next card)
Promissory estoppel (moved to class 26)
Doctrine allowing recovery on a promise made without consideration when the reliance on the promise was reasonable and the promisee relied to his detriment
Applies when the following are proven:
A promise was made
Relying on the promise was reasonable or foreseeable
There was actual and reasonable reliance on the promise
The reliance was detrimental
Injustice can only be prevented by enforcing the promise
–> This gives remedies to solve such unfair outcomes to avoid injustice
Seen with Fran, hired and fired, entitled to equitable remedies under promissory estoppel
At will employment
Can fire for any non-illegal reason or no reason
Main takeaways from cases with consideration
Each side must give up something extra in order for there to be consideration. If just adding extra terms to the same deal, no extra consideration, just enforce the original contract.
Steinberg v. Chicago Medical School
Steinberg was rejected from Chicago based on criteria not published in a brochure. The brochure was an invitation to make an offer, Steinberg’s application and $15 was the offer, and they accepted his application, which is an acceptance of the contract. Therefore, this is a binding contract, and the Chicago Medical School must use the published criteria for admission
Manifestation of Assent
Obvious to a reasonable person that there is assent to enter the contract. Necessary for an enforceable contract. In the forms of offer, absence of termination (keep the offer on the table), and acceptance of the offer
Offer
A communication manifesting willingness to enter into a bargain, invite them to accept it. Put the contract on the table
Preliminary Negotiation
Not an offer, but rather bargaining, still need further manifestation of assent for it to be an offer. invitation to offer
Counter-offer
Considered rejection in common law but in UCC could be seen as you except everything except the specific part you counter
Leftkowitz v. Greater Minnesota
Greater Minnesota runs an advertisement in a newspaper for very cheap fur, Leftkowitz accepts the offer, but they refuse to sell it to him. The ad is ruled to be an offer and Leftkowitz accepted the offer, so he is entitled to the fur. There does not need to be an acceptance of the acceptance.
UCC v. Common Law
Use UCC for sale of goods (all things which are movable at the time of identification to the contract)
Common Law: Everything else (real property)
Gravamen of harm v. factual determination tests
Factual determination test decides UCC or common law based on whichever part of the contract is dominant, I.e. more important
Gravamen of the harm test decides it based on whichever step could possibly be more harmful
Ex: Delivering TV to dorm (which applies)
Say deliver TV to your dorm—> majority of districts base it off the more important part (delivering TV) and the minority of districts base it on whichever has more harm potential (getting up the stairs)
Terms for an Offer
- Terms of the contract must be reasonably certain
- Terms of a contract are reasonably certain if they provide basis for determine the existence of breach and for giving an appropriate remedy
- Shouldn’t be proposed bargains left open or uncertain
Price term particulars
UCC–Contract can exist even where no price term is stated
Common Law–agreement for transfer of interest in land must describe the land and state the price
4 ways to terminate offer
- Lapse of time (if certain amount of time goes by, offer is considered to be terminated)
- Revocation by offerer before acceptance (see below)
- Rejection by offeree before acceptance (see below)
- Death of either
Revocation by offerer before acceptance
Direct (Statement by offerer to offeree unambiguously indicating change of mind) or indirect (conduct, not statement by offerer unambiguously indicated change of mind of which the offeree is aware)
Offerer can revoke at any time before accepted except where:
Detrimental reliance
Part performance in response to offer to enter unilateral contract
Option: Paid promise to keep an offer open
Firm offer (UCC) signed, written promise by a merchant to keep an offer open
Rejection by offered before acceptance
Plain old rejection, counteroffer, conditional acceptance, or acceptance with additional/changed terms
Common law says acceptance with changed terms is rejection
UCC says not rejection, but only added if both parties are merchants, change isn’t material and offerer doesn’t object within reasonable time
What we see from examples of offer
Even if drunk, still an offer. Just because agreement, not necessarily contractual
Acceptance
Can be accepted explicitly or by behavior
Offeree must know of the offer, offeree must manifest an intention to accept, and the acceptance must be expressed as an unequivocal and unconditional agreement to the terms of the offer
Acceptance by performance requires at least part of the offer be performed
Acceptance by promise requires complete every act essential to making promise
Acceptance is necessary to solidify terms, contract formed right when acceptance is made, and matters when the acceptance is made
Examples from Acceptance Cases
Dobbs delivered Dickinson a memorandum agreeing to sell his house, had until 9 AM Friday to accept it. Dickinson agreed to offer on Thursday but didn’t tell Dobbs yet, and no binding contract, so Dobbs is free to do what he wants with it until 9 AM Friday. No contract.
Petterson is the owner of land, unpaid installment. Until act is performed, can be revoked. Withdrawn before became binding promise, and therefore no contract was ever made for the breach of which the plaintiff may claim damages
Defendant in writing offered to sell real estate to specified prospective buyer and agreed to pay percentage of the sales price as commission. Defendant revoked the offer in writing, but later that day the broker obtained offeree’s acceptance. Unilateral contract, for an act to be performed. Partial performance already underway, contract results.
Plaintiff accepts counter offer and signs it after defendant already cancels the counteroffer. Rules not to be an enforceable contract, as there needs to be an offer and acceptance with mutual understanding of both sides, which is not the case here
Express v. Implied v. Constructive Terms of a Contract
Express: Terms parties specifically articulate in the contract
Implied: Not explicitly articulated in the contract, but terms which facts of the deal clearly indicate party intended to include
Constructive: Terms imposed by the court as a matter of law and without regard to the intention of the parties
Excuse
Impossibility, impracticability, or frustration of purpose
Impossibility
Contract formed under assumption such an event wouldn’t occur, and death/disability, illegality, or destruction of subject matter makes it impossible
Impracticability
Performance is objective imposible and not your fault. Nonoccurence of the event was a basic assumption underlying the formation of the contract. When performing the contract feels like a punishment. For example, car stuck in water, and very hard to get out, impractical to have to deliver the car
Frustration of purpose
When principle purpose of contract is no longer in effect, and occurrence of the event the non-occurrence of which was a basic assumption in making contract, but contract is still possible. Ex: parents pay tuition and student dies. Not impossible, parent can still pay. But frustration of purpose as the principle purpose of the contract no longer there, and not your fault.
Conditions of Contract
Promises and duties, avoid punishing parties, constructive condition (imposed by law to meet ends of justice), traditional (event the occurrence or nonoccurrence of which gives the constructive condition)
Remedy 1 Case Examples
Based on access to replacement, reasonableness of the solution
At Law Damages
Expectation damages, reliance damages, stipulated/liquidated damages, interset
Expectation Damages
When you award someone as if the contract had been fulfilled (as opposed to the state you were in before).
Default with contracts
Reliance damages
Restores back to state where had been before. Default with torts
Stipulated/Liquidated damages
Whatever is stipulated in contract (whatever the contract says the remedies are) if the contact is not met
Buyer’s remedies under UCC
Rejection (Buyer can reject contract if they want), cure (Can make up for it if there’s an issue), acceptance (loss of right to reject, Acceptance after inspecting goods and sees they are good, or fails to make an effective rejection, or doesn’t act inconsistent with the seller’s ownership), calculation of damages (cover, If actually need the thing and can’t get from contracting party, could cover, claiming entire set of damages and force them to pay), and damages for non-delivery/repudiation (If they don’t delivery it, can get covered damage based on market price - contract price)
Seller’s Remedies under UCC
Re-sale (—> If good faith re sale, seller can recover difference between resale price and contract price), Damages for non-acceptance/repudiation (Difference between market price at time and place for tender and unpaid contract price), incidental damages (commercially reasonably charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer’s breach, in connection with return or resale of the goods or otherwise resulting from the breach)
Cases:
- Laredo Hides v. H & H Meat
- Teradyne v. Teledyne
Laredo Hides v. H & H Meat:
Plaintiff sues seller to recover damages for breach of contract for sale of cattle hides. Defendant sells hides, cancels contract. Plaintiff forced to purchase hides on open market. Defendant has to pay difference, as plaintiff acted reasonable
Teradyne v. Teledyne:
Plaintiff sues for damages. Defendant broke contract. Buyer cancelled order when packed ready for shipment, offered to purchase something else, but someone else bought that. Seller could have sold 2 things, not 1, sues for this loss.
Don’t make them pay full amount because plaintiff sold the thing anyway
