What is a Contract and What Law Applies? Flashcards
Types of Contracts
Express Contract
Implied Contract
Quasi-Contract
Express Contract
Formed by language, oral or written.
Implied Contract
Formed by conduct
Quasi-Contract
Not a contract at all. It is the name given when an unenforceable contract results in unjust enrichment.
Courts permit a plaintiff to bring an action in restitution to recover the amount of the benefit conferred on the defendant.
Contract Formation
K = MA (O+A) + C - D
Contract = Mutual Assent (Offer + Acceptance) + Consideration - Defenses
Acceptance - Bilateral Contracts
A bilateral contract is one consisting of the exchange of mutual promises; that is, a promise for a promise.
A bilateral contract offer can be accepted in any reasonable way.
Most contracts are bilateral
Unilateral Contract - Acceptance
Acceptance by Performance
A unilateral contract is one in which the offeror requests performance rather than a promise.
The offeror(promisor) promises to pay upon the completion of the requested act by the promisee.
Once the act is completed, a contract is formed.
When does a unilateral contract occur?
A unilateral contract, which requires full performance, occurs in only two situations:
- when the offeror clearly (unambiguously) indicates that completion of performance is the only manner of acceptance; and
- where there is an offer to the public, such as a reward offer.
Look for the language: “offer . . . only by” or a reward offer. Otherwise assume the offer is for a bilateral contract.
As to Validity
Void Contract
A void contract is one that is totally without any legal effect from teh beginning. It cannot be enforced by either party.
I.e., an agreement to commit a crime.
As to Validity
Voidable Contract
A voidable contract is one that one or both parties may elect to avoid, such as by raising a defense that makes it voidable, like infancy or mental illness.
As to Validity
Unenforceable Contract
An unenforceable contract is otherwise valid but isn’t enforceable due to a defense, such as SOL or SOF
What Law Applies?
Common Law v. Art. 2
Cenerally, the common law governs contracts. However, for contracts involving the sale of goods, Article 2 of the UCC applies.
When common law and article 2 differ, Article 2 govers in a contract fo the sale of goods.
CL v. Art. 2
Goods Defined
Goods are all thigns movable at the time they are identified as the items to be sold under the contract.
Thus, article 2 applies to sale of tangible things, but doesn’t apply to the sale of real estate, services, or intangibles, or to constuction contracts.
CL v. Art 2
Merchants vs. Nonmerchants
Article 2 generally defines “merchant” as one who regularly deals in goods of the kind sold or who otherwise by their profession holds themselves out as having special knowledge or skills as to the practices or goods involved.
For Art 2 provisions dealing with general business practices, almost anyone in business can be deemed a merchant. Some Art 2 provisions are narrower and require a person to be a merchant with respect to goods of the kind involved int eh subejct transaction.
CL v. Art. 2
Contracts invoving goods and nongoods
If a sale involves both goods and services, you will determine which aspect is dominant and apply th elaw governing that aspect to the whole contract.
However, if the contract divides payment between goods and services, then Art 2 will apply to the sale portion and the CL will apply to the services portion.
