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Business law – Contract Law

Contract
between two or more parties that is enforceable by the court of law
Elements of a contract
1. Agreement = Proper author, Proper accepts
2. Consideration = For something of legal value ( I agreed to pay 10K to paint appartment , you agreed to do it)
3. Capacity
4. Genuine assent (author of text book points it out as defence) = 5/ Voluntary coming together
5. Legal purpose – The objective of the contract must be for a legal purpose. For example, a contract for illegal distribution of drugs is not
a binding contract because the purpose for which it exists is not leg
The characters of our play
Offeror/promise giving the contract

Offeree/promise

Contract that need to be writting
a. Any contract for sale of land
b. Any contract for more than one year
merchant you are governed by
uniform commercial code and 5 elements of common law
Bilateral
for a promises
Example you rent my apartment, you pay $X)
Unilateral
a promise for an act / an agreement to pay for nonperformance.
Example: Rewards, I will pay you $1,000 if you bring my car from Cleveland to San Francisco.” Bringing the car is acceptance.
Formal contract
Use guide lines based on a industry or formalized contract on court.
Executed
completed contract
executory
Something not yet performed or done.
Examples: an executory contract is one in which all or part of the required performance has not been done; an executory bequest is a gift under a will which has not been distributed to the beneficiary
Standard used by court to determine whether a contract is valid
Reasonable person stadnard
Valid contract
enforceable binding contract hence a good contract
Voidable contract
One or sometimes both parties have the ability to cancel the contract for a certain period of time.
They can cancel the contract by rescinding it, avoidance, or disaffirm
Void contract
never was a contract (non existence)
Unenforceable
Agreement between two parties that is unenforceable in the court of law
a.Usually when it violate a law – subsequent illugality
b. A contract that is required in writing but isn’t
Quasi contract (not a contract)
Quasi contract is not a contract: it is a way we right a wrong. When we have contract law we just look at 5 elements and wording of the contract. If there is no contract then there is no contract to enforce.
Righting a wrong or to prevent unjust enrichment – usually written by fair market value. If you did services and there was no contract to enforce you will pay guy amount for labor he did.
Contract laws and damages
No punitive damages unless a tort is also committed in the breaching of the contract. Contract simply offer recovery at fair market value
Offer
1. Judged based on Reason persona standard
2. Present intent
3. Definitive language = No vagueness or opinions expressed
If there is vagueness the
Communication
Can be controlled:
1. The offer must be communicated to you
2. Advertiser have some protection
3. Reward – limited to offered and aware
Revocation – Termination
Offeror takes back the offer, any time before someone accepts
Can be done two ways: expressed or implied
Rejection – Termination
Offeree says no thanks
Counter offer is rejection of the original offer
Switching roles (offeror becomes offeree) and terminates the original offer.
By operation of law – rejection
i. Counter offer
ii. Death and incapacity
iii. A subsequent illegality
Promissory estoppels
1. Stop someone from taking back their promise. Based on detrimental reliance / Actual reliance. Is Unjust not enforce.
Acceptance – means we have an argument
1. If we have a bilateral contract (promise for a promise),
2. b. unilateral contract only works with complete (100%) performance – promise for an act ( person doesn’t accept until the work is preformed). It’s accepted and completed all at one time. If you tell someone who 90% complete painting your house a qusi contract.
Mirror image rules
You must accept exact rules of the contract hence if any material term of a contract is altered than it is not a contract
Materal terms
Land is based on property description and price while sale goods quantity.
Option contract
Contract in itself – a consideration is give
Accepts upon dispatch
mailbox rule ( only applies for acceptance)

How avoid is this by putting clause in your contract staying it can only be accepted in person.

Consideration
Bargained for exchange. It is anything of value promised to another when making a contract. It can take the form of money, physical objects, services, promised actions, abstinence from a future action, and much more. Consideration to create a legally enforceable contract entails a detriment to the promisee OR a benefit to the promisor
Preexisting duty rule
You can not use the same consideration twice
a. Unforeseeable difficulty (the one exception)
Past consideration is not valued consideration – lacks consideration from going forward.
Minors – Capacity
Minors have the ability to avoid a contract (it is statutory/automatic)
Unless they do not became emanicpated and contiue action or ratify
Minors exceptions – Capacity
If minors lie they both they and adult have the ablity to recind a contract.
If minor is in business he or she has same rights as an adult when it comes to contracts.
Mentally incompetent: Adjudged insane – Capacity
ilegally inane (by a judge) usually by doctor.The contract is void! Was never a contract to began with!
Mentally incompetent: non adjudicated (adjudged) – capcity
Voidable by the option of non adjudged individual. This person has avoidable option.
You have the contract enforced if you can prove 3 things:
1. Did not know the person was insane
2. Did not investage futher (no background, no reason to look deeper)
2. Fair deal (it was fair in the end you did not take advantage of the individual)
Intoxicated person – Capcity
Voidable at the option of the intoxicated (voluntary and non involuntary) person – While the intoxication last:
1. Reasonable time with it last or reasonable time with you gain knowledge.
2. You sell your car with your drugged out, some knock at your door a month later. Where are the keys?
Some contracts are illegal – Legaity
Blue laws – you cant sell certain items
Exculpatory clauses / waiver – Legality
Waiving liability for Negligence: yes I understand the risk
Acknowdging the risk – Does not work for an intentional tort of fraud.
Only works if there are two elements: must be understandable to a non lawyer
1. Conspicuous (bold)
2. Understandable
Unconciousable / adhesion contract – legality
i. Extreme on equal barging power
ii. Dominate party used the power
iii. Weaker party had no alternative
Example: Say you have thriving ice cream store. Your land lord says you have to buy his
Genuine assent
Nothing is hidden, full disclosure!
No Duress (threat), Fraud or intentional mispresenation (lacks full disclosure),
Innocent misrepresentation – Genuine assent
recesinde only
Mistakes – Genuine assent
1. Unilateral – rescinding only if other party knew about or should of know about it but didn’t tell the other party.
2. Mutual – Either party can rescind the contract (it must be about same material facts or terms)
Contract with undue influence – based on relationship of trust
Based on relationship of trust / fiduciary – position of trust
1. Expertise – Dotor patient, lawery client – the burden is always on the party trying get out of the contract
2. Defense – Full disclosure, Adequate consideration, Professional tells you to seek counsel or second a opinion.

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