LGS 200 Chapter 9 lecture notes
LGS 200 Chapter 9 lecture notes LGS 200 - 008
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LGS 200 - 008
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This 5 page Class Notes was uploaded by Conner Jones on Thursday February 18, 2016. The Class Notes belongs to LGS 200 - 008 at University of Alabama - Tuscaloosa taught by Charlye S. Adams in Summer 2015. Since its upload, it has received 51 views. For similar materials see Legal Environment of Business in Law and Legal Studies at University of Alabama - Tuscaloosa.
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Date Created: 02/18/16
Chapter 9 – Contract Law Overview of Contract Law Sources of contract law o Common law for all contracts sales and leases o Sales and lease contracts uniform commercial code (UCC) Definition of contract o Private law between two parties o Promise or set of promises Objective theory of contracts o Circumstances to determine intent of parties o Objective facts include: What a party said How party acted or appeared Circumstances surrounding transaction Types of contracts Bilateral o “promise for a promise” (I promise to paint kitchen if you promise to pay $500) unilateral o “promise for an act” (I promise to pay you $500 when you paint my kitchen) revocation: cannot revoke once substantial performance has begun formal v. informal o formal- must be in writing to be enforceable o informal- all other contracts express v. applied o express- words (oral or written) o implied (in fact)- conduct creates and defines the terms of contract ex: ambulance carries victim to hospital, expects to be paid contract performance o executed- a contract that has been fully performed on both sides o executory- a contract that has not been fully performed on both sides enforceability o valid: agreement, consideration, contractual capacity, and legality o void: no contract o voidable: one/both parties have ability to void contract at any time o unenforceable: some type of defense to contract Agreement offer and acceptance o parties must show mutual assent to terms of contract o once agreement is reached, a valid contract is formed requirements of a valid offer o intent: has to be serious, not joking lacking intent: expressions of opinion, future intent, negotiations, advertisements o definite terms identification of parities, object/subject matter of contract, payment, time of payment o communication offeree’s knowledge of offer (by offeror or agents) termination of offer o can be terminated prior to acceptance if: termination by parties revocation of offer by the offeror can be withdrawn anytime before offeree accepts offer irrevocable if offeree changed position based on reliance of offer rejection terminates offer counteroffer changes terms termination by law lapse of time- terminates after time specified in offer has passed or “reasonable” period of time destruction of subject matter- (house destroyed before offer accepted) death/incompetence of offeror or offeree supervening illegality of contract- legislation/court decision can terminate contract acceptance of offer- voluntary act (expressed/implied) by the offeree that sows assent (agreement) to the terms of offer, communicated to offeror o unequivocal acceptance the “mirror image” rule- if an offer is made to you as the offeree, you have to accept the mirror image of what was offered to you, you cannot change offer in any way o silence as acceptance general rule: offeree should not be legally obligated to reject offer when offeree has duty to speak: takes benefits of services with opportunity to reject you must pay for service o communication of acceptance bilateral contract- communication of acceptance is necessary because of mutual exchange of promises unilateral contract- acceptance is evident, notification is not necessary o mode and timeliness general rule: in bilateral contract, acceptance is timely if made before offer is terminated mailbox rule: acceptance is effective when offeree uses “authorized means of acceptance” (US mail, acceptance is made upon dispatch) substitute method of effectiveness- effective when agreement reaches offeror if method of transport is not agreed upon E-Contracts online offers- clicking o online acceptances- binding contract can be formed by clicking “I agree to terms and conditions” (law does not require parties to read all terms) o shrink wrap agreements- contract terms are inside box, party opening box agrees to terms by keeping merchandise o browse wrap agreements- do not require assent (hyperlink to term and conditions), are usually unenforceable E-signatures o Electronic process attached to/associated with a record, executed by a person with intent to sign record o Digitized signature- graphical image of handwritten signature Consideration Must have “legally sufficient value” o Promise, performance or forbearance (refraining on repossession) “bargained-for-exchange” o something of legal value (promise/performance) must be exchanged between parties (grandmother gift example) agreements that lack consideration o preexisting duty- promise to do what one already has a legal duty to do, has no sufficient consideration exceptions: recession and new contracts- underestimated cost of doing job unforeseen difficulties Contractual Capacity minors- generally at the age of 18 a person is emancipated and has legal capacity to enter into a contract, any minor can void a contract at any time intoxication- lack of capacity at the time the contract is being made (contract is made valid/voidable on a case by case basis) mental incompetence o “void” if a person has been adjudged mentally incompetent by a court of law and guardian has been appointed o “voidable” if person does not know he or she is entering into contract or lacks mental capacity to comprehend its nature, purpose, consequences o “valid” if person is able to understand nature and effect of entering into contract but may lack capacity to engage in other activities (lucid intervals) Legality must be for legal purposes, cannot be a contract for illegal acts contracts in restraint of trade o Non-Compete contracts in employment are enforceable as long as time and geographic terms are reasonable Unconstitutional contracts/clauses o Procedural unconscionability- party’s lack of knowledge of subject (lack of legal knowledge) o Substantive unconscionability- contracts are oppressive or overly harsh, denies person to discuss remedy Statute of frauds To be enforceable must be in writing and signed if: o Contracts involves land o Contracts involving “one-year rule” (service for longer than 1 year) o Collateral (foreclosures) or secondary contracts o Marriage promises o When sale of good is $500 or more Third party rights Assignments: o Assignor- party assigning rights to 3 party o Assignee- party receiving rights rd o If assignee fails to pay rent, landlord can only go after the 3 party for remedy o Exceptions: statute expressly prohibits assignment contract is in personal nature (hiring Beyoncé to sing at party, she cannot assign it to another singer) assignment will significantly change risk or duties of obligor o intended beneficiary (life insurance policy)- beneficiary can sue insurance co. if they do not pay out o incidental beneficiary- someone who unintentionally benefits from contract (company has to hire new employees to carry out contract, employees unintentionally benefit, have no ground to sue if they back out of contract)
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