Week 4, LGS notes
Week 4, LGS notes LGS 200
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This 4 page Class Notes was uploaded by Grant Logsdon on Sunday February 21, 2016. The Class Notes belongs to LGS 200 at University of Alabama - Tuscaloosa taught by Charlye S. Adams in Winter 2016. Since its upload, it has received 14 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: 02/21/16
Ch 9 Formation of Contracts 2/11/16 Sources of Contract law ● Common law contracts real estate, service ● Sale and lease contracts UCC Definition of Contract ● promise or set of promises, for the breach of which the law provides a remedy or the performance of which the law in some way recognizes as a duty ● If a party breaches the contract they will be penalized Objective Theory of Contracts ● Objective theory of contracts circumstances to determine intent of parties, would a reasonable person intend to follow what is said in the contract ● Facts include what the party said going into the contract, how the party acted or appeared, circumstances surrounding the transaction ● Pan Handle Realty, LLC v. Olins(2013) Types of Contracts ● Bilateral Offeree must only promise to perform (“promise for a promise”) ● Unilateral Offeree can accept the offer only by completing the contract performance (“promise for an act”revocationoffer cannot be revoked once the substantial performance has begun ex: telling someone you will pay them $100 if they drive you to the airport and paying them once the act is done Formal vs. Informal Contracts ● Formal must be in writing to be enforceable ● Informal all other contracts Express vs. Implied Contracts ● express words (oral or written) ● Implied conduct creates and defines the terms of the contrequirements pl. furnished good or service, pl. expected to be paid, and def. had a chance to reject and did not Contract Performance ● Executed A contract that has been fully performed on both sides ● Executory A contract that has not been fully performed on either side Contact Enforceability ● Valid agreement, consideration, contractual capacity, and legality ● Void no contract ● Voidable ● Unenforceable To Have a Valid Contract Agreement ● offer and acceptance ● parties must show mutual assent to terms of the contract ● once the agreement is reached a valid contract is formed ● To have an agreement there must be: ○ Intention contract is judged by what a reasonable person in the offeree's position would conclude about the offer; reasonable person standard ■ Intent may be lacking in expressions of opinion, statements of the future, invitations to negotiate ○ Definiteness of Terms identification of the parties, object or subject matter of the contract, a court can supply missing terms if the parties intend to form a contract ○ Communication offerees knowledge of the offer directly by the offeror or use of Agents ● An offer can be terminates prior to acceptance by: ○ Action of the parties ○ By law ● Irrevocable offers courts are generally unwilling to allow revocation when the offeree has changed position based on justifiable reliance on the offer ● Termination ○ Rejection ○ Counter offer original contract is thrown out and a new one is made ○ Lapse of timesome contracts are available only until a certain time or date ○ Destruction of subject matter ○ Death or incompetence of the Offeree or Offeror automatically terminates unless it is an irrevocable offer ○ Supervening illegality of the proposed contract legislation or court decision automatically terminates offer or renders contract unenforceable ● Acceptance ○ Unequivocal Acceptance “mirror image” rule ○ Silence As Acceptance offeree has a duty to speak, if they do not reject services than silence results in an agreement ○ Communication of Acceptance ○ bilateral contractcommunication of acceptance is necessary because of mutual exchange of promises.Unilateral Contract:acceptance is evident and communication is not necessary ○ Mode and Timeless: in bilateral contracts acceptance is timely if made before offer is terminatemailbox rule: acceptance is effective when offeree uses authorization ,means of acceptance; if Offeror says send a letter to accept an offer then as soon as the oferee puts the letter in the mail then they accept and offer an not be revoked ○ Online Offerssellers website should include hyperlink to page with full contract ○ ESignatures: electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record ● Consideration ○ “Legally Sufficient Value” promise, performance, forbearance ○ a “Bargainedforexchange” Must provide basis for the bargain, Something of legal value (a promise, or a performance) must be exchanged between the parties ○ Agreements that lack consideration ■ Preexisting Duty: Exceptions. ■ Unforeseen Difficulties. ■ Recession and New Contract ■ Past Consideration: no consideration because the bargainedfor exchange element is missing ● Capacitylegal ability to enter into a contract ○ Minors Generally, at 18 years, a person is emancipated, and has the legal capacity to enter into any contract that an adult can; however, a contract entered into by a minor is voidable at the option of that minor, and can be disaffirmed ○ Intoxication lack of capacity at the time the contract is being made. Contract is either voidable or valid, depending on circumstances ○ Mental Incompetence oid if a person has been adjudged mentally incompetent by a court of law and a guardian has been appoinoidable if the person does not know he or she is entering into the contract or lacks the mental capacity to comprehend its nature, purpose, and consequencvalid when person is able to understand the nature and effect of entering into a contract but may lack capacity to engage in other activities (known as “lucid” intervals) ● Legality ○ To be enforceable it must be formed for a legal purpose ○ A specific clause in a contract can be illegal, but the rest of a contract can be enforceable ○ A contract to commit a tortious act is illegal ○ Contracts contrary to public policy are generally void Statute of Frauds ● To be enforceable the following types of contracts must be signed in writing ○ contracts involving interest in land ○ contracts involving “oneyearrule”know for test ○ collateral or secondary contracts ○ promise made in consideration of marriage Third Party Rights ● Assignment: LandlordTenant3rd Party ● Sublease ● Intended beneficiary ● Incidental Beneficiary ● Ch 10: Contract Performance, Breach, and Remedies 2/18/16 Voluntary Consent ● Mistakes ○ Unilateral mistakewhen you say you want to sell your car for $25,000 but accidently write $2,500 you cannot back out unless: the other party knows or should have known it was a mistake, or if mistake was due to an inadvertent mathematical and without gross negligence. ○ Bilateral mistake when parties to a contract are mistaken as to the same material fact; general rule: contract may be rescinded by either party ○ Mistake of valuewhen a party later finds out that an object is of more value than originally known then the original owner can not take it back ○ Fraudulent Misrepresentation voidable by innocent party ■ Misrepresentation of material fact ■ intent to deceive ■ reliance on misrepresentation ■ injury to the innocent party ○ Undue Influence ccurs when a party takes specific action to conceal a fact that is material to the contract. ○ Duress party who enters into a contract under fear or threat makes a contract voidable, threatened act must be wrongful or illegal and render person incapable of exercising free will Performance and Discharge ● Conditions of performance A possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract ● Conditions Precedent condition must be fulfilled before a party’s performance can be required, requires absolute duty to perform ● Discharge Both parties have a duty to fulfill their respective obligations by performing the acts each party has promised ● Substantial Performance Enforcement of Contract: Party in good faith performs substantially all of the terms Performance must not vary greatly from what was promised. Performance must create substantially the same benefits, Measure of damages is cost to bring object of contract into compliance. There is no exact formula. ● Performance to the satisfaction of another most contracts will be analyzed under the reasonable person standard; when contract requires personal satisfaction of another as a condition, person to be satisfied must act honestly
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