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BLAW CH. 7 Notes

by: Lexie Barclay


Marketplace > University of Arkansas > BLAW > BLAW CH 7 Notes
Lexie Barclay

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All things Contract Law
Business Law
John Norwod
Class Notes
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This 4 page Class Notes was uploaded by Lexie Barclay on Monday October 10, 2016. The Class Notes belongs to BLAW at University of Arkansas taught by John Norwod in Fall 2016. Since its upload, it has received 6 views.


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Date Created: 10/10/16
BLAW CH. 7 FORMATION OF CONTRACTS Contract: ​defined as an agreement that a court is willing to enforce ● Elements: 1. Agreement 2. Consideration 3. Capacity 4. Legality ● Writing, handshake, exchange of money→​ NOT required to be considered a contra​ ut preferred in court ● Need BOTH parties to cancel contract, not just one Common law of contracts:​ primary law dealing with contracts Restatement of Contracts: ● Summary of the basic law of contracts ● Written by american Law Institute ● Not statutory law (so judges don’t have to follow it) ○ NOT legally binding​ but very influential on judges Uniform Commercial Code: ● Is LAW (judges have to follow it) ● Legally binding ​ ● State law not federal law ​ ● Statutory law ● Article 2: ​Sales ○ Contract for the sale of personal property (not land, not services) ○ Adopted by almost every state ○ Federal court does uniform law (if applicable) even though it is state law Types of Contracts: Bilateral Unilateral ● 2 sides ● 1 side ● 2 promises ● 1 promise ● (most contracts are bilateral ● If one party performs act, other must compensate ● EX: Carbolic Smoke Ball Company vs. Carlile Important Terms: Expressed vs. Implied Expressed: not implied, explicitly stated Implied: not expressed, terms not explicitly stated but generally understood Expressed -------------------------------------- Implied ● Not implied ● Not expressed ● Explicitly stated ● Terms not explicitly stated but generally understood Executory -------------------------------------- Executed ● At least a portion of ● The act has been contract hasn’t been performed completely performed and contract is finished Void -------------------------------------- Voidable ● Never has legal​ effect ● At least i​ nitially had ● EX: murder contract legal effect but could be cancelled by one party Offer and Acceptance 1) Offer ● expression of a willingness to enter into a legally binding agreement ● 3 requirements: a. Legal Intent→ judged by ​ utward manifestation​ of that intent (whatever you make that person think you intended) b. Communication→ offeror------offeree, EX: Lucy vs. Zehmer pg. 164 c. Reasonably ​Definit​→ EX: nationwide case 2) Acceptance:​ completes the deal ● Bilateral: ​promise ​completes the deal ● Unilateral:​ ompleted act ➔ Offeror can revoke​ at anytime because because a promise to hold an offer open is ​NOT legally binding ◆ Must simply notify offeree 2 Exceptions 1. Offeree has ​bought time 2. Firm Offer Rule (Sales Contract Article 2): offeror must be ​ rofessional​ merchant,” must be​ in writing Common Law Rule: ​valid when mailed (upon deposit in mailbox) Counter Offer: ● Same as rejecting original offer ● Can’t change their mind and accept original offer “Mirror Image Rule:” ​the acceptance cannot change the terms of the offer; (any negation counts as a counter offer and ​therefore ​a reject) must ​“reflect”​ offer completely Consideration:​ the price which a person charges for a promise “Bargained-for Exchange:” p ​ arties have both willingly entered into contract Adequacy of Consideration: c ​ ontract must be executed as was discussed Pre-existing Duty Rule: ​not​ consideration if you ju​ estate an obligation you already have Past Consideration Rule: n ​ o consideration if they offer you something for something you’ve already done 3) Capacity Minor→ ​contracts with minors ​ re voidable​ y the ​minor only​ (must act while still a minor or within a reasonable amount of time after becoming an adult) intoxication→ ​not ​a viable defense usually because it’​ ard to prove + must be extreme ( ​ not just “impaired”) to invalidate contract Insanity ● in LAW→ ​a person (maybe elderly) is presented to court and ruled mentally incompetent ● in FACT→ ​nothing done until insanity results in contract which is obviously ridiculous so the family goes to court to prove insanity/mental incompetency 4) Legality 1. Gambling a. Is a ​ rime​ in Arkansas b. Basic Rule​-contracts are not enforceable by way of action or defense (rule of “in pari delicto”=equally at fault)→ the court will leave the parties where they find them 2. License a. Only if considered “regulatory” b. If someone promotes himself as having a license without having a license, all contracts are unenforceable 3. Exculpatory Clauses a. Waiver, disclaimer→ waives liability b. Is enforceable except when it isn’t c. EX: ​No Lifeguard, Swim at Own Risk Non-Compete Clauses ➔ Covenant not to go to competing business ➔ Basic Rule​→ ARE legal IF 1) Reasonable business p ​ urpose 2) Limited​ as to ​ ime​ (some states specify time limits, AR does not) 3) Limited ​as to ​area: a) If area is ​overly broad: i) Entire contract is invalidated ii) OR area contract is changed (​blue pencil rule→​ now in AR) Statutes of Frauds: ​Must be written and signed by defendant for plaintiff to have valid case Parole Evidence Rule: ​oral agreements cannot overrule what is in writing UETA: ​contracts cannot be denied legal effect solely because they are in electronic form, UETA Sec. 107


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