Transcript Contracts 9-1 Introduction Contracts are the basis of many daily activities. They provide the means for individuals and businesses to sell and otherwise transfer property, services, and.

Contracts
9-1
Introduction
Contracts are the basis of many daily
activities.
They provide the means for
individuals and businesses to sell and
otherwise transfer property, services,
and other rights.
Without enforceable contracts,
commerce would collapse.
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A contract is an
agreement that is
enforceable by a
court of law.
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Introduction (continued)
Contracts are voluntarily entered into
by parties.
The terms of the contract become
private law between the parties.
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Legally Enforceable Contract
If one party fails to perform as
promised, the other party can use
the court system to enforce the
contract and recover damages or
other property.
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Parties to a Contract
Every contract involves at least two
parties.
Offeror – the party who makes an
offer to enter into a contract.
Offeree – the party to whom an
offer to enter into a contract is
made.
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Parties to a Contract
Offer
Offeror
Offeree
Acceptance
Offeror makes an
offer to the offeree
Offeree has the power
to accept the offer
and create a contract
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To be an enforceable contract, four basic
requirements must be met:
Agreement
Lawful Object
Consideration
Elements
of a
Contract
Contractual
Capacity
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Elements of a Contract (continued)
Agreement
– There must be agreement between the
parties.
– This requires an offer by the offeror and
an acceptance of the offer by the
offeree.
– There must be mutual assent by the
parties.
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Elements of a Contract (continued)
Consideration
– The promise must be supported by a
bargained-for consideration that is
legally sufficient.
– Gift promises and moral obligations are
not considered supported by valid
consideration.
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Elements of a Contract (continued)
Contractual Capacity
– The parties to a contract must have
contractual capacity.
– Certain parties, such as persons
adjudged to be insane, do not have
contractual capacity.
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Elements of a Contract (continued)
Lawful Object
– The object of the contract must be
lawful.
– Contracts to accomplish illegal objects
or contracts that are against public
policy are void.
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Defenses to the Enforcement of a
Contract
Genuineness of Assent
– The consent of the parties to create a
contract must be genuine.
– There is no real consent if the consent is
obtained by:
Duress
Undue influence
Fraud
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Defenses to the Enforcement of a
Contract (continued)
Writing and Form
– The law requires that certain contracts
be in writing or in a certain form.
– Failure of these contracts to be in
writing or be in proper form may be
raised against the enforcement of the
contract.
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Sources of Contract Law
The Common Law of Contracts
– Contract law developed primarily by
state courts.
The Uniform Commercial Code
(UCC)
– Comprehensive statutory scheme that
includes laws that cover aspects of
commercial transactions.
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Sources of Contract Law (continued)
The Restatement of the Law of
Contracts
– Compilation of model contract law
principles drafted by legal scholars.
– The Restatement is not law.
– However, lawyers and judges often refer
to it for guidance in contract disputes.
– Currently in its second edition.
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Classifications of Contracts
Bilateral Contract
A contract entered
into by way of
exchange of
promises of the
parties.
“A promise for a
promise.”
Unilateral Contract
A contract in which
the offeror’s offer
can be accepted
only by the
performance of an
act by the offeree.
“A promise for an
act.”
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Classifications of Contracts
(continued)
Express Contract
An agreement that
is expressed in
written or oral
words.
Implied-in-fact
Contract
A contract where
agreement
between parties
has been inferred
from their conduct.
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Classifications of Contracts
(continued)
Objective Theory of Contracts
The intent to enter into an express or
implied-in-fact contract is judged by
the reasonable person standard.
The subjective intent of a party to
enter into a contract is irrelevant.
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Classifications of Contracts
(continued)
Quasi-Contracts (Implied-in-Law
Contracts)
Allows a court to award monetary
damages to a plaintiff for providing
work or services to a defendant even
though no actual contract existed
between the parties.
Intended to prevent unjust
enrichment and unjust detriment.
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Classifications of Contracts
(continued)
Formal Contracts
Contracts that require
a special form or
method of creation.
– Contracts Under
Seal
– Recognizances
– Negotiable
Instruments
– Letters of Credit
Informal Contracts
No special form or
method is required
for their creation.
Fully enforceable
and may be sued
upon if breached.
– Leases
– Sales Contracts
– Service Contracts
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Classifications of Contracts
(continued)
Valid Contract
Contract that
meets all of the
essential elements
to establish a
contract.
Enforceable by at
least one of the
parties.
Void Contract
A contract that has
no legal effect.
Neither party is
obligated to
perform.
Neither party can
enforce the
contract.
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Classifications of Contracts
(continued)
Voidable Contract
Unenforceable
Contract
Contract where one
or both parties
A contract where
have the option to
the essential
avoid their
elements to create
contractual
a valid contract are
obligations.
not met.
If a contract is
However, there is
avoided, both
some legal defense
parties are
to the enforcement
released from their
of the contract.
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Classifications of Contracts
(continued)
Executed Contract
A contract that has
been fully
performed on both
sides.
A completed
contract.
Executory Contract
A contract that has
not been fully
performed by
either or both
sides.
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