Common Law Contracts Overview
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Common Law Contracts Overview

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Common Law Contracts Overview Common Law Contracts Overview Presentation Transcript

  • Common Law of Contract An Introduction to Common Law Of Contract
  • Analyzing Contracts➲ Formation ● Offer, Acceptance, and Consideration➲ Interpretation ● usually done using an objective standard, several interpretation tools and a few rules.➲ Performance ● the main focus here is whether there has been a breach.➲ Defenses ● usually dealt with as formation deficiencies.➲ Remedies – Almost always damages.
  • Formation➲ Three Requirements ● Offer ● Acceptance ● Consideration➲ NOTE – writing can be a formal requirement, but only if required by statute.➲ Questions concerning whether something is an offer or acceptance are dealt with using an objective test.
  • What is an Offer?Carbolic Smoke Ball Case Revisited
  • The Basic Model without revocation OfferAcceptance Rejection Counteroffer = rejection + new offerContract formed No Contracton terms of offer Offeror Offeror offeror Accepts Rejects makes c-offer K on terms of No and so on counteroffer Contract
  • Interpretation➲ Formation issues – objective test➲ Meaning of terms or missing terms ● Plain Meaning Rule ● Course of Dealings ● Trade Practices ● Trade Usage➲ Parol Evidence Rule – when written contracts can be modified by prior or contemporaneous oral or written agreements.
  • Performance and Breach: Main Issues➲ Conditions ● When does a contract go into effect ● Order of performance➲ What amounts to breach ● Material - failure to perform that permits the other party to the contract to either compel performance, or collect damages because of the breach ● Total or Fundamental- permits the aggrieved party to terminate performance and sue for damages ● Substantial Performance – when breaching party has standing to sue to compel performance from non-breaching party.
  • Formation Defenses➲ Operate to nullify a contractual relationship because of some defect in the contract formation process.➲ Equitable remedy of restitution is available to place parties in position they were in prior to contract formation.➲ Must distinguish between void and voidable contracts.
  • Common Defenses➲ Illegality➲ Lack of Writing (Statute of Frauds) ● also viewed as formation formality➲ Lack of Capacity➲ Mistake➲ Fraud➲ Duress➲ Undue Influence➲ Unconscionability
  • Illegality➲ Courts concern is protection of the public interest.➲ Two kinds: Illegal and Contrary to Public Policy ● Either the object or consideration is illegal. vs.
  • Effect of Illegality➲ General Rule – not enforceable ● parties share guilt, so court will simply not enforce.➲ Exceptions: ● Illegal portion is not “essence of bargain” = severance ● If a party repents and repudiates = restitution ● Where one party is not guilty of serious moral turpitude = restitution
  • Lack of Capacity➲ Two Kinds of Capacity Issues: ● Minority ● Mental➲ Court is concerned with protecting against exploitation.➲ These contracts are generally voidable by the person lacking capacity.➲ Restitution is available, but limited in cases dealing with minors.
  • Mistake Generally➲ Erroneous belief at the time of contracting that certain facts are true or false.➲ Defect in assent – party or parties would not have made K if mistake was known.➲ We are dealing with misinformation, not fraud or deception.
  • Elements of Mutual Mistake1.When K was made, parties shared erroneous belief concerning a fact.2.This fact was basic assumption of the K ➔ Neither party would have entered into the K had they known the truth.3.Mistake has material effect on exchange of performances.4.Adversely effected party did not bear the risk.
  • Misrepresentation➲ Assertion not in accord with the facts. ● Fraudulent – deliberate lie, made with knowledge that fact is false. ● Negligent – misinformation results from partys failure to check facts that he had a duty to ascertain. ● Innocent – genuine, albeit erroneous, belief by party making the assertion.➲ Consequences of misrepresentation depend on state of mind of party making assertion.
  • Duress➲ Nature of Duress ● Traditionally, actual force or an unlawful threat of death or bodily harm. ● Today, economic duress can also make a K voidable.➲ Determined by usual objective standard.
  • Elements of Duress➲ One of the parties must make a threat➲ The threat must be improper➲ The threat must induce the apparent assent, in that it leaves the victim no reasonable alternative but to agree.➲ A contract entered into under duress is voidable.
  • Undue Influence➲ Elements – victim must establish: ● he had a relationship of dependency and trust with the other party, believing that other party would not act contrary to victims interest. ● Dominant party improperly abused this position by unfairly persuading victim to enter into K adverse to his interests.
  • In Need of a General Doctrine➲ Cannot claim duress without threat. ● even when result of K is unfair.➲ Cannot claim undue influence without showing of relationship of trust.➲ Cannot claim fraud unless the misrepresentation and inducement are serious enough to satisfy elements
  • Unconscionability ➲ UCC & Restatement 2nd simply acknowledge courts ability to adjust Elements:UNFAIR BARGAINING Leading to UNFAIR K TERMS Procedural Substantive unconscionability unconscionability
  • Remedies➲ Damages➲ Equitable Relief ● Injunctions, Specific Performance, Restitution, Rescission
  • U.S. Contract LawAn Overview of Common Law & UCC Principles
  • Sources of Law➲ Common Law ● origin of contract law is judge made law.➲ Uniform Commercial Code ● every state has adopted some form of the UCC ● applies to “commercial contracts” such as the sale of goods.➲ Consumer Protection Laws ● regulates transactions with consumers and places additional requirements on contracts
  • When to Use UCC?➲ Article 2 applies to the Sale of Goods ● Not services ● Not real property ● If mixture, Court will look to see what the “predominate purpose” is.➲ Distinguishes between “merchants” and “consumers” ● Merchant = business professional ● Consumer = casual or inexperienced seller or buyer
  • What does the UCC Cover?➲ Formation➲ Interpretation & Obligations➲ Performance➲ Breach, Repudiation and Excuses➲ Remedies