9 contracts nature and terminology


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9 contracts nature and terminology

  1. 1. Chapter 9 Contracts: Nature and Terminology
  2. 2. Introduction <ul><li>Promise is a declaration that something will or will not happen in the future. </li></ul><ul><li>What is a Contract? </li></ul><ul><ul><li>Contract is an agreement (based on a promise) that can be enforced in court. </li></ul></ul><ul><li>What law governs? </li></ul><ul><ul><li>Service contracts - common law of contracts. </li></ul></ul><ul><ul><li>Sale and lease contracts - Uniform Commercial Code (UCC). </li></ul></ul>
  3. 3. §1: Function of Contract Law <ul><li>Designed to provide stability and predictability, as well as certainty, for both, buyers and sellers in the marketplace. </li></ul><ul><li>Necessary to ensure compliance with a promise or to entitle the innocent party to some form of relief. </li></ul>
  4. 4. §2: Definition of a Contract <ul><li>A contract is a: </li></ul><ul><ul><li>Promise or set of promises, </li></ul></ul><ul><ul><li>For breach of which, </li></ul></ul><ul><ul><li>The law provides a remedy, or </li></ul></ul><ul><ul><li>The performance of which the law in some way recognizes as a duty. </li></ul></ul><ul><li>Objective Theory of Contacts. Circumstances to determine intent of parties. </li></ul>
  5. 5. §3: Elements of a Contract <ul><li>Agreement (Offer and Acceptance). </li></ul><ul><li>Consideration. </li></ul><ul><li>Contractual Capacity. </li></ul><ul><li>Defense: </li></ul><ul><ul><li>Legality. </li></ul></ul><ul><ul><li>Genuineness of assent. </li></ul></ul><ul><ul><li>Form. </li></ul></ul>
  6. 6. §4: Types of Contracts <ul><li>Bilateral v. Unilateral. </li></ul><ul><ul><li>Bilateral - Offeree must only promise to perform (“promise for a promise”). </li></ul></ul><ul><ul><li>Unilateral - Offeree can accept the offer only by completing the contract performance (“promise for an act”). </li></ul></ul><ul><ul><ul><li>Irrevocable: Offer cannot be revoked once performance has begun. </li></ul></ul></ul>
  7. 7. Types of Contracts <ul><li>Express v. Implied In Fact. </li></ul><ul><ul><li>Express : Words (oral or written). </li></ul></ul><ul><ul><li>Implied In Fact : Conduct creates and defines the terms of the contract. Requirements: </li></ul></ul><ul><ul><ul><li>PL furnished good or service </li></ul></ul></ul><ul><ul><ul><li>PL expected to be paid </li></ul></ul></ul><ul><ul><ul><li>DEF had chance to reject and did not. </li></ul></ul></ul><ul><ul><li>Case 9.1 : Homer v. Burman (2001). </li></ul></ul>
  8. 8. Types of Contracts [3] <ul><li>Quasi Contracts - Implied in law. </li></ul><ul><ul><li>Fictional contracts created by courts. </li></ul></ul><ul><ul><li>Imposed on parties for the interest of fairness and justice. </li></ul></ul><ul><ul><li>Equitable remedies. </li></ul></ul><ul><ul><li>Quantum Meruit. </li></ul></ul><ul><li>Case 9.2: Industrial Lift v. Mitsubishi (1982). </li></ul>
  9. 9. Types of Contracts [4] <ul><li>Formal v. Informal. </li></ul><ul><li>Executed v. Executory. </li></ul><ul><ul><li>Executed - A contract that has been fully performed on both sides. </li></ul></ul><ul><ul><li>Executory - A contract that has not been fully performed on either side. </li></ul></ul>
  10. 10. Enforceability <ul><li>Valid. </li></ul><ul><ul><li>Elements: Agreement, consideration, contractual capacity, and legality. </li></ul></ul><ul><li>Void. </li></ul><ul><ul><li>No contract. </li></ul></ul><ul><li>Voidable (unenforceable). </li></ul><ul><ul><li>Valid contract can be avoided or rescinded. </li></ul></ul>
  11. 11. §5: Interpretation of Contracts <ul><li>Plain Meaning Rule: Courts give terms their obvious meaning. </li></ul><ul><li>Ambiguous Terms. If terms are ambiguous, court will attempt to interpret ambiguous contract terms in a reasonable, lawful, effective manner. </li></ul><ul><ul><li>Contracts are interpreted as a whole. </li></ul></ul><ul><ul><li>Terms negotiated separately given greater weight. </li></ul></ul><ul><ul><li>Ordinary, common meaning given. </li></ul></ul>
  12. 12. Interpretation of Contracts <ul><li>Ambiguous Terms (cont’d) </li></ul><ul><ul><li>Specific wording given greater weight than general language. </li></ul></ul><ul><ul><li>Written or typewritten given greater weight than preprinted. </li></ul></ul><ul><ul><li>Ambiguous terms interpreted against the drafter. </li></ul></ul><ul><ul><li>Trade usage, prior dealing, course of performance to allowed to clarify. </li></ul></ul><ul><li>Case 9.3: Dispatch Automation v. Richards (2002). </li></ul>
  13. 13. Law on the Web <ul><li>‘ Lectric Law Library on Contracts. </li></ul><ul><li>Legal Research Exercises on the Web. </li></ul>