Promise is a declaration that something will
or will not happen in the future.
What is a Contract?
Contract is an agreement (based on a promise)
that can be enforced in court.
What law governs?
Service contracts - common law of contracts.
Sale and lease contracts - Uniform Commercial
§1: Function of Contract Law
Designed to provide stability and
predictability, as well as certainty, for both,
buyers and sellers in the marketplace.
Necessary to ensure compliance with a
promise or to entitle the innocent party to
some form of relief.
§2: Definition of a Contract
A contract is a:
Promise or set of promises,
For breach of which,
The law provides a remedy, or
The performance of which the law in some way
recognizes as a duty.
Objective Theory of Contacts. Circumstances
to determine intent of parties.
§3: Elements of a Contract
Agreement (Offer and Acceptance).
Genuineness of assent.
§4: Types of Contracts
Bilateral v. Unilateral.
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”).
Irrevocable: Offer cannot be revoked once
performance has begun.
Types of Contracts
Express v. Implied In Fact.
Express: Words (oral or written).
Implied In Fact: Conduct creates and
defines the terms of the contract.
PL furnished good or service
PL expected to be paid
DEF had chance to reject and did not.
Case 9.1: Homer v. Burman (2001).
Types of Contracts 
Quasi Contracts - Implied in law.
Fictional contracts created by courts.
Imposed on parties for the interest of fairness and
Case 9.2: Industrial Lift v. Mitsubishi (1982).
Types of Contracts 
Formal v. Informal.
Executed v. Executory.
Executed - A contract that has been fully
performed on both sides.
Executory - A contract that has not been fully
performed on either side.
Elements: Agreement, consideration, contractual
capacity, and legality.
Valid contract can be avoided or rescinded.
§5: Interpretation of Contracts
Plain Meaning Rule: Courts give terms their obvious
Ambiguous Terms. If terms are ambiguous, court
will attempt to interpret ambiguous contract terms in
a reasonable, lawful, effective manner.
Contracts are interpreted as a whole.
Terms negotiated separately given greater weight.
Ordinary, common meaning given.
Interpretation of Contracts
Ambiguous Terms (cont’d)
Specific wording given greater weight than general
Written or typewritten given greater weight than
Ambiguous terms interpreted against the drafter.
Trade usage, prior dealing, course of performance to
allowed to clarify.
Case 9.3: Dispatch Automation v. Richards