ContractsA contract is based on promises .docx

Contracts
A contract
is based
on promises
voluntarily
made
Do all
promises
give rise to
contractual
obligations?
OfferAcceptanceConsiderationCapacityLegality

Unilateral and bilateral Expressed and impliedValidVoid and
voidableUnenforceable
PROMISE
FOR AN
ACT

Reward is
an example
PROMISE
FOR A
PROMISE
ART AGREES TO PAINT HOUSE AND BOB AGREES TO
PAY $1,000.
Bill and Linda meet at a party. He was
74, and she was 49. A month later, they
started to talk about marriage. Linda was
concerned about quitting her job, and Bill said he would give
her whatever she needed. One day, she walked into the

bathroom with a handwritten note containing financial terms for
a marriage, and he signed it. They got married, but Bill filed for
divorce 1 ½ years later.
What is the issue?
Does the contract given to and signed by the husband in the
bathroom constitute a valid and enforceable agreement that was
freely
entered into?
What kind of agreement was it, unilateral or bilateral?
It was unilateral because it was an agreement to marry.

How did the court rule?
To be enforceable, the agreement must be freely entered into
without duress or undue influence. When marriage is
contemplated, the parties must do so knowing of the assets of
the other. In this case, the parties never disclosed their assets,
liabilities or income. The husband also never had the chance to
consult an attorney. Therefore, the agreement is not
enforceable.
Stated in direct
termsCan be written
or oral
I will sell you my sports car for $25,000

When you
go to the
doctor, you
impliedly
agree to pay
for services.
Plaintiffs cared for the decedent for
several months before he died. They
claimed they were promised payment
for services. Defendant maintains that
they are a family member so services
were gratuitously rendered.
Contract implied-in–fact is to prevent
unjust result. Normally, there is a presumption
that services rendered by a family member
are free. However, contract may be implied
when service are performed with expectation

of payment. In this case, plaintiffs can point
to no evidence that they agreed upon a
price with the decedent, what form
payment would take, or when payment
would be made, so a contract should
not be implied.
Satisfies all
requirements of
an enforceable
agreement
Binds one party
but gives the other
option to withdraw

Element of
contract has
no legal force
or effect
ILLEGAL
CONTRACT
Satisfies elements of
a valid contract but
won't be enforced
by court

Most contracts
are oral in nature
and can be enforceable.
The major problem with oral contracts is proving the existence
of the agreement.
Oral contracts require the courts to assess the credibility of the
parties.
Are agreements where
people pool their money
to buy lottery tickets

enforceable or illegal
betting contracts?
Two sisters signed an
agreement that they would
share the winnings in
a lottery. A winning ticket
was bought for $500,000 and
one of the sisters did not
get a share and sued.
What is the law
in Connecticut
on betting
contracts?
All wagers in which
the consideration
is money won or
bet shall be void.

What did
the plaintiff
argue?
The agreement was not a betting contract but a mutual
agreement to share profits from legal forms of gambling.
What did
the court
say?
The law was not applicable to
this case because the parties
were not betting but promising to
share equally in the winnings
they received from
legalized gambling.

Proposal by one party to
another manifesting an
intention to enter into a
valid contract
Intent to contractTerms must be definiteOffer must be
communicated
This is an
objective

test
Plaintiff purchased 15 cans of Pepsi
and then borrowed $700,000
which he sent to Pepsi in exchange
for the jet. Pepsi sent the money
back claiming that their ad
was only a joke.
“No objective person could reasonably conclude that
commercial actually

offered consumer a Harrier Jet. The possibility that it could be
bought
for $700,000 was the first clue that
the deal was too good to be true.”
Subject matterQuantityPrice
Advertisement

at a stated price is
merely invitation
to negotiate
FRAUDULENT
ADVERTISING
IS ILLEGAL
How long does an offer stay open?

An offer can be revoked anytime before its acceptance, or it can
terminated by its own terms.
I will give you 5 days
to make up your mind. At the end of that period, the offer
terminates.
An acceptance is
a manifestation
by the offeree to
be bound by the
terms of the offer.
Acceptance is valid

only when it has
been communicated
to the offeror and
is unconditional.
I can’t afford
$1,000 but I will
give you $800.

A counter offer rejects
the original offer and
becomes an offer that
the other person can
accept or reject.
The defendant refused to pay
on a life insurance policy
following a fatal car accident.
The carrier argued that a
contract was not formed
before the husband's death.
The defendant offered accidental death
insurance with a mortgage.
Once enrolled, the insured would
get a certificate that had an effective date.
The plaintiff mailed the form on April 5 and
was killed on April 22. Carrier argued that
form was only an offer to contract that

was accepted with the issuance of the
policy.
An insurance application is an offer which the insurer may
accept or reject. In this case, however, a reasonable person
would have thought that the enrollment form was the offer that
she would accept by completing and mailing the form back.
This was an enrollment form and not an application.
constitute

acceptance?
Can
CAN I MAIL YOU AN INSURANCE POLICY AND SAY “IF I
DON’T HEAR FROM YOU, WE HAVE A DEAL”?
Offeror has no power to impose duty upon offeree to act.
RECORD CLUB

If a person makes
the highest
bid at an auction, is that
bid a mere offer or
an acceptance?
Well…it depends.
With ReserveWithout Reserve

2/1 make offer
2/2 receive offer
2/3 mail acceptance
2/4 mail revocation
2/5 receive revocation
2/6 receive acceptance

What is the effect of a fax
to the agent of a seller to the agent of the buyer when there is
no record of the receipt for the transmission?
The agent for the buyer claims that he faxed an agreement
of sale to the seller but had no
proof that the transmission went through. The seller claims that
he called and said
that he no longer wanted to sell the property.

What is
the law
on faxes?
Acceptance by telephone or
fax is governed by the same
rules as when the parties are in
each other’s presence. The
communication must be
substantially instantaneous and
the communication must
be two way.

For the communication to be two-way, one
party must be able to readily determine that
the offeree is aware of the communication. If
not, then the mailbox rule will apply. Since
there was no proof in this case that
the fax was sent, the burden is on the party
who sent the transmission to prove it. The
burden has not been meet in this case, so
there is no contract.

THAT SOMETHING
MUST HAVE
LEGAL VALUE
BENEFIT
CAN BE A
SERVICE

BENEFIT DOES
NOT HAVE
TO BE
ECONOMIC

Illusory promiseMoral obligationPast consideration
An illusory promise
is one in which the act of performance is left solely up to one
party.
I will buy as many books from you
as I want at $10
a book.

A moral obligation is insufficient to support consideration.
A parent promise to give his son $1,000
out of love and affection.
Past consideration is a current promise to pay for something in
the past.
Jim promises on his death bed to give John $10,000 for the help
he has given over the years.

BUILDER AGREED TO DO
NOTHING MORE FOR
PROMISE TO PAY
MORE MONEY

Is the cosigner of a loan, primarily or
secondarily liable
in case of a default?
SuretyGuarantor

I will give
you $100 on
your birthday

Elvis agreed to pay for the divorce of the mother of his former
girlfriend and to pay
off the mortgage on her home.
Plaintiff then filed for divorce and

agreed to give her husband the equity in
her house for his turning over the deed
to her. Presley then died before
paying the obligations and the Estate
refused to honor the agreement.
Why is Elvis’ promise to pay
the obligations of his mother’s girlfriend
supported by
consideration?

A promise which a person
should reasonably expect to
induce action or forbearance
on the part of the other and
which does induce such
action is binding if injustice
can be avoided only by
enforcement of the promise.
While Presley’s promise induced
the plaintiff to assume the
mortgage as part of the
settlement agreement, it was

not binding until approved
by the court. So, the plaintiff's reliance was not justified.

A party who does have capacity to contract but lacks mutual
assent to bargain.
Mere psychological
or emotional problems are not enough.

CHILD MUST DISAFFIRM
WITHIN REASONABLE
TIME AFTER
REACHING MAJORITY

Milicic was an 18 year old basketball
player and the second round pick of the
Detroit Pistons. He entered into an endorsement contract when
he was 16 whereby the defendant would pay Milicic money and
products in exchange for endorsements. Four days after he
turned 18, Milicic tried to buy out his contract, but the
defendant refused. He then disaffirmed the contract and began
returning everything he had received.
Pennsylvania allows minors
to disaffirm a contract unless
it is for a necessary as long
as it is done within a

reasonable time after
reaching majority.
Milicic was a child living
in a foreign country when
he signed the contract.
Minors should not
be bound by their
mistakes.
.

An illegal contract is
one that calls for the
performance of a
crime, tort or is against
public policy.
An illegal
contract is
void
Is an unlicensed
entity that performs
services without a
license void?

The person may
be precluded from
recovering a fee
for his services.

Farrell was an architect who worked on a condo project of the
defendant for 25% of the profits. Some of the work was done in
Michigan where he was licensed, and some of the work was
done in Idaho were he was not licensed. Farrell was fired, and
the defendant refused to pay him, claiming that the contract was
illegal since Farrell was not licensed in that state.
Idaho does not allow a court
to aid a party to an illegal
contract. The state requires
an architect to be licensed
in order to practice in that
state.

.
Such statutes must be narrowly
construed. Since Farrell was not
licensed in Idaho before 2/17/04,
service rendered before then were
illegal. His services after getting
a license were legal, and he is
entitled to payment for them.
PROBLEM THREE - B

Estelle played in a tournament.
A hole in one was rewarded
with a car. Estelle’s ball was
rolling into the hole when a frog
jumped out and hit the ball. The
judge disallowed
the shot.

Contract says judge
shall be sole arbiter
of dispute

Contest rules say judge
makes final decision over
disputes, and he ruled the shot
no good. “In and through”
means “completely through.”
The decision of the judge is binding
unless fraud, gross mistake
or lack of good faith.
ELECTRONIC SIGNATURE IN GLOBAL
AND NATIONAL COMMERCE ACT

Electronic
signature
is valid
Specially made goodsGoods received by buyerPerson admits
oral contractUnjust enrichment

The purpose of the Code is to
make uniform laws involving
commercial transactions
involving sales, banking
and secured transactions.

The Code has
nothing to do
with real estate
transactions.
Article Two deals
with the sale
of goods.

A merchant is
a person who deals
with goods of
that kind.
elements

elements
As a general rule, an individual can engage in any type of
conduct he or she wishes unless there is a law prohibiting those
actions.
elements
elements
Crimes against businesses include: shoplifting, robbery,
burglary, and employee theft, which cost businesses billions of
dollars annually.
elements
Offenses committed by people in business dress.
Not usually physical violence but rather unethical activity,
fraud, or financial theft.
elements

elements
Crawford was arrested walking from a commercial building that
had a courtyard. The police received a report of a burglary in

progress at the building. Defense argued that it was not burglary
because of the courtyard.
elements

What is the
law in
California
on burglary?
elements

Every person who enters any room, shop or building with the
intent to commit any felony is guilty of burglary
elements

The courtyard is an integral part of the building. The offices
had four walls and a roof and the only entry was though the
courtyard that had locked gates on each end.
elements

.
Consider
the following two cases…
A person gives his ATM card to a co-worker to withdraw $20
from his checking account. Instead, the
roommate withdraws $500.
elements

What crime has
been committed?
elements
Taking and carrying away the property of another without
consent and with the intent of depriving the other of the goods
permanently
Larceny

Refers to
possession
and not
ownership
elements

Embezzlement occurs when someone takes property entrusted to
him or her with the intent to deprive the owner of the property.
elements

An embezzler is
lawfully entrusted with the property as opposed to a thief who
improperly obtains possession of the asset.
elements

THEFT PLUS FORCE OR THREAT OF FORCE
elements

A pick pocket
is usually
not robbery,
but a purse
snatch in
which the
victim is knocked
to the ground
would be.
elements

Unlawful to buy
or receive stolen
goods knowing that
goods are stolen
elements
This crime occurs when one uses the Internet to sell property
gained through unlawful means.
elements

also known as SHOPLIFTING
Retail Theft
elements
elements

Using the victim’s personal
information to obtain a financial
advantage such as the
misappropriation of a credit
card or money from
a bank account.
elements
Now a federal crime under the Identify Theft
and Assumption
Deterrence Act
elements
elements

Birdsong burst through a gate separating the tellers from the
customers. He slammed the gate closed and threw a printer to
the ground before ordering the tellers to stand up and give him
the money from the teller drawers.

A person is guilty of robbery when, in the course of committing
theft, he uses or threatens the use of physical force on another
person with intent to accomplish theft
elements

The defendant’s conduct must be objectively menacing. When a
defendant demands money in making the demand and acts
aggressively toward inanimate objects nearby, that behavior can
satisfy the requirement for robbery.
elements
elements

Agreement between
two or more people
to commit a crime or
to do a lawful act in
an unlawful manner

elements
Allows the government
to file charges against
anyone who has participated

in the planning or commission
of a crime and to hold
each liable for the actions
of the other.
MUST HAVE
TWO PEOPLE AGREE
elements

MUST DO
SOMETHING IN
FUTHERANCE OF
THE CONSPIRACY
elements

Is it a defense that
the person to the
conspiracy was too
drunk to have formed
the intent to conspire
to commit the crime?

The court in Hankinson v. Wyoming said that whether the
defendant was too drunk to form the requisite intent to commit
the crime is a jury
question. Here, the defendant made decisions that required some
presence of mind. Therefore, the
defendant was guilty as charged.
elements
elements

Illegal actions
committed in
a business
setting
elements

This includes such things
as computer fraud, health
care fraud, securities fraud, insider trading, theft of trade
secrets, embezzlement, and
tax evasion.
elements

.
Have you
ever heard of
“payola” or
“kickback?”
elements
elements

.
Bribery is the act
of offering something
of value to another with
the intent of influencing that
person’s opinion or to have
something done in return
by that entity.
elements

Examples would be
giving money to a
juror to influence the
vote, or paying a cop to
overlook a crime.
elements

The term originated
during the days of Al
Capone when organized
crime owned Laundromats
to dispose of money obtained
by illegal means.
elements

The mob needed to show a
legitimate source for their
funds, so this was done by
buying legitimate businesses
that would commingle the
illegal earnings with the
revenues received from
these businesses.
elements

Today, the law is called the
Money Laundering Control Act.
Its purpose is to
go after the third party
who claims ownership
to money obtained through
illegal means.
elements

A person charged with the offense does not have to commit the
crime which generated the illegal revenue.
elements
elements

Facts:
Awada owned a bar. He placed bets with Sabby. Sabby took
checks given to him by another bettor to Awada who deposited
the checks in his account ad gave the cash to Sabby
elements

There is absolutely no requirement that a defendant also be
involved in the underlying crime. Only needs to know
transaction is to conceal.
elements

Insider trading occurs
when corporate insiders,
such as officers, directors
and employees,
buy or sell stock in
their own companies.
elements

occurs when
a person buys or sells stock
while in possession of
information about the stock
that has not been made public .
elements

Would it be illegal if a
CEO tells a friend about
something in the company that
has not been made public and
the friend sells his shares of
stock in that company?

Would it be illegal if a
a bank employee comes
into non-public information
about a business while
processing a loan application
and buys the stock
in that business?
elements

There are two theories
of insider trading: The classical theory
and
2) The misappropriation
theory.
elements

The classical theory
imposes liability on
insiders who trade on the
basis of confidential

information obtained
by their positions
within the company.
elements

The President of a firm
knows that the FDA is not
going to approve a cancer
drug and immediately
sells his stock in the
company before the news is
made public.
elements

The misappropriation theory
imposes liability on
outsiders who trade on the
basis of confidential
information obtained
by reason of their relationship
with the person possessing
the information.
elements

“Tipping”
- providing confidential
Information to someone outside of the
Organization who then trades on
that information
elements

Tyler’s Sports Bar and Grill
needs to increase its revenues so
it decides to build a microbrewery.
A loan is needed, but the bar’s
financials will not support the
application. Joe Roberts
changes the financials
to reflect higher revenues.
Has he done anything illegal?
elements

Suppose you want to buy a home but
need to show extra income on your
loan application to qualify for
a mortgage. Therefore, your
father gives you a letter stating
that you work at his business
and make $25,000 a year when
you don’t work there. Is this illegal?
elements
elements

This crime occurs whenever a person makes a false statement of
a material fact or overvalues property for purposes of inducing
a bank to take action.
elements

Does the bank have to rely
on the false statement for
a person to be guilty
of the crime?

No. Whether the bank
relied on the statement
is irrelevant. The reason behind the law is that false statements
to federally insured banks can mislead government auditors.
elements

Anything wrong with filing
a bankruptcy petition, overstating
your debts or understating
your assets? After all, you can’t
pay off your creditors, so why
does it matter?
elements
elements

This crime occurs when a person
devises a scheme to defraud by:
filing a false bankruptcy
statement; filing a false document
in a bankruptcy proceeding; or
making a fraudulent representation
or claim in a bankruptcy case.
elements

This crime requires the accused to
have engaged in two or more instances
of racketeering and have
directly invested
in, maintained, or participated in a
criminal enterprise affecting
interstate or foreign commerce.
elements

Activities covered include:
Murder, kidnapping, gambling
arson, robbery, bribery, extortion,
Mail and wire fraud, obstruction of
Justice, witness intimidation,
Money laundering, embezzlement,
Etc.

Scheme to defraudWhich involves the use of the mails
Or a wire communication
3) For the purpose of executing
the scheme.
elements
elements

Even though a corporation
is a separate entity from
its officers and employees,
it may still be held liable
for the criminal actions of
its employees committed
within the scope
of the employment.
elements

Criminal liability arises
under the doctrine of respondent
superior. In other words, a
corporation can’t act on its
own, so it acts through its agents
and employees. Therefore, it
should be liable for those
criminal acts committed on
behalf of the business.
elements

When is an employee
acting within the
scope of authority for
a corporation to be liable
for criminal
activity?
elements

An employee is acting within the scope of
employment if the (1) the employee
has the authority to do the particular
corporate business which was
conducted criminally; (2) the employee
was acting in part in furtherance of

the business; and (3) corporate
management has authorized or tolerated
the criminal acts.
elements

A classic case would
be a bartender
serving alcohol to
a minor.
elements
elements

Should a fraternity be
criminally liable if one
of its members puts beer
in a soda machine
at a pledge party and
a minor buys a beer?
elements

A fraternity held a rush at its
house, and the members put beer in a
soda machine. A 19 year old
then bought a beer. The fraternity
had voted not to provide beer at
rush, and the machine had been
moved to an area in which
the defendant did not have control.
elements

What did the
fraternity
argue?
elements

The individuals
responsible for making
beer available for sale to the
minor were not acting on
behalf of the fraternity or
within the scope of
their authority.

The key for corporate liability is whether the agent is acting
within the scope of apparent authority. This occurs when the
principal conducts itself in a way to cause a third person to
believe that the agent is authorized to act. Here, the defendant
had
control over the soda machine and apartment. They also had
interest in the proceeds, and a fraternity member was making
change for the machine. Many of the guests at the party were
under 21, so they should have known.
elements
elements
elements

elements
elements
elements
elements

elements
elements
elements
elements
elements
elements
elements

HANDWRITING
elements
elements
elements
Marra, an accountant, refused to comply with an IRS subpoena
asserting 5th amendment rights. He was not being investigated,
he was the accountant for a company being investigated
elements
Are Fifth Amendment rights
violated since turning
Over documents would
Incriminate him?

elements
Marra must respond to each question and request and raise his
5th amendment rights to each.
elements
elements
The victim said that
her assailant wore a
ski mask but had a tattoo
of a shark on his shoulder.
District Attorney wants
the defendant to remove
his shirt in court.
elements
Can Christopher be
forced to take off his
shirt in court for an
in-court identification,
or does that violate his

Fifth Amendment rights?
elements
While the in-court
identification may
incriminate him, he must
remove his shirt since
it is not testimony
elements
This Amendment deals with the law of search and seizure
elements
Prohibits unlawful search and seizures
Warrants must be issued upon probable cause
elements
Generally, the police
need a search
warrant to search
a person or
his property.

elements
Officer must get
written authorization
in form of search
warrant based
upon probable cause.
elements
Search Warrant
is specific as to
location and item.
elements
elements
POST V. RUTTER
elements

After receiving a complaint of an administrative violation, the
defendant attempted to inspect plaintiff’s business. Plaintiff
brought suit against defendant for violating his 4th amendment
rights
elements
Ohio’s statute authorizes warrantless searches. The defendant
had a lessened expectation of privacy. Such searches are
necessary for enforcement of the act. Plaintiff’s rights were not
violated.
elements
RESEARCH PAPER GUIDELINES
The research paper should be based on newspaper articles which
have a subject matter related to material we have covered or
will cover in class. Please use a respectable newspaper as your
source, e.g., the Washington Post, the New York Times, etc.
Both papers are available online for free. Wikipedia is not a
reliable source. Further research should be conducted using
online resources that are listed at the end of Chapter One.
Through TuLibrary you can access LexisNexis Academic. Under
the legal category you can search cases and law review articles
on your topic.

The paper should include:
1) a summary of the article - providing some factual
background;
2) an explanation of how the article relates to class material,
expanding on what you learned in class - additional research is
required such as cases or law review articles on the topic; and
3) any observations or opinions you may have of the article and
the topic.
Other Requirements:
1) The papers must be at least 5 pages in length and no more
than 7 pages.
2) The papers must be double spaced and typed with one inch
margins. Please use Times New Roman 12 point font or
something equivalent.
3) Attach a copy of the article or articles which you use.
4) A bibliography is required listing all of your source material.
5) Topic approval is required by October 6, 2014.
6) The paper is due November 10, 2014.

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