Classifications
Classifications*either one of these
Valid: binding and enforceable agreement meeting all requirements
Voidable: When one or more persons can elect to get out of a contract
Void: There is no contract; lacking an element
Unenforceable: valid but for some reason cannot/will not be enforced in court
Illegal: made for an illegal purpose
AND
Bilateral: Promise for promise
Unilateral: Promise for act |
Elements
Requirements for a contract
1. An agreement between 2 or more competent parties
2. based on genuine agreement
3. supported by consideration
4. not for illegal purposes
5. sometimes must be in writing
Definitions
Offer: A proposal to make a contract. Must have definite proposal [certain not invitation], made with intent to contract, communicated to the offeree.
Termination: Offers are valid until terminated. Possible through rejection, counteroffer, acceptance, etc
Acceptance: Unconditional acceptance in method specified by offeror |
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Problems Under Acceptance
Fraud:*requires all below
Can rescind contract and get damages if occurrs
1.Misstatement of a material fact
2.Made with knowledge of falsity [or with reckless disregard of its truth]
3.With intention to deceive
4.Reliance by the other party
5.Resulting to injury to the other party
Misrepresentation:
Like fraud but no intent to deceive.
Can rescind contract but usually no damages |
The difference between fraud and misrep is intent
Consideration
That which is bargained for
Requires a legal detriment or legal benefit to each parties (doesn't mean you have to get something)
No requirement that money be involved
Bargain need not be fair |
Capacity to Contract
Parties must be legal age w/o mental disability or incapacity
Minors: contracts voidable by minors
NOT voidable by the adult in the contract
Disaffirm: May avoid both executed and executory contracts during minority and w/i a reasonable time after majority. Must return whatever received
Insanity: Do not understand the nature and consequences of the act when contracting
Adjudicated: contract void
Not adjudicated: voidable
Intoxication: Must be so terribly drunk that they don't know about contract execution, not just a few drinks |
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Statute of Frauds (writing req for an agrmt)
If action cannot be performed w/i a year |
Sale of interest in real estate, lease >1 year |
Sale of goods >$500 |
Answer for the debt of another |
Requires: Names of those bound, Subject & Consideration, and Signature of one attepting to enforce against |
Commonly Forgotten
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Parole Evidence Rule assume contract completely on its face, no prior agreements not contained in written contract
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Accord and Satisfaction Mutual agreement to change contract
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Contract Performance
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Anticipatory Repudiation One party says won’t or can’t perform before performance date
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Discharge Death, physically incapable, becomes illegal, bankruptcy
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Rescission Both agree to forget it
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Remedies for Breach of Contract
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Damages |
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Compensatory, nominal, or liquidated Yes
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Punitive Usually not (unless accompanied by tort or fraud)
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Compensatory Damages
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Compensate for losses caused by breach of contract |
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Special Damages: must be reasonably foreseeable and specifically proved Profits, future business, costs to replace/repair, medicals, lost wages, etc
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General Damages (rarely for breach of contract) Pain and suffering, mental anguish, hedonic damages, etc
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Rule of Mitigation: Must do what is reasonable to avoid or minimize damages
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Benefit Rule: If violation also provides a benefit, then must reduce recovery by benefit
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Equitable Remedies
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Specific Performance: Where there is not adequate remedy at law Usually unique not fungible goods (Rare/special Always land) Not personal service Only available against seller: can make sell
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Fungible goods: goods that are interchangeable for commercial purposes, and whose properties are essentially identical (Ex: dollar bills, bond/shares, etc)
Nominal Damages
When it really is the principle of the thing and not the money |
You don’t NORMALLY sue for nominal damages, they happen when you win, but the jury doesn’t think you deserve a significant award of damages. |
Bailment
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The contractual transfer of a asset or personal property from a bailor to a bailee for a certain period of time |
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Mutual benefit bailment Bailee liable for negligence in its care
Bailor must warn of known dangers
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Gratuitous bailment for benefit of bailor Bailee liable for gross negligence in its care
EX: “take care of my dog while I’m on vacation”
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Gratuitous bailment for benefit of bailee Bailee liable for slight negligence in its care EX: “can I borrow your lawnmower to mow my yard?”
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Bailee cannot use bailed object outside of bail agreements Usually absolute liability if outside
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Other requirements Duty to return object Can't use outside of bailment limits
Usually not liable for wear and tear
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