BLAW 201: 2009: Notes

Contract Notes from 9/22/2009

Classifications of Contracts

Bilateral and Unilateral Contracts – A bilateral contract is a promise for a promise. The exchange of promises creates the enforceable contract. A unilateral contract is one where the offer can be accepted only by the performance of an act by the offeree.

Incomplete or Partial Performance – Offers can be revoked by the offeror at any time before the offeree has begun performance.

Express and Implied-in-Fact Contracts – Express contracts may be either oral or written, whereas implied-in-fact contracts are implied by the activities of the parties. Implied-in-fact contracts require that the plaintiff supply property or services to the defendant that they expected to be paid for, and that the defendant had an opportunity to reject the property or services and failed to do so.

Formal and Informal Contracts – Contracts may be formal, such as negotiable instruments, letters of credits, recognizance, and contracts under seal, or informal or simple contracts, like leases, sales contracts, and service contracts. The distinction is that formal contracts require a special format or method.

Valid, Void, Voidable, and Unenforceable Contracts – Valid contracts meet all the essential elements and are enforceable by at least one of the parties. A void contract has no legal effect, and neither party can enforce it. Contracts where at least one party can avoid their contractual obligations are voidable contracts. If there is a legal defense to the enforcement of a contract, it is called an unenforceable contract, but the parties may choose to voluntarily perform the contract.

Executed and Executory Contracts – Contracts that have not yet been fully performed by either side are called executory contracts; those that have been completed are executed contracts.

Express and Implied Contracts

Express contracts may be either oral or written, whereas implied-in-fact contracts are implied by the activities of the parties. Implied-in-fact contracts require that the plaintiff supply property or services to the defendant that they expected to be paid for, and that the defendant had an opportunity to reject the property or services and failed to do so.

Equity

Equity is resorted to when monetary damages are not sufficient or are not a proper remedy.

Terms

  • bilateral contract—A contract entered into by way of exchange of promises of the parties: a “promise for a promise.”
  • common law of contracts—Contract law developed primarily by state courts.
  • equity—A doctrine that permits judges to make decisions based on fairness, equality, moral rights, and natural law.
  • executed contract—A contract that has been fully performed on both sides: a completed contract.
  • executory contract—A contract that has not been fully performed. With court approval, executory contracts may be rejected by a debtor in bankruptcy.
  • express contract—An agreement that is expressed in written or oral words.
  • formal contract—A contract that requires a special form or method of creation.
  • implied-in-fact contract—A contract where agreement between parties has been inferred from their conduct.
  • informal contract—A contract that is not formal. Valid informal contracts are fully enforceable and may be sued upon if breached.
  • legally enforceable contract—If one party fails to perform as promised, the other party can use the court system to enforce the contract and recover damages or other remedy.
  • objective theory of contracts—A theory that says the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties.<
  • offeree—The party to whom an offer to enter into a contract is made.
  • offeror—The party who makes an offer to enter into a contract.
  • quasi- or implied-in-law contract—An equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed. The doctrine is intended to prevent unjust enrichment and unjust detriment.
  • Restatement of the Law of Contracts—A compilation of model contract law principles drafted by legal scholars. The Restatement is not law.
    nenforceable contract—A contract where the essential elements to create a valid contract are met, but there is some legal defense to the enforcement of the contract.
  • Uniform Commercial Code—Comprehensive statutory scheme that includes laws that cover most aspects of commercial transactions.
  • unilateral contract—A contract in which the offeror’s offer can be accepted only by the performance of an act by the offeree: a “promise for an act.”
  • valid contract—A contract that meets all of the essential elements to establish a contract: a contract that is enforceable by at least one of the parties.
  • void contract—A contract that has no legal effect: a nullity.
  • voidable contract—A contract where one or both parties have the option to avoid their contractual obligations. If a contract is avoided, both parties are released from their contractual obligations.

Case Law to Study for 9/17/2009

  • Koach’s Sales Corporation v. CRA-MAR Video Center, Inc., 478 N.E.2d 110 (Ind. App. 1985)
  • Smith Internat’l Inc. v. Hughes Tool Co., 759 F.2d 1572
  • Harper & Row, Publishers v. Nation Enterprises, 471 U.S. 539, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985).
  • Elsmere Music Inc. v. National Broadcasting Company, Inc., 623 F.2d 252 (2nd Cir. 1980)
  • Roux Laboratories. Inc. v. Clairol Incorporated, 427 F.2d 823 (Cust.Pat.App. 1970).
  • Mead Data Central, Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026 (2nd Cir. 1989).
  • Miller Brewing Company v. Falstaff Brewing Corporation, 655 F.2d 5 (1st Cir. 1981).
  • Integrated Cash Management Services, Inc. v. Digital Transactions, Inc., 920 F.2d 171 (2nd Cir. 1990).
  • Carson v. Here’s Johnny Portable Toilets, Inc., 698 F.2d 831 (6th Cir. 1983).
  • Feist Publishing, Inc., v. Rural Telephone Service Co., Inc. 499 U.S. 340, 111 S.Ct. 1282, 113 L. Ed.2d 358 (1991)