Characteristics of a Contract

Contract

Defined: $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Sources of Contract Law

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ governs all contracts except when it has been modified or replaced by statutory law. Most of the contracts covered in this course $($e$.$g$.,$ real estate, insurance, services, employment$)$ will fall into this category.

Contracts for the sale and lease of goods are governed by $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

Elements

Offer

Acceptance

Consideration $($bargained$-$for exchange of value$)$

Capacity $($legal age and sound mind$)$

Legal subject matter

Contract terminology

Bilateral Contracts v$.$ Unilateral Contracts

If the offeree can accept the contract simply by promising to perform, the contract is a $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ contract. The contract comes into existence $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

If the offer is phrased so that the offeree can accept only be completing the contract performance, the contract is a $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$ The contract comes into existence $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

Express Contracts v$.$ Implied Contracts

In an $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ contract, the terms of the agreement are fully and explicitly stated in words $($oral or written$).$

In an $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ contract, the contract is implied from the conduct of the parties. Generally, the following conditions must exist:

In an $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ contract, the contractual relationship is ordered by the court, generally done in order to avoid an unjust result.

Executed Contracts v$.$ Executory Contracts

An $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ contract is one that has been fully performed by both sides.

An $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ contract is one that has not been fully performed.

Void, Voidable, and Unenforceable Contracts

A$($n$)\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ contract has the elements necessary to entitle at least one of the parties to enforce it in court.

A$($n$)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ contract is an otherwise valid contract but one that can be avoided at the option of one of the parties.

Example: If one of the parties to the contract is a minor, it is an otherwise valid contract, but the minor has the option of avoiding performance.

A$($n$)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ contract is one that cannot be enforced because of some legal defense.

Example: If one of the parties to the contract breaches that contract, the other party has a limited amount of time to enforce the contract. $($This is called the $$statute of limitations$).$ If the statute of limitations lapses on a contract, the contract becomes unenforceable.

A$($n$)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ contract is no contract at all. No party has any legal obligations under this $$contract$.$

Example: A contract that involves a violation of the law is generally a void contract. The contract cannot be enforced, even if one party performs his$/$her obligations under the contract.

Agreement

Offer

An offer is $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$ The person making an offer is called the $\_\_\_\_\_\_\_\_\_\_,$ and the party to whom the offer is made is called the $\_\_\_\_\_\_\_\_\_\_\_\_.$

Elements of a valid offer

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

When Intent May be Lacking $($Things that look like offers but are not$)$

Expressions of opinion

Statements of future intent

Preliminary negotiations

Advertisements and price lists

Auctions

Termination of the Offer

By the offeree $($rejection$)$

If the offeree rejects the offer, the offer is terminated. Any later attempt by the offeree to accept will be construed as a new offer, giving the original offeror $($now the offeree$)$ the power of acceptance.

Counteroffers: Operates simultaneously as a $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ and $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

By the offeror $($revocation$)$

A revocation is $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

A revocation becomes effective $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

Unless the offer is $\_\_\_\_\_\_\_\_\_\_,$ the offeror usually can revoke the offer $($even if the offeror has promised to keep it open$)$ as long as the revocation is communicated to the offeree before the offeree accepts.

Irrevocable offers

An option contract: a contract where the offeror promises $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

UCC Merchant$$s Firm Offer Rule

Only applies to UCC Contracts

If a merchant signs a writing promising to hold an offer open, that offer is irrevocable for the stated period of time. $($If no time period is stated, the offer is open for a reasonable period of time.$)$

Conduct of the offeree

The offeree takes substantial steps to perform the requested act in an offer for a unilateral contract

The offeree acts in detrimental reliance on the offeror$$s promise to hold the offer open

By operation of law

Specific provision in the offer itself

Lapse of Time

Destruction of the subject matter of the contract

Death or mental incapacity

Supervening Illegality

Acceptance

An acceptance is $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

Communication of Acceptance

In a unilatera