Describe a time, when you (or someone you know) entered into a type of contract with someone, and you believe that a party breached the terms of the contract. For example, I recently ordered something on Amazon, and it was not delivered to me.

3/2/21 ● Contract: agreement that can be enforced in court. ○ Sources of contract law are Common law and the UCC. ○ Where the Common law is vague, the UCC comes in to help out. ● Objective theory of contracts: party’s intention to enter into a contract is judged by outward objective facts as interpreted by a reasonable person ○ Determined by: ■ What the party said when entering into the contract ■ How the party acted or appeared ■ The circumstances surrounding the transaction ● Requirements of a Valid Contract ○ Agreement: offer and an acceptance ○ Consideration: promises must be supported by something of value. Example: showing money or transfer of money ○ Contractual capacity: both parties entering into the contract must have the contractual capacity to do so. Ex: cannot make an agreement with someone who is dead ○ Legality: contract’s purpose must be to accomplish some goal that is legal and not against public policy. Ex: You have an agreement with a hitman but the hitman leaves town.You can’t bring it to court because it’s illegal. ● Defenses to the Enforceability of a Contract: ○ Voluntary consent: consent of both parties must be voluntary ○ Form: contract must be in whatever form the law requires, like in writing, if required to be so. ● Contract Formation ○ Offeror: party making offer ○ Offeree: party to whom offer is made ● ● Bilateral Contracts: promise given in exchange for return promise. Unilateral Contracts: offer can be accepted only by offeree’s performance. Ex: If you come to my house to clean it, I will play you. ○ An issue in unilateral contracts is what happens when the promisor revokes the offer after the promisee has begun performance but before the act has been completed. ● Formal versus Informal Contracts: contracts that require a special form as opposed to those that do not Express contracts: all terms are explicitly written Requirements for Implied Contracts: ○ plaintiff furnished some service or property ● ● 3/2/21 ○ ● plaintiff expected to be paid for that service or property, and the defendant knew or should have known that the payment was expected ○ defendant had a chance to rejected the services or property and did not Most contracts have both Express and Implied Terms. ● Contract Performance ○ Executed contract: A contract that has been fully performed by both parties. ○ Executory contract: A contract that has not been fully performed. ● Contract Enforceability: ○ Voidable Contracts: A contract that may be legally avoided at the option of one or both of the parties. ○ Unenforceable Contracts: A valid contract rendered unenforceable by some statute or law. ○ Void Contracts: A contract having no legal force or binding effect. ● Quasi Contracts: contracts implied in law, but not actual contracts. “as if” parties entered into a contract. ○ Created to prevent unjust enrichment or prevent people from benefiting at the expense of others ○ When an actual contract exists, the Quasi Contract does not apply. ● Interpretation of Contracts: ○ Plain Language Laws: laws enacted to regulate legal writing and eliminate legalese ○ The Plain Meaning Rule ■ Ambiguity ■ Intent of parties cannot be determined ■ Lacks a provision on disputed issue ■ Term is susceptible to more than one interpretation ■ Uncertainty about a provision ○ Extrinsic Evidence: evidence not contained in the document itself. Courts try not to do this. Tuesday, March 2, 2021 Professor Yuval Simchi-Levi What is a contract? Contract: agreement that can be enforced in court Sources of contract law: Common law + UCC Objective theory of contracts: party’s intention to enter into a contract is judged by outward objective facts as interpreted by a reasonable person Determine by examining the following: 1. What the party said when entering into the contract 2. How the party acted or appeared 3. The circumstances surrounding the transaction 10-2 Elements of a Contract 10-2a Requirements of a Valid Contract 1. Agreement: offer and an acceptance 2. Consideration: promises must be supported by legally sufficient bargained – for consideration – something of value 3. Contractual capacity: both parties entering into the contract must have the contractual capacity to do so 4. Legality: contract’s purpose must be to accomplish some goal that is legal and not against public policy 10-2b Defenses to the Enforceability of a Contract 1. Voluntary consent: consent of both parties must be voluntary; 2. Form: contract must be in whatever form the law requires, such as in writing, if required to be so 10-3 Types of Contracts 10-3a Contract Formation ● Offeror: party making offer ● Offeree: party to whom offer is made – Bilateral versus Unilateral Contracts ● Bilateral Contracts: promise given in exchange for return promise ● Unilateral Contracts: offer can be accepted only by offeree’s performance ● Revocation of Offers for Unilateral Contracts: issue in unilateral contracts is what happens when promisor revokes offer after the promisee has begun performance but before the act has been completed; – Formal vs Informal Contracts: contracts that require a special form as opposed to those that do not; – Express versus Implied Contracts ● Express contracts: all terms are explicitly written ● Requirements for Implied Contracts: a. Plaintiff furnished some service or property b. Plaintiff expected to be paid for that service or property, and the defendant knew or should have known that the payments was expected; c. Defendant had a chance to reject the services or property and did not; – Mixed Contracts with Express and Implied Terms: contract may constrain both – Case Example 10.5 Uhrhahn Construction & Design, Inc. v. Hopkins (2008) 10-3b Contract Performance ● Executed contract: A contract that has been performed by both parties ● Executory contract: A contract that has not yet been fully performed 10-3c Contract Enforceability – Voidable Contracts: A contract that may be legally avoided at the option of one or both of the parties. – Unenforceable Contracts: A valid contract rendered unenforceable by some statute or law. – Void Contracts: A contract having no legal force or binding effect. 10-4 Quasi Contracts ● Quasi contracts: contracts implied in law, but not actual contracts. It is “as if” parties entered into a contract ● Created to prevent unjust enrichment ● 10-4b When an Actual Contract Exists, the doctrine of quasi contract does not apply 10-5 Interpretation of Contracts ● 10-5a Plain Language Laws: laws enacted to regulate legal writing and eliminate legalese ● 10-5b The Plain Meaning Rule – Ambiguity 1. Intent of parties cannot be determined 2. Lacks a provision on disputed issue 3. Term is susceptible to more than one interpretation 4. Uncertainty about a provision – Extrinsic Evidence: evidence not contained in the document itself “A contract should be unambiguous.” Contracts law is rooted in the common english law Legal vs equitable remedies-> equity remedy was a piece of land, legal remedy was any financial remedy Contract meaning in layman terms, an agreement between two parties that can be enforced in court Sources of contract law: Common law +UCC Verbal agreement is not as reliable, signatures are written proof that a party has agreed Objective theory of contracts: party’s intention to enter into a contract is judged by outward objective facts as interpreted by a reasonable person Requirements of a Valid Contract 1. Agreement: offer and an acceptance 2. Consideration: promises must be supported by legally sufficient bargained-for consideration – something of value 3. Contractual capacity: both parties entering into the contract must have the contractual capacity to do so 4. Legality: contract’s purpose must be to accomplish some goal that is legal and not against public policy Defenses to the Enforceability of a Contract 1. Voluntary consent: consent of both parties must be voluntary; 2. Form: contract must be in whatever form the law requires, such as in writing, if required to be so Contract Formation 1. Offeror: party making offer 2. Offeree: party to whom offer is made Bilateral versus Unilateral Contracts 1. Bilateral: promise given in exchange for return promise 2. Unilateral Contracts: offer can be accepted only by offeree’s performance -Revocation of Offers for Unilateral Contracts: issue in unilateral contracts is what happens when promisor revokes offer after the promisee has begun performance but before the act has been completed -Formal versus informal contracts: contracts that require a special form as opposed to those that do not; -Express contracts: all terms are explicitly written -Requirements for Implied Contracts a. Plaintiff furnished some advice or property b. Plaintiff expected to be paid for that service or property, and the defendant knew or should have known that the payment was expected; c. Defendant had a chance to rejected the services or property and did not; -Mixed contracts with Express and Implied Terms: contract may contain both Executed contract: a contract that has been fully performed by both parties Executory contract: A contract that has not yet been fully performed by both parties Voidable Contracts: A contract that may be legally avoided at the option of one or both of the parties Unenforceable Contracts: A valid contract rendered unenforceable by some statute or law Void contracts: A contract having no legal force or binding effect -Quasi contracts: contracts implied in law, but not actual contracts. It is “as if” parties entered into a contract -Created to prevent unjust enrichment -When an Actual Contract Exists, the doctrine of quasi contract does not apply Plain Language Laws: laws enacted to regulate writing and eliminate legalese 1. The Plain Meaning Rule a. Ambiguity i. Intent of parties cannot be determined ii. Lacks a provision on disputed issue iii. Term is susceptible to more than one interpretation iv. Uncertainty about a provision 2. Extrinsic Evidence: evidence not contained in the document itself Interpretation of Contracts Plain Language Laws: laws enacted to regulate legal writing and eliminate legalese The Plain Meaning Rule • Ambiguity 1. Intent of parties cannot be determined 2. Lacks a provision on disputed issue 3. Term is susceptible to more than one interpretation 4. Uncertainty about a provision • Extrinsic Evidence: evidence not contained in the document itself Other Rules of Interpretation • Rules the Courts Use 1. Insofar as possible, a reasonable, lawful and effective meaning will be given to all of a contract’s terms 2. A contract will be interpreted as a whole. Individual, specific clauses will be considered subordinate to the contract’s general intent. All writings that are a part of the same transaction will be interpreted together. 3. Terms that were the subject of separate negotiation will be given greater consideration than standardized terms and terms that were not negotiated separately. 4. A word will be given its ordinary, commonly accepted meaning, and a technical word or term will be given its technical meaning, unless the parties clearly intended something else. 5. Specific and exact wording will be given greater consideration than general language. 6. Written or typewritten terms prevail or preprinted terms. 7. Because a contract should be drafted in clear and unambiguous language, a party that uses ambiguous expressions is held to be responsible for the ambiguities. Thus, when the language has more than one meaning, it will be interpreted against the party that drafted the contract. 8. Evidence of trade usage, prior dealing, and course of performance may be admitted to clarify the meaning of ambiguously worded contract. • Express Terms Usually Given Most Weight 1. Case Example 10.10 U.S. Bank, N.A. v. Tennessee Farmers Mutual Insurance Co. (2009) Sabrina Poon Law 1101 Notes 3/9/21 Classic Case 11.1 The Offer ● A price or commitment to perform or refrain from performing some specified act in the future ● offeror to offeree Example: Lucy v Zehmer 1954 ● Classic case in contract law because it illustrates objective theory of contracts with respect to determining whether an offer was intended 11-1a Requirements of the Offer ● When intent lacking vs intent: modern courts adopting more liberal views of agreements ● Expressions of opinion: expressing an opinion is not an offer ○ Statements of future intent: not an offer ○ Preliminary negotiations: request or invitation to negotiate is not an offer ○ Invitations to bid: an invitation to submit a bid is not an offer ○ Adverstisements, catalogues, and circulars: typically, do not constitute offers, except when there are definite terms to agree ○ Live and online auctions-invitation to bid until hammer is struck down ○ Agreements to agree: agreement to agree on materials in the future are typically not agreements, but modern view of courts is that “agreements to agree” may be enforceable ○ Preliminary agreements: courts are increasingly finding that these constitute agreements ■ Spotlight on Amazon.com: Case 11.2 ● Basis technology corp. v. Amazon.com inc 2008 ● Assume that instead of exchanging emails, the attorneys for both sides had had a phone conversation that included all of the terms to which they actually agreed in their email exchanges ○ Definiteness ○ Generally must include: 1. Identification of parties 2. Identification of the object or subject matter of the contract, including work to be performed, with specific identification of such items as goods, services and land 3. Consideration to be paid 4. Time of payment delivery or performance ● Communication: must communicate offer to offeree 11-1d Termination of the Offer ● Termination by action of the parties: offer can be terminated in three ways: by ○ Revocation ○ Reject ○ Counteroffer ● Termination by action of the offeror, also known as the revocation: when offeror withdraws an offer ● Revocation occurs either way: 1) express repudiation of the offer 2) performance of acts that are inconsistent with the the existence of the offer & are made known to the offeree ● Irrevocable offers: although most offers are revocable, courts do not allow offers to be revoked when offeree has changed position because of justifiable reliance on it (doctrine of promissory estoppel) ● Option contract: when an offeror promises to hold an offer open for a specified period of time in return for a payment (consideration) given by the offeree ● Mailbox rule (assuming contract/offer is silent as to terms of rejection/revocation) general mailbox rule for revocation is that it occurs when the offeree receives the revocation ○ By contrast, as will see rejection of offer, occurs as soon as offeree puts rejection in mailbox ● Termination by action of the offeree ● Rejection vs inquiries about an offer: a mere inquiry is not a rejection ● Rejection effective only when offeror receives it ● Counterofferors: rejection of the original offer and the simultaneous making of a new offer ● Mirror image rule – common law requirement that offereree’s acceptance match the offer’s offer exactly ● Termination by operation of law 1) Lapse of time: if no mention of a time period to accept, offer terminates at the end of a reasonable time period; 2) Destruction of specific subject mattter 3) Death or incompetence 4) Supervening illegality: when a statue or court decision makes an offer illegal terminals the offer 11-1c Acceptance ● Unequivocal Acceptance: mirror image rule ● Silence as acceptance: typically silence cannot constitute acceptance, except when offeree accepts the benefit of offered services even if there’s opportunity to reject them and knew that they were offered with the expectation of compensation or when both parties had prior dealings with each other ● Communication of Acceptance: offer must be accepted unequivocally; ○ Case example 11.15 powerhouse custom homes inc v 84 lumber co (2011) ● Mode and timeliness of acceptance ● The mailbox rule: acceptance is valid when it is dispatched through the mail ● Authorized means of communication: express or implicitly authorized by the facts and circumstances of the situation ● Substitute method of acceptance: occurs when offeror authorizes a particular method of acceptance, but the offeree accepts by a different means Chapter 11 Agreement Example On July 1, stan a steel manufacturer telephone Byron and offered to sell. Byron six carloads of steel at $600 a ton. Byron said “that’s a lot of steel! Would you promise to keep your offer open for 10 days so i can think about whether i can use that much?” Stand replied, “sure, i promise to keep the offer open for 10 days.” On July 6, Stan sent letter to Byron that states, “i hereby revoke my offer of July 1. Stan refused to deliver the steel. ● Offers are revocable!!! Chapter 11 I. Agreement ● The Offer ○ An offer is a promise or commitment to perform or refrain from performing some specified act in the future; ○ Made by offeror to offeree A. Requirements of the Offer 1. There must be a serious, objective intention by the offeror. 2. The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract. 3. The offer must be communicated to the offeree Case example: Lucy v. Zehmer (1954) ● Classic case in contract law because it clearly illustrates the objective theory of contracts with respect to determining whether an offer was intend ● Intoxication did not affect the contract making because the seller wanted to sell and buyer wanted to buy ○ Intoxication has to be to the point that they have no control 4. When Intent Lacking vs. intent: modern courts adopting more liberal views of agreements a) Expressions of Opinion: expressing an opinion is not an offer b) Statements of Future Intent: not an offer c) Preliminary Negotiations: request or invitation to negotiate is not an offer d) Invitations to bid: an invitation to submit a bid is not an offer e) Advertisements, Catalogues, and Circulars: typically, do not constitute offers, except when there are definite terms to agree f) Live and online auctions – invitation to bid until hammer is struck down. g) Agreements to Agree: agreement to agree on materials in the future are typically not agreements, but modern view of courts is that “agreements to agree” may be enforceable; h) Preliminary Agreements: courts are increasingly finding that these constitute agreements Spotlight Case: Basis Technology Corp. v. Amazon.com, Inc. (2008) ● All the emails in the case between the two combined were made into a contract in court 5. Definiteness a) The identification of the parties. b) The identification of the object or subject matter of the contract, including the work to be performed, with specific identification of such items as goods, services, and land. c) The consideration to be paid. d) The time of payment, delivery, or performance. 6. Communication: must communicate offer to offeree B. Termination of the Offer 1. Termination by Action of the Parties: offer can be terminated in three ways: by revocation, by rejection or by counteroffer 2. Termination by Action of the Offeror: (revocation) when offeror withdraws an offer a) Revocation occurs either way: (1) express repudiation of the offer (2) performance of acts that are inconsistent with the existence of the offer and are made known to the offeree 3. Irrevocable offers: although most offers are revocable, courts do not allow offers to be revoked when offeree has changed position because of justifiable reliance on it (doctrine of promissory estoppel) 4. Option contract: when an offe …
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