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Unit 6: CONTRACTSUnit 6: CONTRACTS

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Overview of Contract LawOverview of Contract Law Sources of Contract Law.

– Common Law for all contracts except sales and leases.– Sale and lease contracts - Uniform Commercial Code (UCC).

A contract is a:– Promise or set of promises,– For breach of which,– The law provides a remedy, or– The performance of which the law in some way recognizes as

a duty.

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Elements of a ContractElements of a Contract

Agreement (Offer and Acceptance) Consideration (promise to do something in

return for a valuable benefit ) Contractual Capacity Defense:

– Legality– Genuineness of assent– Form

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Contract EnforceabilityContract Enforceability Valid

– Elements: Agreement, consideration, contractual capacity, and legality

Void– No contract

Voidable (unenforceable)– Valid contract can be avoided or rescinded

AgreementAgreement

The “agreement” actually consists of two elements: the offer and the acceptance.

There are certain requirements for both of these to be valid.

Valid offer: present intention to be bound, definite terms, communication to offeree.

Valid acceptance: voluntary, mirror image rule.

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ConsiderationConsideration

Consideration is the value given to support a contract. If there is no consideration, it is a gift.

Consideration has two requirements: 1) that the parties bargain or negotiate back and forth, and that 2) what they are giving and getting has legal value.

E.g.: giving money for a carPA 106 -- Kaplan University 6

CapacityCapacity

To have contractual capacity means that you have the ability to make a contract and be bound by its terms.

There are several different ways that a party can lose capacity (intoxication, mental incapacity, infancy).

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CapacityCapacity

Most people with capacity issues have a voidable right. This means the person with the capacity issue can choose whether or not to enforce the contract.

If the person wants to be bound by the contract, s/he must ratify it; if the person wants out, s/he must disaffirm it.

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IntoxicationIntoxication

In order to have a contract set aside based on intoxication, you either need:

1) that the intoxication was involuntary or2) that the voluntarily intoxicated person

was so intoxicated that s/he did not understand the nature and consequences of the actions.

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Mental IncapacityMental Incapacity

If a court has declared a person mentally ill, that person cannot enter into a contract – the contract is void.

Mentally ill people have a voidable right – which means s/he can get out of the contract if desired.

If a court has not addressed the issue, you need to look at the person and the illness.

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InfancyInfancy

If a person is a minor at the time of contracting, s/he has a voidable right under the contract. This extends until a reasonable period of time after reading the age of majority.

If the minor is emancipated (on his own), he is bound by contracts for necessaries (food, clothing, shelter).

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DefensesDefenses

If a valid contract exists, you still need to consider whether there is a valid defense to that contract.

The defenses that are normally looked at are legality, genuineness of assent, and form.

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DefensesDefenses

Contracts must have a legal purpose to be enforceable.

This means that contracts to have someone commit a crime or a tort are not enforceable.

The reason for this is that a court cannot give a remedy for breach of contract.

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Genuine AssentGenuine Assent

Remember the first requirement of a valid acceptance – that it be voluntarily given?

If the acceptance is not based on free will and given voluntarily, then that creates a defense to it.

Examples: fraud, duress, unconscionability, undue influence.

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Genuine AssentGenuine Assent

Fraud: telling someone a lie to get them to sign

Duress: using threats of physical force to get someone to contract.

Unconscionability: using hidden terms or other sneaky methods to bind people.

Undue influence: taking advantage of someone you are responsible for.

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Unit 6 DBUnit 6 DB

Using the contract legal terminology from Chapter 8 in docsharing, search for a contract case from your state. For example, you could use the search terms - breach of contract and misrepresentation. If possible, please try to use different search terms than those already posted. Share with your fellow classmates the search words you used and provide an example of what case you found.

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What is a Search Term? What is a Search Term?

Different publishers of cases and other sources of law use different “entry words” or key words. To locate relevant cases, you will enter these terms to describe legal concepts or issues in the case in different ways. Examples: Automobile/vehicle/motor vehicle and Child/infant/juvenile/minor

Whether online or in indices to books, creating a list of viable starting places at the outset is important.

Can use secondary material, legal thesauri, and lexicons (legal dictionary) to find additional terms.

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Contract Legal Terminology from Chapter 8

Look for cases in your state that deal with any of the following:

Breach of contract Capacity (Competent) Consideration Impossibility Infancy Misrepresentation Mistake Unconscionable Fraud Duress

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Looking Ahead…Next week is Looking Ahead…Next week is Unit 7Unit 7

Happy Thanksgiving! No seminar on Thursday, Nov 25th

Look for full credit for seminar and PowerPoint covering wills posted in docsharing & e-mail

All assignments for Unit 7 are due on Tuesday, Nov 30th

If you are traveling and need more time please contact me

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Questions?Questions?

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