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Overview of Contract Law Principles

May 5, 2025

Introduction to Contracts

Sources of Contract Law:

  • Common Law: Established by court decisions, covers most contracts except for the sale of goods.
  • Restatement (2d) of the Law of Contracts: Influential summary of contract principles.
  • Uniform Commercial Code (UCC): Governs commercial transactions.
    • UCC §2: For the sale of goods (e.g., cars, books, clothes), different rules than Common Law.
    • Not Covered by UCC §2: Employment, services, real property, intangibles

Contracts

  • Definition: A promise enforced by law.
  • Essentials: Mutual Assent, Consideration, Legality, Capacity.

Types of Contracts

  • Express Contracts: Clearly stated in words.
  • Implied-in-Fact Contracts: Understood from conduct.
  • Unilateral Contracts: Promise for an act.
  • Bilateral Contracts: Exchange of promises.

Validity of Contracts

  • Valid: All elements present.
  • Void: Lacks essential elements.
  • Voidable: Valid but can be canceled.
  • Unenforceable: Valid but cannot be enforced.

Offer and Acceptance

  • Offer: Intent, Definiteness, Communication.
  • Acceptance: Must mirror the terms of the offer.
  • Termination of Offer: Lapse of time, Revocation, Rejection, etc.

Consideration

What is Consideration?

  • Elements: Legal Sufficiency, Benefit/Detriment, Bargained-for Exchange.
  • Illusory Promises: Lack commitment, not enforceable.

Promises Without Consideration

  • Exceptions: Promissory Estoppel, Charitable Subscriptions.

Contractual Capacity

Capacity to Contract

  • Categories: Minors, Intoxicated Persons, Mentally Incompetent Persons.

Minors

  • Right to disaffirm contracts.
  • Responsible for necessaries.

Intoxicated and Mentally Incompetent Persons

  • Contracts are voidable if they lack understanding.

Conduct Invalidating Assent

  • Duress: Coercion into a contract.
  • Undue Influence: Dominant party overcomes weaker party's will.
  • Fraud: Deception to enter a contract.
  • Mistake: Misunderstanding of facts.

Illegal Bargains

Legality

  • Contracts must have a legal purpose.

Violations

  • Statutes: Licensing, Gambling, Usury, etc.
  • Public Policy: Restraints of Trade, Exculpatory Clauses, etc.

Statute of Frauds

Purpose

  • Certain contracts must be in writing.

Contracts in Writing

  • Suretyship, Interests in Real Estate, Sale of Goods over $500, etc.

Discharge of Contracts

Discharge Methods

  • Performance: Complete or substantial.
  • Breach: Material breach discharges the non-breaching party.
  • Agreement: Mutual rescission, Substituted contract, Novation.
  • Law: Impossibility, Impracticability, Bankruptcy.

Negligence

Elements

  • Duty, Breach, Causation, Damages.

Defenses

  • Comparative Negligence, Assumption of Risk.

Intentional Torts

Types

  • Against Persons: Battery, Assault, False Imprisonment, Defamation.
  • Against Property: Trespass, Nuisance, Conversion.

Remedies

Purpose

  • Compensate for breach or torts.

Types

  • Monetary: Compensatory, Punitive, Nominal, Liquidated.
  • Equitable: Rescission, Specific Performance, Injunction.