Lecture Notes: Understanding Contracts

Introduction

• Discussion on the importance of contracts in law.
• Differentiates between a promise and an agreement.
  • Promise is a subset of an agreement.
  • Not all agreements are promises.

Definition of a Contract

• Legally enforceable promise.
• Contracts create obligations enforceable by law.
  • Black's Law Dictionary: Agreement between parties that creates obligations enforceable by law.
  • Professor Williston: Promise/set of promises with legal remedies for breach.

Key Terms in Contract Law

Consideration

• Turns a promise into a legally enforceable promise.
• Evidence of mutual benefit.

Promisor and Promisee

• Promisor: The one making the promise.
• Promisee: Recipient/beneficiary of the promise.

Bilateral and Unilateral Contracts

• Bilateral: Agreement between two parties.
• Unilateral: Offer made to the public; contract forms when action is taken.

Executory Contracts

• Contracts where promises remain unfulfilled.

Conditions

• Condition Precedent: Must be met before a promise is active.
• Condition Subsequent: Occurrence can nullify a promise.

Remedies

• Reason for going to court; seeking resolution.
• Restitution: Fair damages.

Express and Implied Contracts

• Express: Clearly written/oral agreements.
• Implied: Agreement inferred from actions or situation.

Quasi-Contracts

• Not real contracts; enforced for fairness (e.g., unjust enrichment).

Good Faith

• Implied fairness in executing and forming contracts.

Void and Voidable Contracts

• Void: No contract exists.
• Voidable: Contract may be canceled or ratified by one party.

Advanced Concepts

Performance and Breach

• Performance: Fulfillment of contract promises.
• Substantial Performance: Near completion with minor deviations.

Expectations and Damages

• Contracts ensure monetary compensation for unmet promises.

Promissory Estoppel

• Enforcing reliance-based promises without traditional contractual elements.

Ex Post and Ex Ante

• Ex Post: After the event has occurred.
• Ex Ante: Before the event; anticipation.

Output and Requirements Contracts

• Agreement based on supply needs rather than fixed quantities.

Public Policy

• Contracts must align with societal interests and not harm public welfare.

Contracts and Economics

• Contracts facilitate economic transactions; courts as enforcement mechanism.

Efficient Breach

• Breach can be economically beneficial; allows parties to seek better opportunities.

Default Rules

• Courts apply common standards if specifics aren't detailed in the contract.
• Parties can negotiate for specific terms outside these defaults.

---

This lecture covered foundational aspects of contract law, emphasizing the definitions, key terms, and the legal and economic rationale behind contractual agreements and their enforcement. Understanding these concepts and terms is crucial for legal exams and real-world applications.