Contract Law Key Concepts

Contract Law: Key Concepts

• Governing Law: Contracts are governed either by common law (Restatement (Second) of Contracts) or the Uniform Commercial Code (UCC). The predominant purpose test determines which applies when a contract involves both goods and services. Factors include contract language, business type, and value of goods/services.

Contract Formation

• Offer: A valid offer requires a clear manifestation of intent to be bound, definite and certain essential terms (subject matter, price, quantity, etc.), and communication to the offeree.

• Acceptance: Acceptance must be communicated in the required manner, be unequivocal, and be timely. The "mailbox rule" may affect timeliness.

• Consideration: A bargained-for exchange of legally sufficient value is necessary. This involves detriment to the promisee, benefit to the promisor, and avoiding issues like illusory promises, past consideration, or pre-existing duty. A substitute for consideration, such as promissory estoppel, could also be relevant.

Contract Performance

• Contract Terms: Clear and unambiguous terms are crucial. Express or implied conditions (conditions precedent, concurrent conditions, and conditions subsequent) might affect performance.

• Integration and Parol Evidence:

  • Fully Integrated: The written contract is the complete agreement, limiting use of extrinsic evidence.
  • Partially Integrated: The written contract represents some, but not all terms, allowing some extrinsic evidence to supplement but not contradict.
  • Not Integrated: Extrinsic evidence is admissible to clarify ambiguities, prove defenses to formation, or establish conditions, modifications, or collateral agreements.

• Performance and Breach: Assessing whether parties fully performed obligations, and if not, classifying breaches as total (or material) or minor.

Defenses to Contract Formation or Enforcement

• Mistake: Mutual mistakes regarding a material fact or a unilateral mistake (where the other party knew about it or unfair enforcement) can impact enforcement.

• Duress and Undue Influence: Improper pressure or exploitation of trust can invalidate contracts.

• Illegality: Contracts with illegal subject matter or against public policy are unenforceable.

• Statute of Frauds: Certain contracts, like those for land or exceeding a specific financial threshold, require a written form to be enforceable.

• Unconscionability: Contracts that are grossly unfair or oppressive may be voidable.

• Impossibility, Impracticability, or Frustration of Purpose: Events rendering performance impossible, extremely difficult, or pointless can discharge contractual duties.

Contract Remedies

• Legal Remedies:

  • Expectation Damages: Compensate the non-breaching party's loss of expected benefit.
  • Reliance Damages: Compensate for expenses incurred in reliance on the contract.
  • Restitution Damages: Return benefits conferred on the breaching party.
  • Liquidated Damages: Pre-agreed upon damages that must be reasonable.

• Equitable Remedies:

  • Specific Performance: A court order requiring performance.
  • Injunction: Preventing a party from breaching.

• Limitations on Remedies: The duty to mitigate damages (minimize losses) and foreseeability (damages must be foreseeable) apply.

Explore the fundamental principles of contract law including governing laws, offer, acceptance, and consideration. This quiz will test your understanding of the predominant purpose test and the requirements for valid contracts. Enhance your legal knowledge with this engaging assessment.