Contract Law: Key Concepts Quiz

Contract Law: Key Concepts

• Governing Law: Contracts are governed by either 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 the contract language, the supplier's business, and the value of goods versus services.

Contract Formation

• Offer: A valid offer requires an objective manifestation of intent, definite and certain terms (subject matter, price, quantity, time, and parties), and communication to the offeree.

• Acceptance: Acceptance must be communicated in the required manner, be unequivocal, and be on time (consider the mailbox rule).

• Consideration: A valid contract requires a bargained-for exchange of legally sufficient value. This involves a promise involving a detriment to the promisee or a benefit to the promisor, excluding illusory promises, past consideration, or pre-existing duty. A substitute, like promissory estoppel, can sometimes suffice.

Contract Performance

• Contract Terms: Clear and unambiguous terms are crucial. Express and implied conditions exist.

  • Conditions Precedent: An event must occur before a party's duty arises.
  • Concurrent Conditions: Events must happen simultaneously for obligations.
  • Conditions Subsequent: An event that ends a pre-existing obligation.

• Integration and Parol Evidence:

  • Fully Integrated: The written contract is complete and exclusive, with no outside evidence admissible.
  • Partially Integrated: Some terms are included in the written contract, and outside evidence may supplement but not contradict terms.
  • Not Integrated: The writing isn't final, allowing outside evidence. The Parol Evidence Rule generally prohibits using outside evidence to alter or contradict a fully integrated contract, except in specific cases, like clarifications, defenses to formation, establishing conditions, modifications, or collateral agreements.

• Performance and Breach: Parties' obligations should be fulfilled. Determine if a breach is material, minor, or total.

Defenses to Contract Formation/Enforcement

• Mistake: Mutual mistakes about material facts or unilateral mistakes (where the other party knew) can invalidate a contract.

• Duress and Undue Influence: Improper pressure or exploiting trust/dominance can be defenses.

• Illegality: Contracts with illegal subject matter are unenforceable.

• Statute of Frauds: Certain contracts require a written form for enforcement (e.g., sale of land, contracts not performable within a year, sale of goods over $500).

• Unconscionability: Shockingly unfair or oppressive contracts are voidable.

• Impossibility, Impracticability, or Frustration of Purpose: Unforeseen events may excuse performance if it becomes impossible, impractical, or renders the purpose futile.

Remedies

• Legal Remedies:

  • Expectation Damages: Putting the aggrieved party in the pre-breach position.
  • Reliance Damages: Reimbursement for expenses incurred relying on the contract.
  • Restitution Damages: Returning benefits conferred to the breaching party.
  • Liquidated Damages: Enforced pre-agreed damages, if reasonable and not punitive.

• Equitable Remedies:

  • Specific Performance: Enforcing performance, if monetary damages are insufficient.
  • Injunction: Preventing actions that breach the contract.

• Limitations on Remedies:

• Duty to Mitigate: The aggrieved party must minimize losses.

• Foreseeability: Damages must have been foreseeable at the time of contracting.