Unilateral and Types of Contracts

Unilateral Contracts

• The offeree can accept the offer only by completing the performance requested in the contract.
• Promise for an action: the contract begins when the offeree finishes the required action.
• Example: "I will pay you $1K if you paint my house."

Types of Contracts

• Formal contracts require a specific form or method of creation:
  • The Uniform Commercial Code (UCC) requires written contracts.
  • Example: A contract that requires a negotiable instrument such as a check, draft, promissory note or CD.
• Informal contracts focus on the agreement's substance rather than its form.
  • Lease agreement is an example of an expressed formal contract.
• Implied contracts: terms are defined by the parties' conduct, not explicitly stated words.
  • Requirements for an Implied Contract:
    • Plaintiff furnished a service or property.
    • Plaintiff expected to be paid and the defendant knew or should have known payment was expected.
    • Defendant had a chance to reject the service or property and did not.

Electronic Records and Signatures

• "Record" is defined as information stored in any retrievable format, including tangible, electronic, or other mediums.
• The Uniform Electronic Transactions Act (UETA) governs electronic records and signatures relating to a transaction.
• "Transaction" is defined as interaction between two or more parties related to commercial, business, or governmental activities.
• UETA does not apply to wills and testamentary trusts.

Consideration

• Consideration is the value given in exchange for a performance (unilateral contract) or a promise (bilateral contract).
• It is the price or motive that induces a party to enter into a contract.
• Consideration has two elements:
  • Legally sufficient value:
    • A promise to do something you have no prior duty to do.
    • Performing an action you are not obligated to undertake.
    • Refraining from an action you have the right to undertake (forbearance).
  • Bargained-for-exchange:
    • The item of value must be given or promised in return for the offeree’s promise, performance, or promise of performance.
    • If a court determines that one party is simply fulfilling their existing duty, the new contract lacks consideration.
• Past Consideration is not legal consideration. Promises made in exchange for actions or events that have already happened are unenforceable.
• Illusory Promises are unenforceable due to a lack of consideration.
  • The terms of a contract are so vague or uncertain that one party has not promised anything specific.

Settlement of Claims

• Accord and Satisfaction:
  • A debtor agrees to pay and a creditor agrees to accept less than the original amount owed.
    • The accord is the agreement to settle the claim.
    • Satisfaction is the performance (payment) that follows the accord.
  • The original amount owed must be disputed.
• Release: A legally binding agreement that releases a party from further legal liability.
• Covenant not to sue: A legally binding agreement that promises not to sue on a specific claim, although the claim is still valid.

Minors' Contracts

• Emancipation occurs when a parent/guardian relinquishes control of a minor.
• Most minors can enter into contracts like adults, but the contracts are voidable by the minor.
• Disaffirmance is the legal avoidance or setting aside of a contract obligation.
• Minors generally do not have the right of succession.

Intoxication

• Contracts entered by an intoxicated person can be voidable, depending on their level of understanding.
• Courts look at objective indications of intoxication to determine capacity.
• Contracts are rarely voided due to intoxication, as it is difficult to prove a person's judgement was impaired to the point of not comprehending the legal consequences.
• When disaffirming a contract, the intoxicated person must return any benefits received.

Delegation of Duties

• Delegation is prohibited when:
  • Special trust has been placed in the obligor.
  • Performance depends on the obligor's personal skill or talents.
  • The contract expressly prohibits delegation.
• The obligee generally can sue both the original party and the delegate.

Third-Party Beneficiaries

• When parties agree that a contract's performance will directly benefit a third person, that person becomes an intended third-party beneficiary.
• Third-party beneficiaries have legal rights to enforce the contract.
  • Example: Party A sells property to Party B and the proceeds go to Party C. Party C can sue for breach of contract.