Contracts & Legal Principles Study Guide

**Study Guide: Contracts & Legal Principles** **Key Contract Definitions** - **Contract (K)** -- Legally enforceable agreement between parties. - **Promisor** -- The party making a promise. - **Promisee** -- The party to whom a promise is made. - **Offer** -- A clear intention to enter...

**Study Guide: Contracts & Legal Principles** **Key Contract Definitions** - **Contract (K)** -- Legally enforceable agreement between parties. - **Promisor** -- The party making a promise. - **Promisee** -- The party to whom a promise is made. - **Offer** -- A clear intention to enter a contract, with specific terms, communicated to an identifiable offeree. - **Offeror** -- The party making an offer. - **Offeree** -- The party receiving an offer. - **Mutual Assent** -- Meeting of the minds; agreement. - **Consideration** -- Value exchanged for a promise. - **Capacity** -- Legal ability to enter a contract. - **Legality** -- The contract must comply with the law (Statute of Frauds). - **Bilateral Contract** -- A mutual exchange of promises. - **Unilateral Contract** -- Acceptance through performance. - **Express Contract** -- Terms are explicitly stated. - **Implied in Fact Contract** -- Inferred from circumstances or conduct. - **Implied in Law Contract (Quasi-Contract)** -- Imposed by law to prevent unjust enrichment. - **Executed Contract** -- Fully performed. - **Executory Contract** -- Yet to be performed. - **Void Contract** -- No legal effect. - **Voidable Contract** -- Can be canceled by one party. **Types of Contracts** - **Formal Contracts** -- Must be in a certain form to be valid (e.g., sealed contracts). - **Informal Contracts** -- No formal requirements; can be oral. - **Output Contract** -- Seller agrees to sell all its product to one buyer. - **Requirements Contract** -- Buyer agrees to purchase all required supply from seller. - **Option Contract** -- An offer held open for a specified period with consideration. - **Irrevocable Offer** -- Offer in writing with assurance it remains open. **Contract Law Principles** - **Statute of Frauds** -- Determines which contracts must be in writing. - **Mailbox Rule** -- Acceptance is effective upon dispatch, not receipt. - **Counteroffer** -- A new offer rejecting the previous one. - **Revocation** -- Withdrawal of an offer before acceptance. - **Rejection** -- Offeree declines the offer. - **Breach of Contract** -- Failure to perform contract obligations. - **Statute of Limitations** -- Time limit for legal actions on contracts. **Legal Doctrines & Precedents** - **Stare Decisis** -- Courts follow past rulings. - Can be overturned if: - The past ruling was wrong (e.g., Plessy v. Ferguson overturned by Brown v. Board). - Society has changed (e.g., privacy in the digital age). - The ruling is unworkable (e.g., Bowers v. Hardwick overturned by Lawrence v. Texas). - It conflicts with the Constitution. - **Restatements of Contracts** -- Persuasive legal principles developed by the American Law Institute. - **Uniform Commercial Code (U.C.C.)** -- Governs sales and commercial transactions. **Key Cases** **Kimble Case** - **Issue:** Patent royalties extending beyond expiration. - **Rule:** Brulotte rule prevents post-expiration royalties. - **Possible Fixes:** Limit royalties to the patent term, defer payments only for sales within the term, include non-patent rights. **Seawright v. American General Financial** - **Issue:** Whether continued employment signified agreement to an arbitration policy. - **Ruling:** Yes, because Seawright was informed and continued working, showing implied consent. **Slick v. Reinecker** - **Issue:** Attorney sued for fees despite no written agreement. - **Ruling:** No express or implied contract, so a contingent fee wasn't enforceable. **Domingo v. Mitchell** - **Issue:** Oral agreement over lottery winnings. - **Ruling:** No enforceable contract as Domingo didn't provide consideration. **Contract Law in Business Scenarios** - **Sale of Goods (U.C.C.)**: - Buying a TV from a store → **U.C.C. applies**. - Buying a TV from a friend → **May not apply due to non-merchant status**. - Ordering 50 dozen cookies for a business → **U.C.C. applies**. - **Service Contracts (Common Law)**: - Hiring a company for remodeling → **Common law applies**. - Hiring an employee for an hourly wage → **Common law applies**. **Legal Research Resources** - **State Bar Journals** -- Articles on state-specific laws. - **Legal Encyclopedias** -- Overviews of law topics. - **Formbooks** -- Help in drafting contracts. - **Online Legal Research**: - **Westlaw, LexisNexis** (paid). - **FindLaw, Justia** (free). **E-Commerce & Technology Laws** - **Uniform Electronic Transactions Act (UETA)** -- Recognizes electronic documents as legally valid. - **Electronic Signatures in Global and National Commerce Act (E-Sign)** -- Allows e-signatures in contracts. - **Uniform Computer Information Transactions Act (UCITA)** -- Covers e-transactions but is controversial. **Final Review Questions** 1. **What are the components of a contract?** - Offer, acceptance, consideration, mutual assent, capacity, legality, form (if required). 2. **What is the difference between an offeror and an offeree?** - The **offeror** makes the offer; the **offeree** receives it. 3. **What is the difference between a bilateral and unilateral contract?** - **Bilateral**: Promise for a promise. - **Unilateral**: Promise in exchange for performance. 4. **What is an implied-in-fact vs. a quasi contract?** - **Implied-in-fact**: Based on conduct. - **Quasi (implied-in-law)**: Court-imposed to prevent unjust enrichment. 5. **How do formal and informal contracts differ?** - **Formal**: Must meet specific legal requirements. - **Informal**: No special format required. **Three Main Departures of the U.C.C. from Common Law Contracts** 1. **Acceptance Can Have Different Terms** - **Common Law:** Acceptance must match the offer exactly (**mirror image rule**). - **U.C.C.:** A contract can still be valid even if the acceptance includes **minor changes**, as long as both parties intend to agree. 2. **Contract Modifications Don't Need New Consideration** - **Common Law:** Changes to a contract must include **new consideration** (something of value exchanged). - **U.C.C.:** Modifications are valid **without new consideration**, as long as they are made in **good faith**. 3. **Simplified Statute of Frauds for Sales of Goods** - **Common Law:** Many contracts must be **in writing** (e.g., real estate, contracts over a year). - **U.C.C.:** Contracts for the **sale of goods** over **\$500 must be in writing**, but there are exceptions (merchant confirmations, part performance, custom goods).