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Chapter 8.docx
Chapter_8.docx
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Chapter 8.docx-Chapter 8 – Agreement and Considera...
Chapter_8.docx-Chapter 8 – Agreement and Consideration
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Chapter_8.docx-Chapter 8 – Agreement and Consideration
Page 1
Chapter 8 – Agreement and Consideration in Contracts
A contract is based on a promise (declaration by the promisor that binds the person to do
or not to do a certain act), then the person to whom the promise is made (promise)
has
the right to expect/demand that something either will or will not happen
Overview of Contract Law
Common law governs all contracts besides when it has been modified/replaced by
statutory law
Contract=agreement that can be enforced in court
Objective theory of contracts=a party’s intention to enter into a contract is judged by
outward, objective facts as interpreted by a reasonable person, rather than by the party’s
secret, subjective intentions
o
Objective facts include
What the party said when entering into the contract
How the part acted or appeared
The circumstances surrounding the transaction
Four Requirements for a valid contract
o
Agreement – offer and an acceptance
o
Consideration – something of value received/promised to convince a person to
make a deal
o
Contractual capacity – must be qualified as competent parties
o
Legality – purpose must accomplish some goal that is legal/not against a policy
Following requirements must be met
o
Voluntary consent
o
Form – contract must be in the form the law requires
Type of Contracts
Contract Formation
Offeree=offer is made to them
Bilateral contract=if the offeree can accept simply by promising to perform – “promise
for a promise”
Unilateral contract=if the offer is phrased so that the offeree can accept only by
completing the contract performance
ex. contests, lotteries
Formal contract=contracts that require a special form or method of creation to be
enforceable
ex. negotiable instruments=checks, drafts, certificates of deposit
Informal contract=all other contracts, no special form required, usually based on
substance rather than form
Express contract=terms of agreement are fully and explicitly stated in words, oral, or
written
Implied contract=the conduct of parties creates and defines at least some of the terms of
the contract
Page 2
o
Requirements
Plaintiff furnished some property or service
Plaintiff expected to be paid for that service or property, and defendant
knew or should have known payment was expected
Defendant had a chance to reject the services or property and did not
Mixed contract=express and implied
Contract Performance
Executed contract=fully performed on both sides
Executory contract=not been fully performed by the parties
Contract Enforceability
Valid contract=has the four elements necessary to entitle at least one of the parties to
enforce it in court (4 listed above)
o
Enforceable
o
Unenforceable contract
o
Voidable contract – party has the option of avoiding or enforcing obligation
Void contract=no contract at all, or contract without legal obligations
Quasi contracts=obligation or contract imposed by law, in absence of an agreement, to
prevent the unjust enrichment of one party
Quantum meruit=as much as he or she deserves, describes the extent of compensation
owed under a quasi-contract
Agreement
Three elements to make an offer effective:
o
There must be a serious, objective intention by the offeror
o
Terms of the offer must be reasonably certain/definite, so that the parties and the
court can ascertain the terms of the contract
o
Offer must be communicated to the offeree
NOT an offer:
o
Expressions of opinion
o
Statements of future intent
o
Preliminary negotiations
o
Advertisements, catalogues, circulars
o
Agreements to agree at some future date
o
Preliminary agreements
Definiteness, contract must include the following:
o
Identification of the parties
o
Identification of the object or subject matter of the contract, including work to be
performed, with specific identification of such items as good, services, and land
o
Consideration to be paid
o
Time of payment, delivery, performance
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