Chapter 8.docx-Chapter 8 – Agreement and...
Chapter_8.docx-Chapter 8 – Agreement and Consideration
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Chapter_8.docx-Chapter 8 – Agreement and Consideration
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Chapter_8.docx-Chapter 8 – Agreement and Consideration
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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)
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
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
Agreement – offer and an acceptance
Consideration – something of value received/promised to convince a person to
make a deal
Contractual capacity – must be qualified as competent parties
Legality – purpose must accomplish some goal that is legal/not against a policy
Following requirements must be met
Voluntary consent
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
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
Implied contract=the conduct of parties creates and defines at least some of the terms of
the contract

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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)
Unenforceable contract
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
Three elements to make an offer effective:
There must be a serious, objective intention by the offeror
Terms of the offer must be reasonably certain/definite, so that the parties and the
court can ascertain the terms of the contract
Offer must be communicated to the offeree
NOT an offer:
Expressions of opinion
Statements of future intent
Preliminary negotiations
Advertisements, catalogues, circulars
Agreements to agree at some future date
Preliminary agreements
Definiteness, contract must include the following:
Identification of the parties
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
Consideration to be paid
Time of payment, delivery, performance

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