we're gonna talk about contracts.

In chapter 7, we're gonna focus in on

the first two elements of contracts--

agreement and consideration.

Contract law is based on the common law,

which we've talked about already,

except for contracts for the sale of goods,

which are governed by statutory law,

specifically the Uniform Commercial Code, or the UCC.

The idea is that they would provide stability

and predictability for commerce.

Contract is a promise or set of promises for a breach

to which the law provides a remedy,

or the performance of which the law

in some way recognizes as a duty.

The Objective Theory of Contracts

is applied by the court,

and it looks to the circumstances

to determine the intent of the parties.

Rather, it looks at the objective facts,

including what a party may have said

when entering into the contract,

how the party acted or appeared,

and circumstances surrounding the transaction.

To have a valid, enforceable contract, you need an agreement,

which consists of an offer and acceptance, consideration,

which is a bargained for exchange of something of value,

contractual capacity, and legality.

Legality has to do with purpose of the contract.

It has to be legal at the time of execution.

There are a couple defenses up front to enforceability

of a contract, voluntary consent--

in other words, a person shouldn't be forced

to enter into the contract-- as well as the form.

Some contracts have to be in writing

under the Statute of Frauds,

which we'll talk about more later on.

There are different types of contracts.

A bilateral contract is a promise for a promise.

The only thing that the offeree has to do to form the contract

is to make a promise to perform.

And a unilateral contract,

the only way the offeree can accept the offer

is by doing the act that was requested in the offer.

In other words, a unilateral contract is a promise

for an act.

Formal versus informal contracts--

a formal contract is a contract

that has to be in writing to be enforceable.

All other contracts are informal.

Express versus implied--

"express" means expressed in words,

orally or written.

And "implied" means circumstances

imply that there's a contract.

Basically, requirements are that the plaintiff

furnished goods or services expected to be paid,

and the defendant had a chance to reject

those goods or services but didn't.

Executed verses executory contracts--

an executed contract is where all the parties

have done everything they're supposed to.

An executory contract, at least one of the parties

hasn't done at least one thing.

Talk about the three "V"s-- valid, void, and voidable.

A valid contract is an agreement, consideration,

contractual capacity, and legality.

In other words, a valid contract has all four elements

of a contract.

A void contract is really an oxymoron

in that it's not a contract to start with.

And a voidable contract is an unenforceable contract.

It's a contract that's valid to start with,

but one or both of the parties could back out of it.

Basically, an example that would be a valid contract

that a minor enters into is,

so therefore the minor could avoid it,

or that would be a voidable contract.

Quasi contract are contracts implied in law

is that you're gonna see this one

when there is no actual contract.

It's an equitable remedy,

which we've talked about earlier in the semester.

It's designed to prevent unjust enrichment

by one of the parties.

One example would be if there was a-- not a contract,

but somebody expected to get paid for their services,

then they would get compensated in quantum meruit.

In other words, they'd get the reasonable value

of their services.

There are limitations.

For example, if the other party was enriched,

but it was, for some unnecessary reason-- neglect, misconduct--

for example, if I provided something to another party

that they didn't ask for,

and they didn't have an opportunity to reject,

that would mean they necessarily are forced to pay for it.

Let's focus in on the element of agreement.

As we said earlier, that's offer and acceptance.

The requirements for an offer are a serious intent,

definiteness, and a communication of the offer

from the offeror to the offeree.

In terms of intent, a contract is judged by

what a reasonable person in the offeree's position

would conclude about the offer.

And here are some things that are not offers--

expressions of opinion,

statement of some future intent to enter into a contract

is not an offer,

preliminary negotiations or invitations to negotiate,

and advertisements.

Typically, you know, for example if I advertise to sell my truck,

and a hundred people responded,

I wouldn't be bound to sell it to all of them.

It would be an invitation for them to negotiate.

An agreement to agree can, under the modern view,

be enforceable if the parties intended to be bound.

A preliminary agreement can be binding if the parties

had agreed upon all the essential terms.

The offer has to be definite.

The terms expressed or implied need to identify the party,

the object or the contract, consideration to be paid,

and things like the time of payment, delivery, performance.

An offer can require specific terms

to make the contract definite,

and a court can supply missing terms if the parties intend

to form a contract.

The offer needs to be communicated to the offeree.

The offeree's knowledge of the offer can be either direct

or through an agent.

And an offer is terminated by the actions of the parties

or by operation of law.

One of the things the offeror could do is revoke the offer.

And the offer can be withdrawn any time

prior to the acceptance, unless it's irrevocable.

And typically, the offer is effective when the offeree

or the offeree's agent receives it.

More on termination by action of the offeree.

The offeree could reject the offer.

That would be either expressed or implied.

The offer could be terminated by a rejection counter-offer.

So if somebody offered to sell you something for $100,

and you responded, "I wouldn't pay more than 50,"

that would be a rejection and potentially a counter-offer.

Mirror Image Rule says, under common law,

any change in the terms automatically terminates the offer.

So if I were to accept with different terms,

that wouldn't be a contract.

The offer could be terminated by operation of law

through lapse of time.

The offer might be open for a specific period of time.

Destruction or death--

destruction of the subject matter,

death of the offeror or offeree.

Or even some, what used to be legal,

now illegal purpose for the contract.

Acceptance is voluntary.

It's made by the offeree.

It shows their assent or agreement to the contract,

and specifically the terms of that offer.

This is the Mirror Image Rule,

that the acceptance mirrors the offer.

Silence can be acceptance.

In some cases, when the offeree has a duty to speak,

he takes the benefit of services with the opportunity to reject

and doesn't, that would be considered an acceptance.

Or that's the way the parties have done it in the past.

In a bilateral contract,

communication of the acceptance is necessary

because of the mutual exchange of promises.

Unilaterally, acceptance is evident, because it's an action.

You don't need to notify the other party.

Instead, your notice is your performance of the act.

In bilateral contracts, acceptance is timely.

If it's made before the offer's terminated,

there's the Mailbox Rule,

which basically says the acceptance is effective

upon getting into the mail.

Could be some issues with that, you know, if the other party

said the acceptance isn't effective

until it actually gets to them.

A party could specify how they want acceptance to be made.

And in that case, then it would be an acceptance

if it wasn't delivered in a way that was authorized.

Could be online offers.

If there is, then the seller's web site

should include a hyperlink

to the full details of the offer.

Here are some things to include pretty much in any contract,

but this can be an issue in online contracts as well--

how the other party would accept payment, return policy,

a disclaimer concerning the liability,

a limit on the remedies that the other party can invoke

if there's a breach of contract,

privacy policy, because you potentially are providing

identifying information over the internet,

and forum and choice-of-law clauses,

if there is a dispute where it would be settled

as well as which law of which particular jurisdiction

would apply.

Click-on agreements.

There's a binding contract when a party clicks on a box,

indicating they accept or agree.

That could be through web site or software.

Law doesn't require that the party actually read

all of the terms, just that they had access to the terms.

Courts generally enforce click-on agreements,

as well as shrink-wrap agreements.

So you could have software inside of a box, sealed up,

and the parties agree, by opening the box

or installing the software, to the terms.

Basically they don't necessarily see the terms

in shrink-wrap agreement until afterwards.

And the court reasons that they still would have an opportunity

to reject it if they see the terms.

Browse-wrap terms.

It says, "Unlike click-on agreements,

"browse wrap-terms do not require assent

"and are usually unenforceable."

What that means is that these are over the internet,

and somebody would agree to terms,

and if it's not possible for them to see

what the terms their agreement is about beforehand,

then the court typically doesn't enforce that.

There's the E-SIGN law back in 2000,

it gives e-signatures and e-documents legal force.

So you can have documents that are electronic

that would be the same as paper in terms of enforceability.

For an e-signature to be enforceable,

the contracting parties must have agreed to use e-signatures.

And it doesn't apply to all documents.

UETA-- "Uniform Electronic Transaction Act"--

is it purposes to remove barriers

to forming electronic commerce,

not create new types of contracts.

And an e-signature could be anything

from electric sound symbol,

process associated with a record.

And a record is information that's inscribed

on a tangible medium or stored in electronic

or other medium that is retrievable in visual form.

UETA doesn't create new rules,

but rather enforces real world rules on electronic contracts.

It only applies to e-records and e-signatures

related to a transaction.

It doesn't apply to wills or testamentary trusts.

And it doesn't apply unless each party has previously agreed

to conduct electronic transactions.

But that could be implied by the conduct

of the parties or prior dealings.