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CONTRACT LAW IN THE FIRST-YEAR LAW CURRICULUM Defining Terminology. 1.Contract: The term contract ordinarily means an agreement between two or more persons.

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Presentation on theme: "CONTRACT LAW IN THE FIRST-YEAR LAW CURRICULUM Defining Terminology. 1.Contract: The term contract ordinarily means an agreement between two or more persons."— Presentation transcript:

1 CONTRACT LAW IN THE FIRST-YEAR LAW CURRICULUM Defining Terminology. 1.Contract: The term contract ordinarily means an agreement between two or more persons. 2.How does the following term shed any light on the meaning of the term contract: 3.The term contract means something more than an shared under­ standing between the parties to an agreement. 4.Do words clearly express the message the speaker or writer intends to communicate, or does meaning depend on the recipient of the communication? 5.The term contract may also refer to the set of papers on which the terms of the agreement may be found, the document. 6.To an attorney, the terms contract refers to an agreement that has legal effect: a.The agreement creates legally enforceable obligations between the parties. b.The law would provide a remedy if one of both of the parties do not fulfill their obligations under the contract.

2 CONTRACT LAW IN THE FIRST-YEAR LAW CURRICULUM A transaction involving the sale and purchase of a House will have three elements, each of which may be called a contract: 1.The agreement-in-fact 2.The agreement as written 3.The set of rights and duties created by the agreement-in-fact and/or the agreement as written. I will sell you my home I will pay you $150,000 for your home

3 CONTRACT LAW IN THE FIRST-YEAR LAW CURRICULUM During the first year contracts course, we will study 1.The ways in which agreements are made; 2.The ways agreements are enforced in our legal system; 3.The role judges and lawyers play in creating contracts; 4.The role judges and lawyers play in deciding disputes over performance; and 5.The role judges and lawyers play in fashioning remedies. I will sell you my home I will pay you $150,000 for your home

4 CONTRACT LAW IN THE FIRST-YEAR LAW CURRICULUM How does the contracts course fit into to first year law curriculum? 1.In our legal system many things are susceptible to ownership: home, stock, copyrights, and patents. 2.In our legal system, the state will protect the right of a party who owns property to use, enjoy and consume that property; 3.In the first year Property course, the focus is on rules governing ownership of real property and, in some cases, personal property. 4.Both Criminal Law and Tort law reflects how societys responds to certain violations of property, and for that matter, personal rights. 5.Criminal Law deals with violations of personal and property right which are so serious that society will deter by serious punishment. 6.Tort Law deals with remedies that will be available to individuals how have been injured by violations of their personal and property rights.

5 CONTRACT LAW IN THE FIRST-YEAR LAW CURRICULUM How does the contracts course fit into to first year law curriculum? 1.In our legal system many things are susceptible to ownership: home, stock, copyrights, and patents. 2.In our legal system, the state will protect the right of a party who owns property to use, enjoy and consume that property; 3.In the first year Property course, the focus is on rules governing ownership of real property and, in some cases, personal property. 4.Both Criminal Law and Tort law reflects how societys responds to certain violations of property, and for that matter, personal rights. 5.Criminal Law deals with violations of personal and property right which are so serious that society will deter by serious punishment. 6.Tort Law deals with remedies that will be available to individuals how have been injured by violations of their personal and property rights.

6 Contract Law is the legal mechanism societys uses to protect the expectation that arises from agreements for future performance. 1. Agreements for exchange (contracts) are the means by which resources (property) are assembled and put to more productive use. 2. Simultaneous or Immediate Exchanges. These exchange agreements are completed simultaneously. 3. Future Exchanges.­­ Some exchanges require considerable planning and the performances are usually extended over a pro­longed period of time. CONTRACT LAW IN THE FIRST-YEAR I will pay you $150,000 for your home I will sell you my home

7 THE SOURCES OF CONTRACT LAW Where is the law of contracts found? 1.Primary authority. a.Prior judicial decisions, collectively making up the common law. b.Statutes ordinances, expressions of the will of a duly constituted legislative body on a subject within its sphere. 2.Secondary authority anything that could appropriately influences a court. a.Restatements of the Law (American Law Institute). b.Commentaries by legal scholars (articles, treaties) 3.Judicial Opinions. a.The bulk of contract law has developed through case law: Laws or rules of law synthesized from prior judicial decisions. What we commonly refer to as common law. b.Stare decisis Our judicial system of decision-making is said to be stare decisis: it is characterized by the adherence to past decision or precedent. c.Precedent. A precedent is a prior decision with facts sufficiently similar to the case under adjudication that the court feels obliged to follow it and to render a similar decision.

8 THE SOURCES OF CONTRACT LAW Where is the law of contracts found? 3.Judicial Opinions. a.Precedent 1. Offer: After a lengthy conversation regarding the merits of his 1999 Ford Tarsus and his discussion with a colleague at work regarding the same matter, Bill says to Mary, who knew Bill wanted to sell his car, I will sell you my Tarsus if you promise to pay me $2,100. Knowing this price was about $500 below market price, Mary immediately responded, Ill take the deal. Since Mary jumped on the deal so quickly, Bill began to have second thoughts and refused to sell. Mary sued. Bill defended the lawsuit claiming that his statement to Mary regarding his Tarsus could not have been taken seriously by a reasonable person. Rule: Offer is a manifestation of assent so made as to lead the other party to reasonably understand that her assent would close the deal.

9 THE SOURCES OF CONTRACT LAW Where is the law of contracts found? 3.Judicial Opinions. a.Precedent 2. Offer: During their regular Friday night poker game, believing she had an unbeatable hand, Sally turned to Tom and said, My hand is so good, I am willing to put my 1999 Ford Tarsus on the table. In fact, where are my keys? If you beat my hand, I will sell you my 1999 Ford Tarsus for $300. When she found her keys, Sally threw them in the middle of the table. This type of gesturing between the two parties was not unusual. They had done this sort of wagering every Friday night for over five years. After Tom won the hand, he said to Sally, I accept. When Sally failed to deliver the car, Tom sued. RULE? b. Justification for system of law based on precedent is two fold 1. Offers high degree of predictability of decisions, enabling those who so desire to order their affairs in accordance with ascertainable rules of law. 2. It puts a rein on what might otherwise be the natural proclivity of judges to decide cases on the basis of prejudice, personal emotion, or other factors that we might regard as improper.

10 THE SOURCES OF CONTRACT LAW Where is the law of contracts found? 4.Statutory Law. a.Contract law has developed through the common law rather than by statute. The "statute of frauds" is one noticeable exception. b.Contracts law still remains fundamentally a common law system. However, in recent years significant changes in the common law of contracts has been made by the Uniform Commercial Code (UCC). c.The UCC does not regulate all commercial transactions. 5.Secondary authority: Restatements Of Contracts. a.In a continuing attempt to eliminate uncertainty and promote uniformity in commercial transactions, the American Law Institute was formed. The organization's major undertaking was the drafting and promulgation of an accurate and authoritative summary of the rules of common law in various fields of law: contract, torts, property and others. 6.Secondary authority: Legal Commentary. a. Published articles, books and multi volume treatises are another secondary source of persuasive authority for shaping the development of the law.

11 THE SOURCES OF CONTRACT LAW Where is the law of contracts found? 7.International Commercial Law. a.Because of globalization, many lawyers will find themselves in international commercial transactions. The sources of law for International transactions include the following: 1.GATT: General Agreement on Tariffs and Trade. Although Congress did not give formal approval to this treaty until the World Trade Organization (WTO) was created to administer GATT, the United States has been a party to GATT from it inception. 2.Under the sponsorship of the United Nations Commission on International Trade (UNCITRAL), many countries adopted the United Nations Convention on the International Sale of Goods (CISG). Like the UCC, CISG applies to the sale of goods. One very important difference between the two laws is that CISG does not cover consumer transactions. 3.Since CISG does not purport to cover all issues of international contract law, a private organization, the International Institute for the Unification of Private Law (UNIDROIT) sponsored the preparation of Principles of International Commercial Contracts. These principles are analogous to the Restatement of Contracts

12 CONTRACT THEORY 1.As we consider rules of contract law that are traditionally regarded by Judges and lawyers as comprising the present-day law of contracts, we must be aware that many legal scholars have gone beyond analysis centered on mere identification and classification of rules of law to be applied in resolving specific disputes. 2.Legal scholarship has focused on examining the fundamental nature of law and, in particular, contract law. Legal scholars have attempted to develop theoretical justifications for the current structure of contract law. a.The aim of contract law scholarship is to demonstrate that the contract rules applied by courts are intelligible (comprehensible) and determinable. b.Understanding the fundamental nature of contract law and the principles expressed in contract rules enable us to predict decisions courts would make in any given dispute. c.In theory, this ability to predict judicial decisions enables us to order or affairs in accordance with ascertainable rules of law. d.The secondary effect of determinable rules of contract law is that these rules put a rein on the natural proclivity of judges to decide cases on the basis of prejudice, personal emotion, or other factors that we might regard as improper grounds for decisions.

13 CONTRACT THEORY 3.Classical v. Neoclassical Contract Law. a.Classical Contract Law is a body of law and legal rules usually associated with the age of Homles, Williston, and the First Restatement of Contracts. b.The general structure of classical contract law recognized a series of dichotomies that defined the relationships among legal actors in terms of private and public spheres. 1.Private Sphere: Under the classical theory, the private sphere represented a realm in which individual freedom or individual autonomy is protected from state intervention or coercion. This concept is generally expressed in contract law as the notion of freedom of contract. a.Under this conception of contract law, the individual always voluntarily assumed liability through the making of a promise. Individual actors were free to voluntarily assume liability by agreement. b.The state has no authority to imposed liability or obligations that individual actors did not voluntarily assume through contract.

14 CONTRACT THEORY 3.Classical v. Neoclassical Contract Law. 1.Private Sphere: c.To the extent that judges established an obligation in a contract between individuals that the parties did not expressly agreed to, the state (judges are an extension of the state) would be acting outside of its real of authority. In such an instance individual freedom would be trampled because this involuntarily imposition of liability would be an illegitimate exercise of authority. d.The goal of contract law would be to protect individual freedoms by limiting the ability of judges to act outside their field of authority. The role of contract rules is therefore to put a rein on judges. 2.Public Sphere: Public law of represented regulated relations between individuals and the state. The relationship was not consensual. a.Tort law, where liability was imposed by the legal system without regard for the individual's consent, is an example of public sphere action. This would be a legitimate exercise of authority.

15 3.Classical v. Neoclassical Contract Law. c.Formalism: Courts were to mechanically apply formal contract rules. When the court applied these abstract, formal doctrines, they protected the individual's right to assume contract liability. 1.The law, according to legal formalists, was founded on neutral principles, which, if correctly applied, would allow the judge to avoid having their moral, or political values affect the decision before them. 2.Law was viewed as a self-contained system -- a science -- in which decisions flowed necessarily from a limited number of discoverable and foundational conceptual principles and doctrines. 3.Christopher Columbus Langdell, Dean of the Harvard Law School from , conceived the case method of teaching and studying law. 4.This method of study implicitly relied on Darwinian ideas. 5.Langdell believed that each of these doctrines had arrived at its present state by slow degrees, in other words it is a growth, extending in many cases through centuries... [T]he shortest and the best, if not the only way of mastering the doctrine effectually is by studying the cases in which it is embodied. CONTRACT THEORY

16 3.Classical v. Neoclassical Contract Law. c.Formalism: Courts were to mechanically apply formal contract rules. When the court applied these abstract, formal doctrines, they protected the individual's right to assume contract liability. 6.The law, which according to legal formalists was founded on neutral principles, was pure. 7.The problem with Formalism is that Contract liability, like all other liability, did not arise solely from the individuals choice but came from the courts imposition of legal obligation as a matter of public policy; 8.A contract was binding because the court determined that imposition of liability served social interests, not because the individual had voluntarily assumed liability through his manifestation of assent.

17 c.Formalism: 9.Law was so pure, that judges and the legal system they enforced embraced a political system denied Blacks basic human freedoms. 10.Blacks were property. 11.Negroes... such that he has no civil, social or political rights or capacity, whatever, except such as are bestowed on him by Statute; that he can neither contract, nor be contracted with; that the free Negro can act only by and through his guardian; that he is in a state of perpetual pupilage or wardship; and that this condition he can never change by his own volition. CONTRACT THEORY


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