2 CONTRACTS Introduction Agreement Consideration Remedies All with a splattering of legality, capacity, consent, legal requirements, & performance

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4 CONTRACT A PROMISSORY AGREEMENT BETWEEN TWO OR MORE PERSONS THAT CREATES, MODIFIES, OR DESTROYS A LEGAL RELATIONSHIP Buffalo Pressed Steel Co. v Kirwan 138 Md. 60 Buffalo Pressed Steel Co. v Kirwan 138 Md. 60

5 CONTRACT AN AGREEMENT BETWEEN TWO OR MORE PARTIES, PRELIMINARY STEP IN MAKING OF WHICH IS OFFER BY ONE AND ACCEPTANCE BY OTHER, IN WHICH MINDS OF PARTIES MEET AND CONCUR IN UNDERSTANDING OF TERM. AN AGREEMENT BETWEEN TWO OR MORE PARTIES, PRELIMINARY STEP IN MAKING OF WHICH IS OFFER BY ONE AND ACCEPTANCE BY OTHER, IN WHICH MINDS OF PARTIES MEET AND CONCUR IN UNDERSTANDING OF TERM. Lee vs. Travelers Ins. Co. of Hartford, 173.S.C. 185

6 CONTRACTS Definition: A promise that the law will enforce.

7 PURPOSE OF CONTRACTS Contracts exist to make business matters more predictable.

8 JUDICIAL ACTIVISM VS JUDICIAL RESTRAINT Judicial restraint makes the law less flexible but more predictable. Judicial activism makes the law more flexible but less predictable.

9 DEVELOPMENT OF CONTRACT LAW  Common law requirements:  Later, some payment was required.  Mutual promises became enforceable.  By the 1900’s, courts began to consider fairness.

10 ELEMENTS OF A CONTRACT AgreementConsiderationLegalityCapacity

11 TYPES OF CONTRACTS Bilateral vs. Unilateral Express vs. ImpliedExecutory vs. Executed Valid vs. Unenforceable vs. Voidable vs. Void

12 TYPES OF CONTRACTS (cont’d) BilateralUnilateral

13 TYPES OF CONTRACTS (cont’d) ExpressImplied

14 TYPES OF CONTRACTS (cont’d) ExecutoryExecuted

15 TYPES OF CONTRACTS (cont’d) Valid: Valid: Unenforceable: Unenforceable: Voidable: Voidable: Void: Void:

16 PROMISSORY ESTOPPEL Even when there is no contract, a plaintiff may use promissory estoppel to enforce the defendant’s promise. Even when there is no contract, a plaintiff may use promissory estoppel to enforce the defendant’s promise.

17 PROMISSORY ESTOPPEL 1.The defendant made a promise knowing that the plaintiff would likely rely on it. 2.The plaintiff did rely on the promise; and 3.The only way to avoid injustice is to enforce the promise.

18 QUASI-CONTRACT Even when there is no contract, a court may use quasi-contract to compensate a plaintiff.

19 REQUIREMENTS FOR QUASI- CONTRACT 1.Plaintiff gave some benefit to the defendant. 2.Plaintiff reasonably expected to be paid for the benefit and the defendant knew this; and 3.The defendant would be unjustly enriched if she did not pay.

20 QUASI-CONTRACT DAMAGES The damages awarded are called quantum meruit.

21 SOURCES OF CONTRACT LAW Common Law Uniform Commercial Code Restatement (Second) of Contracts

22 CONTRACTS ARE A PROMISE THE LAW WILL ENFORCE. EXIST TO MAKE BUSINESS MATTERS MORE PREDICTABLE.