Introduction to Contracts Chapter 8

Definition of Contract A contract is a promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes as a duty. A promise is a declaration that something will or will not happen in the future. A breach is a failure to perform as promised

Elements of a contract Assent - Offer and Acceptance, Agreement Consideration - Bargained for exchange; exchange of a legal benefit or detriment Legal - Lawful purpose; not against public policy Capacity - Competence to make a contract

Express & Implied Contacts Express - Terms of agreement are explicit. May be in writing, or oral, or a mixture Implied - the terms are wholly or partially inferred from conduct and circumstances.

Bilateral & Unilateral Bilateral - Both parties make promises. Each party has an obligation to perform and an expectation that the other party will perform. –Mary tells John, “I’ll provide you lodging if you agree to pay me $55.” Unilateral - If the offer is phrased so that the offeree can accept only by completing the act. “If you walk across the Brooklyn Bridge I’ll give you $10,”; reward offers

Executed & Executory Executed - Has been fully performed by all parties Executory - a duty remains to be performed

Valid, Void, Voidable, Unenforceable Valid - Enforceable by either party Void - Promise/contract which as no legal effect Voidable - A contract where because of the manner in which it was formed or a lack of capacity of party, the law permits the party to either enforce or avoid the contract. Unenforceable - an otherwise valid contact rendered unenforceable because of a failure to follow certain requirements.

Formal & Informal Contracts Formal - Depend on a particular form, have a special effect –Contacts under seal; negotiable instruments, letters of credit Informal - Simple contracts, no special form is required (oral, written, implied)

Quasi - Contract A contract implied by law (NOT a real contract) to avoid injustice, equitable in nature – Unconscious person involved in motor vehicle accident, and taken to hospital, is expected to pay for medical services rendered.

Doctrine of Promissory Estoppel A promise which the promisor reasonably expects to induce action or forbearance