1. Basic Contract Law for Paralegals Fifth Edition
Jeffrey A. Helewitz

2. Chapter 1 OVERVIEW OF CONTRACTS
In this chapter you will:
Define a legally binding contract
Identify the six basic requirements to forming a valid contract
Explain the concept of offer and acceptance
Define and exemplify consideration
Classify contracts into bilateral or unilateral agreements
Understand how a contract is created
Explain the difference between executory and executed contracts
Differentiate between valid, void, voidable and unenforceable contracts
Discuss various contractual provisions
Know what is meant by the term contractual capacity

3. Contract Defined
A contract is a legally enforceable agreement that meets certain specified legal requirements between two or more parties in which each party agrees to give and receive something of legal value.

4. Elements of a Valid Contract
Offer
Acceptance
Consideration
Legality of subject matter
Contractual capacity
Contractual intent

5. Type of Obligation
Bilateral: a bilateral contract is a promise for a promise.
Unilateral: a unilateral contract is a promise for an act.

6. Method of Creation
Express contract: mutual assent of the parties is manifested in words, either orally or in writing.
Implied-in-fact contract: promises of the parties are inferred from their actions or conduct as opposed to specific words being used.
Implied in Law contract (also known as quasi-contract): situations that look like a contract but are not because one of the requisite elements is missing.

7. Type of Form
Formal: limited group of contracts that different states have declared valid and enforceable if certain statutory requirements are met.
Informal: all non-formal contracts; agreements that meet all the requirements of valid contracts.

8. Timing
Executory contract: a contract in which one or both of the parties still have obligations to perform.
Executed contract: a contract that is complete and final with respect to all of its terms and conditions.

9. Enforceability
Valid: an enforceable contract that meets all of the six requirements
Void: a situation where there is no contract and the law therefore does not entitle the parties to any legal remedy.
Voidable: a contract where a party to the agreement has the option of avoiding his legal obligation without any negative consequences, but who could, if he wished, affirm his obligation and thereby be contractually bound.

10. Summary Type of Obligation Method of Creation Form Timing
Enforceability
Bilateral
Unilateral
Express
Implied in fact
Implied in law (quasi)
Formal
Informal
Execut-ory
Execut-ed
Valid
Void
Voidable
Unenforceable

11. Chapter 2 OFFER In this chapter you will: Define offer
Identify the three conditions necessary to create a valid offer
Explain the concept of certainty and definiteness in the terms of an offer
List the four required terms in a valid offer
Briefly discuss what is the UCC
Discuss the impact of the UCC on traditional legal principles of a contractual offer
Know what is meant by an output contract
Apply basic concepts of an offer to contractual clauses
Draft a basic offer that would meet legal standards
Indicate the difference between contracting with a member of the general public and a merchant

12. Offer Defined
An offer is a proposal by one party, the offeror, to a second party, the offeree, manifesting an intention to enter into a valid contract.

13. Three Conditions for a Proposal to Qualify as a Contractual Offer
The offeror must manifest a present contractual intent.
The offer must be communicated to the offeree.
The offer must be certain and definite with respect to its terms

14. Certainty and Definiteness in the Terms of the Offer
Four essential elements for definite and certain terms:
The price of the contract
The subject matter of the contract
The parties to the contract
The time of performance for fulfilling the contract

15. Uniform Commercial Code
The Uniform Commercial Code (UCC) is a model law adopted in whole or in part by each state as a statutory enactment that, among other things, has codified certain contractual concepts with respect to the sale of goods.

16. Chapter 3 ACCEPTANCE In this chapter you will: Define acceptance
Differentiate between an acceptance and a counter-offer
Discuss the mirror image rule
Indicate the effect of silence on an offer
Explain who is capable of accepting an offer
Discuss the method of accepting a bilateral and a unilateral offer
Discuss the impact of the mailbox rule on the acceptance of a contract
Explain the effect of the rejection of an offer
Define revocation
Discuss the effect of the termination of an offer on the parties ability to create a valid contract

17. Acceptance
Acceptance is the manifestation of assent in the manner requested or authorized by the offeror.

18. Varying the Terms of the Offer
First, to be valid, the acceptance must parrot exactly the terms of the offer.
Second, any variance in the terms of the offer creates a counteroffer, which rejects and therefore terminates the original offer.
Third, if the variance is merely a term that is implicit in the original offer, that variance will not constitute a counteroffer.

19. When Does Silence Constitute an Acceptance?
if the offer was solicited by the offeree or
the contract is implied in fact

20. Principal-Agent Relationship
An agent is one who acts for and in the place of another, known as the principal, in order to enter into contracts with third persons on the principal’s behalf.

21. Mailbox Rule
The acceptance of an offer of a bilateral contract is effective when properly dispatched by an authorized means of communication.

22. Termination of the Ability to Accept
To terminate an offer by an act of the parties, either the offeree must reject the proposal or the offeror must revoke the offer.

23. Termination by Operation of Law
Lapse of time
The death or destruction of the subject matter
The death or insanity of the offeror or offeree
Supervening illegality

24. Chapter 4 CONSIDERATION
In this chapter you will:
Define contractual consideration
Discuss the concept of mutuality of consideration
Differentiate between a benefit conferred and a detriment incurred
Exemplify what is not considered to be legally sufficient consideration
Explain the pre-existing duty rule
Discuss the impact of the UCC on traditional concepts of consideration
Explain what is meant by the sufficiency of the consideration
Define promissory estoppel
Discuss accord and satisfaction
Indicate how one becomes a guarantor

25. Consideration
Consideration is something that has legal value.

26. Detriment as Consideration
For a detriment to qualify as consideration, the person incurring the detriment must:
give up a legal right
at the request of the other party
in exchange for something of legal value

27. What is Not Consideration
Past consideration is no consideration
Moral consideration is no consideration
A gift can never be legal consideration
Illusory promises are never consideration
Promises to do that which one is already bound to do are not consideration

28. Circumstances under which a Preexisting Duty May Be Consideration
If new or different consideration is given
The purpose is to ratify a voidable obligation
The duty is owed to a third person, not the promisee
Unforeseen circumstances make the duty more difficult to fulfill

29. Does a Bad Bargain Matter?
Caveat emptor: Let the buyer beware
Caveat venditor: Let the seller beware

30. Valid Accord and Satisfaction
The requirements are:
A valid contract
A dispute between the parties with respect to that contract and
An agreement to compromise the dispute rather than sue

31. Guarantees
A guarantee is a written promise to answer for the debts of another that is enforceable against the guarantor.

32. Requirements for a Guarantee to be Valid
A valid contract is entered into between two or more parties
The guarantor creates the guarantee at the time the contract is executed and
The guarantee is in writing

33. Chapter 5 LEGALITY OF SUBJECT MATTER AND CONTRACTUAL CAPACITY
In this chapter you will:
Discuss the concept of the legality of the subject matter
Define malum in se
Define malum prohibitum
List the sic types of contracts that come under the Statute of Frauds
Discuss what is meant by usury
Explain the concept of contractual capacity
Differentiate between infants and minors
Know which types of contracts a minor cannot avoid
Discuss the effect of alcohol and drugs on a person’s contractual capacity
Apply the concepts of legality and capacity to your everyday life

34. Malum in Se
Contracts that violate public policy and are deemed bad in and of themselves.

35. Malum Prohibitum
Contracts that are not morally reprehensible or against public policy but are still minor violations of the lawa prohibited wrong, or something prohibited by statutory regulation.

36. Contracts that Violate the Statute of Frauds
Contracts for an interest in realty
Contracts that are not to be performed within one year
Contracts in consideration of marriage
Guarantees
Sale of goods valued at over $500
Executors’ promises to pay the decedent’s debts

37. Contractual Capacity
The parties’ legal ability to enter into a binding contractual relationship

38. Four Major Areas of Contractual Capacity
Age
Mental capacity
Alcohol
Drugs

39. Chapter 6 CONTRACTUAL INTENT
In this chapter you will:
Define what is meant by contractual intent
Define fraud
Differentiate fraud from misrepresentation
Explain the concept of duress
List the three types of duress that may be encountered in contract law
Discuss what is meant by undue influence
Define a contract of adhesion
Discuss the effect of a mistake on contract formation
Discuss the enforceability of contract entered into with a unilateral mistake
Understand how the concept of contractual intent may be applied to void contracts

40. Contractual Intent
The parties to the contract must actually intend to enter into a contract for the same bargain at the same time.

41. Fraud Five elements of contractual fraud: The misrepresentation
of a material fact
made with the intent to deceive and
relied on by the other party
to his or her detriment

42. Duress
Duress connotes some form of force or coercion exercised over one party to the contract in order to induce that party’s promise to contract

43. Forms of Duress
Physical duress
Economic duress
Mental duress

44. Mistake
Mistake occurs when one (or both) of the parties is under a misconception as to the subject matter of the contract.

45. Categories of Mistake
Mutual mistake: this type of mistake goes to a basic assumption of the agreement, the mistake has a material adverse effect on the parties, and the mistake was of the type that could not be foreseen.
Unilateral mistake: concerns a situation in which only one party to the contract is mistaken because of some typewritten or computation error.

46. Chapter 7 CONTRACT PROVISIONS
In this chapter you will:
Distinguish between a covenant and a condition
List the most generally encountered contractual rules of construction
Apply general contract rules of construction to analysis of contract provisions
List the types of contracts that are governed by the Statute of Frauds
Define an antenuptial agreement
Categorize conditions by when they create or extinguish a contractual duty
Categorize conditions by the method whereby they have been created
Define a condition subsequent, precedent and concurrent
Explain the parol evidence rule
Analyze contractual clauses to determine the parties rights and obligations

47. The Statute of Frauds
The statute of frauds required that, to be enforceable, the following six types of contracts had to be in writing:
Contracts for an interest in real estate
Contracts in consideration of marriage
Contracts that are not to be performed within one year
Guarantees
Contracts for the sale of goods valued over a specified amount
Executor’s promises to pay a decedent’s debts

48. Covenant
An unconditional, absolute promise to perform.

49. Conditions
Specific promise made by the parties to the contract.

50. Categories of Conditions
Conditions categorized by when they create, or extinguish, the duty to perform the covenant
Conditions precedent
Conditions subsequent
Conditions concurrent
Conditions categorized by how the parties have arrived at them
Express conditions
Implied-in-fact conditions
Implied-in-law conditions

51. Rules of Construction
Guidelines that the courts use to interpret all contractual provisions
Lengthy communications are viewed as a whole, and any inconsistent words are discarded
Contracts are to be interpreted according to business custom and usage
Words are to be construed according to their ordinary meaning
If there is an inconsistency with words that are printed, typed, or handwritten, handwriting prevails over typing, and typing prevails over mechanical printing

52. Parol Evidence Rule
Oral testimony may not be used to vary the terms of a writing

53. Chapter 8 THE UNIFORM COMMERCIAL CODE
In this chapter you will:
Explain the background of the Uniform Commercial Code
Discuss the basic guidelines to be used when applying the UCC
Indicate the obligations imposed by Article I of the UCC
Discuss the concept of custom and usage as it applies to contracts
Distinguish between contracts for goods and contracts for services
Define the UCC concept of merchant
Discuss the UCC express and implied warranties
List and discuss conditional sales contracts
List and discuss shipment contracts
Discuss the various remedies afforded parties under the UCC
Define a secured transaction
Indicate the requirements to create a security interest
Define a financing statement

54. Uniform Commercial Code
Major statutory basis of several important areas of contract law. The UCC was created to promote commerce and to establish certain basic guidelines for those parties involved in commercial transactions.

55. Basic Guidelines of Article I
The law of the state applies unless otherwise superseded by the UCC
The parties to a contract may, by their agreement, vary the provisions of the Code
The UCC is to be liberally construed

56. Obligations Imposed by Article I
To perform in “good faith”–honesty in fact
To perform in a “reasonable time,” “reasonableness” to be determined by the facts and circumstances of each situation
To perform according to past business dealings and practices (custom and usage)

57. Basic Guidelines of Article II, Sales
The type of contracts that are governed by the UCC
Specific contractual provisions regulated by the Code covering warranties and risk of loss
Certain remedies that the contracting parties may be entitled to that differ from the general contractual remedies

58. Types of Contracts Covered by Article II
Contracts for the sale of goods
Contracts for the lease of goods
Contracts between merchants

59. Remedies Available under Article II
Remedies available to Seller
Withhold delivery
Stop delivery
Reclaim goods from insolvent buyer
Remedies available to Buyer
Cover
Replevin
Revocation
Claim goods from insolvent seller

60. Article II-A Leases
Many jurisdictions have added a new subsection to Article II to deal with the lease of goods.

61. Article IX Secured Transactions
A secured transaction is any transaction, regardless of form, that is intended to create a security interest in personal property or fixtures, including tangible goods, intangibles, and documents.

62. Requirements to Create a Security Interest
There must be a security agreement
There must be attachment
There must be perfection

63. Chapter 9 THIRD PARTY CONTRACTS
In this chapter you will:
List the different types of third party contracts
Discuss third party creditor beneficiary contracts
Discuss third party donee beneficiary contracts
Distinguish between an intended and an incidental beneficiary
Define a contractual assignment
Discuss the effect of an assignment on the original contracting parties
Indicate how a gratuitous assignment may become irrevocable
Differentiate between an assignment and a novation
Distinguish a delegation from an assignment
Explain the effect of the UCC on third party contracts

64. Third Party Beneficiary Contracts
Agreements in which the original intent of one of the contracting parties, when entering into the contractual agreement, is to have the promised-for consideration pass not to her, but to some outside person

65. Two Types of Third Party Beneficiary Contracts
Third party creditor beneficiary contract: the purpose is to extinguish a debt or obligation owed to some third party
Third party donee beneficiary contract: the purpose is to confer a gift on a third person

66. Third Party Beneficiary Contracts
Creditor Beneficiary
Donee Beneficiary
Created to extinguish debt
Created to confer gift
Rights vest with detrimental reliance
Rights vest on knowledge
Can sue promisor or promisee
Can sue promisor only
Promisor/promisee can defend by asserting any claim he has against the other contracting party
Promisor can defend by asserting any claim he has against promisee

67. Assignment
An assignment is the transfer of a promisee’s rights under an existing contract
Assignments come into existence after the original contract is created
A promisee may not assign his rights without the consent, express or implied, of the promisor

68. Chapter 10 DISCHARGE OF OBLIGATIONS
In this chapter you will:
List the methods whereby a contractual obligation may be discharged
Define voluntary disablement
Discuss the concept of anticipatory breach
Understand what is meant by tendering performance
Differentiate between a material and a minor breach
Define mutual rescission
Explain the concept of impossibility of performance
Exemplify frustration of purpose
Understand which contracts are divisible contracts
Discuss the effect of discharge on the parties to the agreement

69. Methods of Discharge Impossibility of performance Excuse of conditions
Supervening illegality
Death or destruction of the subject matter or parties
Frustration of purpose
Excuse of conditions
Performance
Breach of contract
Agreement of the parties

70. Chapter 11 REMEDIES In this chapter you will:
Distinguish between legal and equitable remedies
Define compensatory damages
Discuss when punitive damages may be sought
Explain what is meant by consequential damages
Distinguish between liquidated damages and limitation of damages
Define injunction
Understand when specific performance may be sought as a remedy
Explain the effect of rescission and restitution on a contract
List the quasi-contractual remedies
Discuss the effect of waivers on a breach of contract

71. Legal Remedies
Legal Remedies or damages are monetary awards granted to an injured party in a contractual dispute whenever money would be an appropriate method of rectifying the injury

72. Four Types of Damages Compensatory damages Punitive damages
Consequential damages
Liquidated damages

73. Equitable Remedies
Equitable remedies are designed to prevent unfairness and unjust enrichment. These are largely nonmonetary awards.

74. Categories of Equitable Remedies
Injunctions
Specific performance
Rescission and restitution
Reformation
Quasi-contractual

75. Quasi-Contractual Remedies
These are the only equitable remedies that involve a monetary award
Quantum meruit: the value of the service rendered
Quantum valebant: the value of the property received