 Sources of Contract Law.  Common Law for all contracts except sales and leases.  Sale and lease contracts - Uniform Commercial Code (UCC).  Function.

 Sources of Contract Law.  Common Law for all contracts except sales and leases.  Sale and lease contracts - Uniform Commercial Code (UCC).  Function of Contract Law.  Provides stability and predictability for commerce. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2

 Definition of a Contract.  Promise or set of promises,  For breach of which,  The law provides a remedy, or  The performance of which the law in some way recognizes as a duty. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3

 Objective Theory of Contacts.  Circumstances to determine intent of parties.  Objective Facts include:  What a party said when entering into the contract,  How the party acted or appeared (intent may be inferred), and  Circumstances surrounding the transaction. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4

 Requirements of a Valid Contract:  Agreement (Offer & Acceptance).  Consideration: bargained-for- exchange.  Contractual Capacity.  Legality: purpose of contract must be legal at the time of execution. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5

 Defenses to Enforceability:  Voluntary Consent.  Form: some types of contracts must be in writing. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 6

 Bilateral: Offeror accepts Offeree’s promise to perform (“a promise for a promise”).  Unilateral: Offeror is bargaining for performance. Offeree accepts by completing contract performance (“a promise for an act”). © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8

 Revocation of Offers for Unilateral Contracts:  Offeror cannot revoke promise once performance has begun, for a reasonable time period. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9

 Formal: must be in writing to be enforceable.  Informal: all other contracts. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10

 Express: words (oral or written).  Implied: conduct creates and defines the terms of the contract. Requirements:  PL furnished good or service  PL expected to be paid  DEF had chance to reject and did not. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11

 Contract Performance.  Executed - A contract that has been fully performed on both sides.  Executory - A contract that has not been fully performed on either side. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12

 Contract Enforceability.  Valid: agreement, consideration, contractual capacity, and legality.  Voidable (unenforceable): Valid contract can be avoided or rescinded based on certain legal defenses.  Void: no contract. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13

© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14

 An essential element for contract formation is agreement.  The parties must mutually assent to the same bargain.  An agreement has two components: an offer and an acceptance. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15

 Requirements of the Offer.  An offer is a promise to do or not do something in the future.  The common law requires three elements for an effective offer:  Offeror’s serious intention.   Reasonably certain terms.   Communication to offeree.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16

 A contract is judged by what a reasonable person in the offeree’s position would conclude about the offer.  CASE 9.1 Lucy v. Zehmer (1954). Do you think the Zehmers had a serious intention? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17

 Expressions of Opinion: not offers.  Statements of Future Intent: not offers.  Preliminary Negotiations, or Invitations to Negotiate: not offers.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18

 Advertisements: not offers (invitations to negotiate).  Agreements to Agree: can be enforceable if parties intended to be bound. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19

 Terms (Expressed or Implied).  Identification of the parties.  Object or subject matter of the contract.  Consideration to be paid.  Time of payment, Delivery, or Performance. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20

 An offer can require specific terms to make the contract definite.  A court can supply missing terms if the parties intend to form a contract. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 21

 Offeree’s knowledge of the offer:  Directly by the Offeror, or  Use of Agents.  CASE 9.2 Alexander v. Lafayette Crime Stoppers, Inc. (2010). When was the offer communicated to the plaintiff? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 22

 An offer may be terminated prior to acceptance by either:  Action of the Parties  or by  Operation of Law.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 23

 Revocation of the Offer by the Offeror:  Offer can be withdrawn anytime before Offeree accepts the offer.  Effective when the Offeree or Offeree’s agent receives it.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 24

 Irrevocable Offer: offeree has changed position based on justifiable reliance on the offer.  Option Contracts: promise to hold an offer open for a specified period of time in return of consideration. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 25

 Rejection of the Offer by the Offeree:  Rejection by the Offeree (expressed or implied) terminates the offer.  Effective only when it is received by the Offeror or Offeror’s agent. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 26

 Counteroffer by the Offeree: rejection of original offer and the simultaneous making of a new offer.  Mirror Image Rule: At common law, any change in terms automatically terminates the offer and substitutes the counteroffer. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 27

 Lapse of Time.  Offer terminates by law when the period of time specified in the offer has passed.  If no time period for acceptance is specified, the offer terminates at the end of a reasonable period of time.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 28

 Destruction of the Subject Matter: before acceptance of offer, terminates the offer.  Death or Incompetence of the Offeror or Offeree: automatically terminates unless irrevocable offer.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 29

 Supervening Illegality of the Proposed Contract: legislation or court decision automatically terminates offer or renders contract unenforceable. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 30

 Acceptance is a: voluntary act (expressed or implied) by the Offeree that shows assent (agreement), to the terms of an offer.  Unequivocal Acceptance: the “Mirror Image” Rule. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 31

 Silence as Acceptance:  General Rule: offeree should not be legally obligated to affirmatively reject an offer.  When Offeree Has Duty to Speak:  He takes benefit of services with opportunity to reject.  Prior dealings with Offeror. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 32

 Bilateral Contract: communication of acceptance is necessary because there is a mutual exchange of promises.  Unilateral Contract: acceptance is evident, notification not necessary. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 33

 General Rule: in bilateral contracts, acceptance is timely if done before offer is terminated.  The Mailbox Rule.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 34

 Acceptance is effective when offeree uses authorized means of acceptance.  If U.S. Mail, acceptance is effective upon dispatch.  If no means specified, acceptance can be by any reasonable means. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 35

 Exceptions to Mailbox Rule:  If Offeror specifies that acceptance will not be effective until it is received.  If acceptance is sent after rejection, whichever is received first is given effect. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 36

 Substitute Method of Acceptance.  Effective if the substitute serves the same purpose (Fed-Ex vs. UPS).  Not effective on dispatch.  Effective when received by the Offeror. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 37

 Generally, consideration must have:  “Legally Sufficient Value”  and  a “Bargained-for-Exchange.”  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 38

 Legally Sufficient Value can mean:  Promise,  Performance, or  Forbearance.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 39

 Bargained-for-Exchange: must provide basis for the bargain.  Something of legal value (a promise, or a performance) must be exchanged between the parties.  The promise must be either l egally detrimental to the promisee, or legally beneficial to the promisor. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 40

 Adequacy of Consideration:  Courts typically will not consider.  Law does not protect a person from entering into an unwise contract.  Cases of “shockingly inadequate consideration” may raise a red flags, and be ruled unconscionable. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 41

 Agreements That Lack Consideration.  Preexisting Duty: promise to do what one already has a legal duty to do does not constitute legally sufficient consideration.  Unforeseen Difficulties.  Recession and New Contract. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 42

 Agreements That Lack Consideration (continued):  Past Consideration is no consideration because the bargained-for exchange element is missing. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 43

 Promissory Estoppel (detrimental reliance).  Elements:  Must be definite promise.  Promisee must justifiably rely on the promise.  Reliance is substantial.  Justice will be served by enforcing promise. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 44

 Minors: at 18 years, a person is emancipated, and has the legal capacity to enter into any contract that an adult can.  However, a contract entered into by a minor is voidable at the option of that minor, and can be disaffirmed.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 45

 Minors (continued).  A contract can be disaffirmed at any time during minority, or for a reasonable period after minor is emancipated.  Minor must disaffirm the entire contract. Disaffirmance can be expressed or implied. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 46

 Intoxication.  Lack of capacity at the time the contract is being made. Contract is either voidable or valid, depending on circumstances.  Disaffirmance (voidable).  Ratification: after ‘sobering up.’ © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 47

 Mental Incompetence.  Void: person is adjudged mentally incompetent by a court of law and a guardian has been appointed.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 48

 Mental Incompetence (cont’d).  Voidable: person does not know she is entering into the contract or lacks the mental capacity to comprehend its nature, purpose, and consequences.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 49

 Mental Incompetence (cont’d).  Valid: when person is able to understand the nature and effect of entering into a contract but may lack capacity to engage in other activities (known as “lucid” intervals). © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 50

 A contract must be formed for a legal purpose.  A specific clause in contract can be illegal, but rest of contract can be enforceable.  Contract to commit a tortious act is illegal. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 51

 Prohibited by federal or state statutory law is illegal and therefore void (never existed).  Contracts to Commit a Crime.  Contracts for Usury. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 52

 Gambling: distribution of property based on chance among persons who have paid valuable consideration.  Licensing Statutes: contract’s enforceability depends on purpose. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 53

 Contracts contrary to public policy are void.  Contracts in Restraint of Trade are generally void.  Exception: Covenant not to Compete and Sale of an Ongoing Business.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 54

 Covenant not to Compete in Employment: is enforceable as long as time and geographic terms are reasonable.  CASE 9.3 Comedy Club, Inc. v. Improv West Associates (2009). What factors did the court consider? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 55

 Procedural Unconscionability: inconspicuous print or legalese.  Depends on a party’s lack of knowledge or expertise.  Substantive Unconscionability.  Contracts are oppressive or overly harsh; that deny a remedy for nonperformance.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 56

 Release a party from liability in the event of monetary or physical injury – no matter who is at fault.  Enforceable when they are not against public policy, are not ambiguous, and do not shield parties from intentional conduct. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 57

 A contract may be unenforceable if the parties have not genuinely assented to its terms by:  Mistake.   Misrepresentation.   Undue Influence.   Duress.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 58

 Mistakes of Fact: allow a contract to be canceled.  Bilateral (Mutual) Mistake: concerns the same material fact, and can be rescinded by either party.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 59

 Mistakes of Fact: allow a contract to be canceled.  Unilateral Mistakes cannot be canceled unless:  Other party to the contract knows or should have known, OR  Mistake was due to an inadvertent mathematical mistake and was not gross negligence. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 60

 Mistakes of Value:  Generally, contract is enforceable by either party.  Exception: Mistake of value because of a mistake of material fact. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 61

 Contract is Voidable by Innocent Party.  Consists of the following Elements:  Misrepresentation of Material Fact.  Intent to Deceive.  Reliance on Misrepresentation.  Injury to the Innocent Party. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 62

 Statement of Fact vs. Statement of Opinion.  Statement of Opinions are not actionable.  Opinions from Experts can be actionable, and injured party can seek rescission or reformation. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 63

 Misrepresentation by Conduct: occurs when a party takes specific action to conceal a fact that is material to the contract.  Misrepresentation of Law: does not entitle a party to relief. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 64

 Misrepresentation by Silence.  Ordinarily neither party has duty to disclose facts.  However, seller will be liable if she knows of material defect that cannot be reasonably discovered by buyer. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 65

 Misrepresentation by Silence.  When parties are in a fiduciary relationship, failure to disclose material facts may be fraud.  CASE 14.2 Rosenweig v. Givens (2009). What factors did the court consider in its decision? © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 66

 Contract lacks voluntary consent and is voidable.  Confidentiality, Fiduciary, or Relationship of Dependence.  Undue Influence or Persuasion is presumed if a weaker party talked into doing something not beneficial to him or herself. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 67

 Forcing a party to enter into a contract under fear or threat makes the contract voidable.  Threatened act must be wrongful or illegal and render person incapable of exercising free will.  Threat of civil suit is not duress. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 68

 Some contracts must be in writing to be enforceable:  Contracts with an Interest in Land.  Contracts involving “One-Year Rule.”  Collateral or Secondary Contracts.  Promises made in consideration of marriage.  Contracts For Sales of Goods over $500. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 69

 Privity of Contract: only original parties to a contract have rights and liabilities under the contract.  Exceptions: Assignments, Delegations, and Third party Beneficiary Contracts.  © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 70

 Terminology:  Assignor: party assigning rights to third party.  Assignee: party receiving rights.  Obligee: person to whom a duty or obligation is owed.  Obligor: person who is obligated to perform the duty. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 71

 Effect of An Assignment: when rights of assignor are unconditionally assigned, her rights are extinguished.  The third party (assignee) has right to demand performance from original party to contract. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 72

 Rights That Cannot be Assigned: (i) when a statute expressly prohibits assignment, (ii) when a contract is personal in nature, (iii) when the assignment materially changes rights or duties of obligor, (iv) when an assignment will significantly change the risk or duties of the obligor. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 74

 Exceptions to Prohibition of Assignment of Rights:  Cannot prevent right to receive money.  Cannot prevent rights in land.  Negotiable instruments.  Damages in sales of goods. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 75

 Contractual duties in a bilateral contract that are delegated to a third party.  Terminology:  Delegator: party making the delegation of duty.  Delegatee: party to whom the duty is owed. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 76

 Delegations are Prohibited:  When the Duties are Personal in Nature (special trust).  When Performance by a Third Party Will Vary Materially From that Expected by the Obligee.  When the Contract Prohibits Delegation. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 78

 Delegator remains liable, even after delegation.  Delegatee is liable if delegation contract creates a third party beneficiary relationship in the obligee. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 79

 2 nd Exception to Privity of Contract.  Original parties to the contract intend at the time of contracting to directly benefit a third person. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 80

 Creditor beneficiary benefits from a contract in which promisor promises the promisee to pay a debt the promisee owes to a third party (creditor beneficiary). © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 81

 Donee Beneficiary: contract is made for the express purpose of promisor giving a gift to a third party (donee), the donee can sue the promisor directly if the promisor breaches the contract. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 82

 Intended : promisee intended to confer on the beneficiary the right to bring suit to enforce the contract. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 83

 Incidental : a third party beneficiary’s benefit from contract between two parties is unintentional.  Incidental beneficiary cannot sue to enforce the contract. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 84

 Sources of Contract Law.  Common Law for all contracts except sales and leases.  Sale and lease contracts - Uniform Commercial Code (UCC).  Function.

Similar presentations

Presentation on theme: " Sources of Contract Law.  Common Law for all contracts except sales and leases.  Sale and lease contracts - Uniform Commercial Code (UCC).  Function."— Presentation transcript:

Similar presentations

About project

Feedback

Log in

Auth with social network:

 Sources of Contract Law.  Common Law for all contracts except sales and leases.  Sale and lease contracts - Uniform Commercial Code (UCC).  Function.

Similar presentations

Presentation on theme: " Sources of Contract Law.  Common Law for all contracts except sales and leases.  Sale and lease contracts - Uniform Commercial Code (UCC).  Function."— Presentation transcript:

Similar presentations

About project

Feedback