Common Law Contracts and Special Non-Contrast Situations | BUS 201, Study notes of Business and Labour Law

Download Common Law Contracts and Special Non-Contrast Situations | BUS 201 and more Study notes Business and Labour Law in PDF only on Docsity! Chapters 11 and 12 Common Law Contracts: I. Common Law Contracts: II. Contract- agreement between two parties that is legally binding Empowering to understand them Ex. Harry potter this is magic because you can do magic with this. You get better in time with the practice. A. Elements - Let’s open up the frog There is a similarity, dissecting things in high school. This girl, Barb, thinks that the teacher is a retard. Apparently there were a lot of things that they didn’t know about the inside of the frog. I know the contract, but you want to know why, and what is binding. 1. Offer- (brain of the contract), the idea of the contract comes from. Serious (not a joke) and objective manifestation to be bound. Example: Lucy vs. Zehmer, this was a serious conversation 2. Acceptance- (give them your heart), the “yes” to the offer 3. Consideration-(the gut), they are stuck, and now they are really obligated. Demonstrates that you are truly committed to the contract. B. Special Terms -be very aware of these term will be on the test and also a quiz coming up on Wednesday Every contract exchanges rights and obligations Adjectives used to describe the contracts Ex. Hat purchasing agreement 1. Bilateral- the parties are exchanging promises, two promises 2. Unilateral- only one promise, promise is exchanged for an act. Promise to have somebody to clean her office He doesn’t promise to clean the office he just goes and cleans the office 3. Valid- that it is a legally binding contract 4. Voidable- simply means that one or both parties can cancel the contract 5. Unenforceable- there is a contract but the courts wont enforce it 6. Void- no contract exists 7. Express- is one in which is stated verbally or written is bilateral 8. Implied- comes out of circumstances You know you will have to pay the doctor 9. Executed- both parties have preformed the part of the contract 10.Executory- 1 or both have yet to perform the duty 11.Formal- most places they would encounter this is real-estate statements Examples: witnesses, notary 12.Informal- most contracts, don’t need notary, signed or sealed The quiz Offer: wants to sell bracelet for 1,000 Acceptance: puts up picture of Obama Consideration: they have agreed It is valid, expressed, executory (not executive until money and bracelet are exchanged), informal contract, bilateral III. Special Non-Contract Situations Not a good offer Want to stick the parties together A. Quasi-Contract- Unjust enrichment. Unjust enrichment means somebody is getting something for nothing Refuses to reciprocate Landscapers come to her house and they install a waterfall in the yard. End of the day they have a bill. Looks really nice but she refuses to pay and there is not contract here. Have never had negotiations, but you knowingly accepted the benefits. The court will award them but not necessarily for everything. You have to knowingly accept. B. Promissory Estopple- detrimental reliance- need these three things 1. One party making representations to another and intending that they rely on them 2. The party does reasonably rely 3. Suffer harm (detriment) Example: Very famous case Hoffman vs. red owl, red owl was the franchise owner and kept telling Hoffman that he could start up the franchise. Red owl ended up refusing in the very end. There was no contract but red owl made promises and reasonably relied and then he was harmed. So he received damages… 3. Communication- has to be communicated to the offeree. How you go about communicating the yes response. Only person that agrees to the offer is the only one that can give the acceptance. Offeror has to specify a method of acceptance that they want the offeree to do. a. Silence- the rule: your silence cannot constitute your acceptance Example: ill sell you a car but you don’t say anything unless you say if I don’t call you at 5pm then I’ll take the car (valid acceptance) b. specified method-have to email at 10am c. suggested method- suggest that you use a certain method Example: Kathy says Lynda can send a yes response in any way such as Hedwig the owl. But it isn’t an acceptance because it won’t arrive at the same time like an email or a fax. d. no specified or suggested method- any type of reasonable means are fine to be used (no owl to be used or smoke signal) 4. Mailbox rule- The acceptance is affective by dispatch, dropped in the mailbox and not in your possession, and not by when they receive the letter. a. contradictory responses- the two letters first rejection then acceptance. Which one you opened first is the one that is the acceptance. b. way to avoid the mailbox rule- have to receive by the certain time and the receipt is used. Example: payment must be received by a certain date. Specify the acceptance Acceptance is affective of the point of dispatch. Acceptance is only the yes response. Rejection is effective only when it is received. II. The Consideration- the mortar or glue. Found in the offer and the acceptance. The gut (I’m stuck) really obligated. Both parties are committed to the contract. Consideration must come from the offeror and the offeree A. Elements 1. Something of legal value (not necessarily monetary value)- have not exchanged money but they have exchanged a promise and promise to refrain. 2. Bargained for and given in exchange for a promise or an act- Did the opportunity for bargaining exist? Could they have bargained? Don’t care about not matching up. It can be a bad deal. Just have to have the promises for consideration. Later will see if you can get out of the contract… Problem areas with consideration A. Nothing of value 1. Illusory promises-not really a promise at all when you look into it. Example: sell car for 2000 but can cancel whenever I want, free absolute way out so there is no value. Not committed! 2. pre-existing duty rule- you cannot use what you are legally obligated to do as your consideration example: cop takes police report give 1000 dollars if you find the perp, but they are already obligated to find the perp (no contractual obligation) Promissory estoppels can bind you. In class example: (unilateral) pay 50 dollars to the 1st person to clean my office Offerer-teacher Offeree- student The consideration is the promise to give the money. The promise to do something that you don’t have to do, the offeree’s consideration is the doing, or the cleaning of the office. In a unilateral scenario it is the act of money and cleaning that are the consideration. 2nd scenario- (Bilateral) sell bike for $20, the promise to give the bike and promise to pay are the consideration 1st step: identify the parties. 2nd step: What are the elements? B. No bargained for exchange- Could the parties have bargained? 1. Moral obligations- in place to protect something we in society value. In other words this moral obligations exception is that you should not bargain back and forth over something that we should be morally doing Example: person hanging from a cliff, and they ask if you can throw down the rope. You ask how much money they have… 2. Past consideration- Bargain over something that has already occurred Classic Example: name child after wealthy uncle. So sure enough the wealthy uncle will give them money for the named child. But, the child has already been named so no money. C. Special situations that can come up- If you are doing an analysis and cannot find consideration, but can make contract like situation…example: Promise to give $100 for a charity and get there promise to change society. Some courts say it is a contract and others don’t think it’s a contract. Assignment for Friday-example of a contract Now look for ways out of the contract based on some flaw with the parties themselves… Problems with Contractual Elements: I. Contractual Capacity - some people that can enter into contracts but their contracts can be ended because they are in a weakened state. These people can be easily ripped off. Example: When I was a little kid loved comic book. They used to have advertisements in them. An ad for sea monkeys caught her attention. They looked like monkeys on top of sea horses. Thought they would worship her and they end up just being little bugs. (Kids believe stupid stuff like this) A. Minors 1. Can enter into contracts, but can disaffirm anytime while a minor and a reasonable time after reaching the age of majority a. special rules regarding disaffirmance b. special rules regarding ratification Once a reasonable time has passed and no longer are a minor you can collect from the beginning. Example: can bring car back after they crash it and get money back 2. Upon disaffirmance minor must restore ii. intentional misrepresentation (a.k.a fraud) - intentionally / purposefully made - doesn’t have to be material - you know it’s a mixed breed dog - purposely lied and said it was c. reliance- they enter into the contract and bought the dog d. reliance is reasonable or justified, as long as you obviously knew that this statement was false C. Duress- must sign or otherwise (gun to the head have to do it or you are going to be shot) or say coercion on test D. Undue Influence- Unfair persuasion or manipulation. More powerful party and a weaker party. Someone uses their dominance to unfairly manipulate or pressure a person into a contract. Dominant person exploits the less dominant party. Example: kid and an adult E. Unconscionability 1. Substantive- shocking unfairness in the writing of the contract 2. Procedural- shocking unfairness in process entering into the contract. It wasn’t coercion but it was shocking. 3. Adhesion- Finally, look for a way out of the contact based on some flaw with the agreement itself…. Legality Formality: writing, limited number of contracts that have to be written. There are certain bilateral executive contracts that must be in writing to be enforceable. I. Contracts violating a statute A. Wagering B. Blue Laws- Makes it illegal to enter into certain contracts on certain days of the week C. Usury- Sets the max. rate of interest someone can charge. II. Contracts violating the purpose of a statute A. Licensing statutes- Must have a license and be qualified to perform a job. Not uncommon for states to have an organization gets a license for contracting. there for two purposes: a. Making money b. Helping the public (protection) B. Agreements that would result in the commission of a crime- If one or both of the parties know that the result of a legal contract would lead to a crime, it is unenforceable III. Contracts violating public policy A. Negative impact on society (price filing, monopolies) - Shows that the contract would have a negative outcome on society B. Covenants not to compete – agreement not to compete with another company a. Part of another valid contract i. Partnership agreement ii. Buy/sell for a business iii. Employee contract- has to fill additional elements 1. And cannot undo hardship on employee 2. Has to serve a legitimate business purpose (trade secrets) 3. Ex: Leaving Herman miller to go work for a competitor b. Only last for reasonable amount of time c. Cover a reasonable geographic area C. Releases- tries to release themselves from tort liability of the performance of the contract a. Ex: parasailing liability contract, won’t sue them if it is hurt. Can never release you from grossly negligent or intentional acts. IV. Effect of illegality A. Divisible contracts B. Reformation Formality: Bilateral executory contracts that must be in writing to be enforceable I. History of the statute II. Coverage of the statute (MY LEGS) Must be in writing to be enforceable A. Marriage B. Year- Something that is more than a year into the future C. Land- Leases, mortgages D. Estate- The personal representative of an estate who promises to pay the decedents debt with the personal representatives own money must do so in writing. E. Goods- A contract for a sale of goods over $500 must be in writing (receipt) F. Secondary- Promises to pay another party debt in the case that the first party fails to pay 1. ID the parties 2. Elements (offer, acceptance, consideration) 3. Capacity 4. Content 5. Agreement 6. Legality The video in class: End of Contractual Liability: I. Contractual Liability ends upon: A. Occurrence or failure of a condition B. Performance or breach C. Agreement of the parties D. Operation of the law E. Excuse II. Conditions A. When the occur in relation to the duty 1. precedent 2. concurrent 3. subsequent B. How they are created 1. express