Contract Law: Understanding Formation, Rules, and Types, Slides of Contract Law

Download Contract Law: Understanding Formation, Rules, and Types and more Slides Contract Law in PDF only on Docsity! Contract Law Formation and Legality Class 2 Docsity.com Lord Melbourne British Prime Minister (1779-1848) The whole duty of government is to prevent crime and to preserve contracts. Docsity.com What Are The Usual Rules? • Statement of material facts • Each party’s promise as to its future performance • Each party’s rights • Conditions • Discretionary authority • How the contract will end • General policies that govern the relationship Docsity.com Sources of Contract Law • Common law ▫ Importance of the Restatement • Constitution ▫ Fundamental right recognized in both state and federal constitutions • Uniform Commercial Code ▫ Article 2 (RCW 62A.2-) Docsity.com Types of Contracts • Bilateral or unilateral • Express or implied • Executory or executed Docsity.com Definite Terms • Terms (expressed or implied) that must be included in the offer: ▫ Parties ▫ Subject matter ▫ Consideration (usually price) ▫ Time for performance Docsity.com Communication of Offer •An offer must be communicated in some way to the offeree •Once communicated, the offeree has the right to make a contract Docsity.com Termination of an Offer • An offer may be terminated before it is accepted ▫ By action of either party ▫ By operation of law Docsity.com Timeliness • Mail Box Rule ▫ Acceptance is effective on dispatch – provided an authorized method of communication is properly used. • However, the offeror may specify how and when acceptance should be made. Docsity.com Consideration • A bargained for exchange – each side is inducing the other to agree. ▫ The thing bargained for can be a promise or action. ▫ The thing bargained for can be a benefit to the promisor or a detriment to the promisee. Docsity.com Adequacy of Consideration • Court will generally not weigh the value of the promise. • If the parties are satisfied with the bargain initially, then the value of the bargain will not be considered by a court. Docsity.com Equitable “Contracts” • Quasi-Contracts 1. Plaintiff gave some benefit to the defendant 2. Reasonably expected to be paid 3. Defendant would be unjustly enriched if plaintiff is not paid Docsity.com  An illegal contract is void  A contract is illegal if: ◦ It violates a federal or state statute ◦ It violates public policy Docsity.com  Many statutes expressly prohibit certain contracts or contract terms  Some of these are: ◦ Gambling statutes ◦ Insurance statutes and regulations ◦ Usury statutes ◦ Consumer protection statutes ◦ Statutes protecting vulnerable individuals Docsity.com  Usury laws prohibit charging excess interest on loans. ◦ Excess interest is generally defined in the statute. www.dfi.wa.gov/consumers/interest_rates_excepti on.htm Docsity.com  Washington’s usury statute is RCW 19.52 ◦ RCW 19.52.030 permits enforcement of usurious contracts, but only allows the creditor to collect the principal – less twice the interest paid and minus the accrued but unpaid interest. Attorneys fees and costs also are assessed against the creditor. Docsity.com  Statutes to Protect the Public: Only licensed practitioners/providers may enforce a contract  Regulatory or Revenue Statutes: Contract with an unlicensed individual is generally enforceable. Docsity.com  The buyer of an existing business may ask the seller to agree not to compete with the business. This agreement is enforceable if it is reasonable: ◦ In Time ◦ Geographic Area ◦ Scope of Activity Docsity.com  A noncompetition clause in a contract for employment is generally enforceable if it is essential to the employer, fair to the employee, and harmless to the general public. Docsity.com  Washington courts will enforce noncompete clauses if they are validly formed (i.e., supported by consideration), are of legitimate concern to employer’s business, and are reasonable as to ◦ Time ◦ Geographic limits ◦ Scope of Activity Labriola v. Pollard Group, Inc., 152 Wn.2d 828 (2004) Docsity.com  An unconscionable contract is one that the court refuses to enforce because of fundamental unfairness. ◦ A contract is unconscionable if it one that “no man in his senses and not under delusion would make . . . and no honest and fair man would accept.” Docsity.com Contract Drafting • Goals: ▫ Accurately state the business deal ▫ Be clear and unambiguous ▫ Resolve problems in a practical way ▫ Be sufficiently specific ▫ Advice the client’s goals and reduce its risks ▫ Prevent litigation Docsity.com