BIZ LAW Chapter 9 INTRODUCTION TO CONTRACTS
Terms in this set (22)
Purpose of a Contract
To make business matters more predictable.
Judicial Activism vs. Judicial Restraint
Judicial Restraint: a court's reluctance to interfere with the terms of the contract....makes the law less predictable but more flexible.
Judicial Activism: a court's willingness to change or ignore a contract that perceives unjust... makes the law more flexible but less predictable.
Elements of a Contract 4
1. Agreement: One party must make a valid offer and the other party must keep it.
2. Consideration: There has to be bargaining that leads to an exchange between parties.
3. Legality: The contract must be for a lawful purpose.
4. Capacity: The parties must be adults of sound mind.
Issues to Consider 5
1. Consent: both sides must agree to contract.
2. Written Form: some contracts must be written to be enforceable.
3. Third Party Interests: the effect of the contract on third parties must be considered.
4. Performance and Discharge: when one party fulfills his obligation, the duty is discharged.
5. Remedies: a court will award money or relief to an injured party if a contract is broken.
A promise that the law will enforce.
Development of Contract Law
-Common Law required all contracts to be in writing, with a seal affixed.
-Later, some payment was required before a contract could be enforced.
-Mutual promises became enforceable in the 1600s.
-By the 1900's, courts began to consider the fairness of contracts before enforcing them.
Bilateral and Unilateral Contract
Bilateral: both parties make a contract.
Unilateral: one party makes a promise and the other party can accept only by doing something.
Express and Implied Contracts
Express: the two parties clearly state all important terms of their agreement.
Implied: the words and conduct indicate that the parties intended an agreement.
Executory and Executed Contracts
Executory: one or more parties has not fulfilled its obligations.
Executed: all parties have fulfilled their obligations.
Valid, Unenforceable, Voidable, and Void Agreements
Valid: satisfies the law's requirements.
Unenforceable: when the parties intend to form a valid bargain but some rule of law prevents enforcement.
Voidable: when the law permits one party to terminate the agreement .
Void: one that neither party can enforce, usually because the purpose is illegal or one of the parties had no legal authority.
Two Remedies created by Judicial Activism
Sometimes a court needs to provide a remedy for an injury, even if there was no contract.
-Promissory Estoppel and Quasi-Contract
Need to show that:
1. The defendant made a promise knowing that the plaintiff would likely rely on it.
2. The plaintiff did rely on the promise; and
3. The only way to avoid injustice is to enforce the promise.
Plaintiff must show that:
1. He gave some benefit to the defendant.
2. He reasonably expected to be paid for the benefit and the defendant knew this; and
3. The defendant would be unjustly enriched if she did not pay.
What are the damages awarded in Quasi contract are called?
Quantum Meruit meaning "as much as he deserved."
Two main sources of Contract Law
Common Law (services) and the Uniform Commercial Code (goods)
What is a court's main purpose?
To interpet the law.
Promise not to compete with a business. More common than ever, frequently litigated.
Anything moveable, except for money, securities, and certain legal rights.
Business and Professions Code 16600-16602.5
in a sales contract is enforceable ask Drasco about this from your hand written notes
Davis v Mason
Mason was a surgeon/apothecary in English town in Thetford. Davis wanted to apprentice himself to Mason. They agreed plus agreed that if Davis left Mason's practice, he would not set up a competing establishment within 10 miles of Thetford within 14 years. If he did Davis promised to pay 200 euro. 2 years later Mason fired Davis claiming misconduct. Davis opened a practice within 10 miles of Thetford. Mason sued for 200 euro. Davis claimed agreement should be declared illegal and unenforceable. He said 14 years was unreasonable and 10 miles too far. Also said it was harmful to the public health to restrict a doctor from practicing. He also added his consideration was too great for this deal. In other words 200 euro was unfair because he didn't receive anything of that value from Mason.
Judgment was for plaintiff. Both parties made promises and both parties expected to benefit from the agreement. "Unreasonable" is impossible to measure. How long too long? How far is too far?
Requirements for contracts that cannot be completed within one year?
Must be in writing.
Restatement of Contracts
See pg 241.
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