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16 terms

Contracts: You Spot - You Write

Contract formation
Generally three things are needed in order to form a contract; offer, acceptance and consideration. Restatement second of contracts defines an offer as a manifestation of willingness to enter into a bargain. An acceptance is a manifestation of assent to the terms of the offer. To constitute consideration both parties must agree to do something or refrain from doing something that they were not otherwise legally obligated to do.
Generally people are free to enter into contracts. By statute and case law, however, certain classes of individuals can enforce contracts they enter into, but cannot have them enforced against them.
Contracts entered into for illegal purposes are not enforceable, and generally, courts will not hear these types of cases, preferring to let the parties "stew in their own juices."
Unconscionability cases generally arise when the terms of the contract are so one sided as to be against public policy. This generally happens when one party to a contract has superior bargaining position and uses that position to impose onerous terms in the weaker party, often by using confusing legal language and fine print.
Preexisting duty rule
In non-UCC cases, the majority rule requires mutual consideration to make a contract modification valid. This is known as the preexisting duty rule. The UCC disposes of the mutuality of consideration requirement and will enforce modifications made in good faith.
Statute of Frauds
MY LEGS. The statute of frauds requires certain agreements to be in a signed writing in order to be enforceable. Generally, the agreements covered by a particular jurisdiction's statute of frauds include: contracts in consideration of marriage, contracts that cannot be performed within one year, contracts for the sale of land, contracts involving executors guaranteeing to pay off an estate's debt, contracts for the sale of good $500 or more under the UCC, and suretyship contracts.
Assignment of rights
A party to a contract has the ability to assign its rights under the contract to a third party. Once the assignment is made and becomes irrevocable, the assigning party has no further rights under the contract.
Delegation of duties
A party to a contract generally has the right to delegate his duties under the contract to a third party. However, the party delegating the duties remains liable for the breach of contract if the delagatee breaches the contract.
Parol evidence rule
The parol evidence rule is a substantive rule of contract law. If it applies and is enforced, it will result in testimony being excluded from trial. A partially integrated contract document is one that is incomplete in some way, usually involving a term alleged to be part of the contract but not actually embodied in the final written document. If the court finds the contract to be partially integrated, it will allow as testimony outside parol evidence as long as the proffered testimony does not contradict what is written in the contract. If the court finds the document to be a completely integrated contract, then the court will not allow testimony to either contradict or supplement the terms of the contract.
An express condition is something which may not occur, but which must occur if a party is going to be required to fulfill the terms of a contract. With constructive conditions the party whose performance will take a while must perform first. If each party can perform at the same time, then the courts require each party to perform at the same time. If one party alleges that the other party breached, the plaintiff has the burden of proving that he was willing, able, and ready to perform.
Breach of contract
A breach of contract occurs when one party to a contract does not perform as promised.
Anticipatory Repudiation
Anticipatory repudiation must be unequivocal: the breaching party must make it clear that he will not perform the contract. If a statement is less than unequivocal and does not rise to the level of an anticipatory repudiation, the doubting party can demand adequate assurances or performance. If the breaching party fails to provide such assurances after a commercially reasonable time, the doubting party can treat it as an anticipatory repudiation and sue immediately.
Contract damages
Contract law damages are substitutional; that is, the defendant is required to pay money damages to put the injured party in the position he would have been in had there been no breach.
Specific performance
Specific performance is an extraordinary remedy and rarely given. In non-UCC cases, this occurs when the subject matter of the contract is land, because land is considered unique. In UCC cases, this extraordinary remedy is granted under section 2-716 when the goods are unique, or in other proper circumstances.
As long as a party to a contract does not guarantee a result, he is excused from performing if it becomes impossible to perform the contract. Increased costs alone, which might cause the breaching party to lose money by performing under the contract, do not constitute impossibility.
Frustration of purpose
If the parties to the contract both knew of a particular purpose for the contract, and that purpose fails through no fault of their own, a party does not have to perform under the contract based on the doctrine of frustration of purpose.