Contract Law

1
Contract Law

• Jody Blanke
• Professor of Computer Information Systems and Law

2
Contract Law As Private Law

• Willing parties can agree to do most anything
• Freedom of contract
• Meeting of the minds

3
Private Law

• Contract between Major League Baseball and the
  Players Association - Collective Bargaining
  Agreement (241 page PDF file)
• free agent
• salary cap
• luxury tax
• NHL (a league that used to play ice hockey in
  Canada and the U.S.)

4
Uniform Commercial Code

• Poster child of uniform laws
• Adopted in 49½ states
• Very successful
• Facilitates the ease of doing business
• First place to look for the law
• then, other state statutes
• then, state case (common) law safety net

5
Basic Requirements

• An agreement between the parties
• Consideration
• Capacity
• Legality

6
Agreement The Offer

• Offeror must have intention to be bound by offer
• e.g., kick the tire
• Terms must be reasonably definite and certain
• can be written, oral or implied
• can come from prior dealings or usage of trade
• Offer must be communicated to offeree
• e.g., reward for lost dog

7
Figurative Death of an Offer

• Natural causes lapse of time
• Suicide revocation
• Murder rejection
• Counteroffer rejection offer
• Execution by operation of law
• change in law terminates offer

8
Literal Death of An Offer

• The offeror dies
• The offeree dies
• Destruction of subject matter

9
Acceptance

• At common law mirror image rule
• UCC more relaxed (and reasonable)
• battle of the forms
• Generally effective upon receipt
• exception mailbox rule

10
Consideration

• Each party must provide something of value
• Money, property, services, forebearance
• e.g., Hamer v. Sidway the rich uncle case
• e.g., Jennings v. KSCS
• Courts will not examine the adequacy of the
  consideration

11
Capacity

• Age law protects minors
• Voidable contract
• Exception for necessaries
• Mental competency
• Void contract
• Voidable contract
• Intoxication

12
Legality

• Contracts must have a legal purpose
• cannot take out a contract for that noisy
  neighbor
• cannot purchase a gram of cocaine
• gambling?
• e.g., Durado Beach Hotel v. Jernigan

13
Genuiness of Assent

• Duress gun to the head
• Undue Influence
• Fraud
• Mistake
• Unilateral generally does not excuse
  performance
• exception if nonmistaken party knew of the
  mistake
• Mutual generally does excuse performance
• no meeting of the minds

14
Statute of Frauds

• An oral contract is as legally valid as a
  written contract unless the law requires it to be
  in writing
• as good as
• if executed before 100 clergy people of all
  faiths willing to come to court and testify

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Must Be In Writing

• Contract to transfer an interest in real property
• Contract that cannot be performed within 1 year
• Contract to pay the debts of another
• Contract made in contemplation of marriage
• dowry agreement
• prenuptial agreement
• Contract for the sale of goods greater than 500
• UCC drafters recommend increase to 5,000

16
Parol Evidence Rule

• Court will not permit evidence of prior or
  contemporaneous oral statements if there is a
  complete written agreement
• exception ambiguities
• Morals of the story
• read the contract
• get it in writing

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Integration Clause

• I have read the above agreement and understand
  that it represents the entire agreement between
  the parties.
• Morals of the story
• read the contract
• get it in writing

18
Standard Form Contracts

• Read them
• Modify them
• and get written approval from authorized
  representative
• Use attachments if necessary
• e.g., letters, memos, specifications
• Ambiguities interpreted against the drafter

19
Choice of Law/Forum

• Written contracts often contain choice of law and
  choice of forum clauses
• These will generally be enforced as long as there
  is a connection to the state
• Some states may also require that the choices be
  fair

20
Covenants Not to Compete

• May be related to sale of business
• e.g., Joe the Baker
• May be related to employment contract
• California will not enforce such an agreement as
  an illegal restraint of trade
• Georgia will not blue pencil an agreement
• Brenda Woods agrees not to work as an on-air news
  anchor in the Atlanta/Athens television market
  for 6 months

21
Covenants Not to Compete

• Scope
• agreement must specify what activity is to be
  limited
• Geography
• be careful of terms like Atlanta
• Duration
• e.g., 6 months, 1 year, 2 years