Contract Requirements
A contract is a promise or set of promises enforced by law
- i.e., a legally enforceable agreement
Requirements to form a valid K - a K is formed when there exists:
- Mutual assent
- i.e. a meeting of the minds
- demonstrated by an offer and valid acceptance
- Consideration
- A bargained-for exchange of legal value between the parties
- No defenses to K formation
- No defenses to formation exist that would invalidate the K
Void, voidable, and unenforceable Ks - if there is a valid defense to K formation or enforcement, a K may become:
- Void - K never had any legal effect
- Voidable - one or both parties may elect to void the K
- Unenforceable - otherwise valid K that is unenforceable b/c a defense applies (e.g. incapacity, SOF)
Types of Contracts
(Unilateral, Bilateral, Quasi-Contract)
Bilateral K - exchange of mutual promises
- Each party is a promisor and promisee
- E.g. A offers to sell his car to B for $5,000 and B promises to purchase A’s car at that price
Unilateral K - offer requires performance as the manner of acceptance
- Offeror-promisor agrees to pay upon completion of the act requested by the promisee; once act is completed, K is formed
- E.g. A promises to pay B $100 if B paints A’s fence; B is not obligated to paint A’s fence, but if B does, K is formed and A must pay B $100
Quasi-K - not a K, but rather a restitution remedy designed to prevent unjust enrichment; usually arises when there is an unenforceable agreement, but one side has realized a benefit
- Look for:
- P has conferred a benefit to D;
- P reasonably expects to be paid;
- D knowingly accepted the benefit; and
- D will be unjustly enriched if P is not compensated
Applicable Law
Most Ks are governed by either common law or the UCC
Common law - applies to most Ks, except sales of goods
- Any K not involving the sale of goods should be treated under common law contract principles
- Most often arises in the form of Ks for real estate or services
UCC Article 2 - governs the sale of goods
- If both parties to a K are merchants, the UCC has additional special rules (e.g. acceptance with additional terms)
Mixed Ks - for Ks involving both goods and services, the predominant purpose of the K dictates the applicable law
- Exception - if K terms divide payment between the goods and the services, apply the UCC to the sale of goods portion of the K and common law to the remainder
