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30/03/2011 09:22:00

← Ch. 9: Contract Law


← Types of Contracts: lease, employment, marriage, services, scholarships, cell phone,
utilities, loan, education, sales, credit cards, bank accounts, memberships, ticket

← * contract- an agreement that has the legal force of the law; legally binding agreement

← -most contracts are not required by law to be in writing

← -difference between social agreements and legal agreements, the law does not
enforce social agreements

← -suing for breech of contract you want damages- *the law provides a remedy to
the injured party

← -Contract law changes-is not static.

← -19th century, absolute autonomy ruled-parties strictly complied w/ the required


formalities

← -Contracts governed by common law

← -Sale of personal property governed by UCC

← -Personal property is anything other than “real property” (land)

← -General contract law governs all contracts outside of the Code-employment, service,
land, insurance, etc.

← -Contract must have:

← -Mutual assent-mutual agreement

← -Consideration-intentionally exchanging legal benefit or detriment

← -Legality of object

← -Capacity-persons making contract must have capacity to do so

← -Types of contracts

← -Express: written or oral or both


← -Implied: implied in fact: ex: passenger gets on bus-passenger pays and bus takes
them to where they need to go

← -Void: doesn’t meet all 4 requirements, not a contract

← -Voidable: a contract, but for some reason persons can avoid legal duties of
contract b/c of lack of capacity or the way it was formed

← -Unenforceable: law provides no remedy-time may have expired, or some type of


fraud

← **-Promissory estoppel: usually promises are unenforceable unless they are in a real
contract, but sometimes a non-contractual promise can be enforced-ex: the promisor reasonably
expects that the promise induces the promise to take action or non-action

← **-Quasi contracts: implied in law-based on restitution, obligation to avoid injustice

CH 9

-Executory Contract- contract that hasen’t been fulfilled yet

-Implied tort

-Implied in law- where the courts will hold a contract even when there isn’t one

-Uniform Commercial Code (UCC)- if a merchant makes an offer to you have to keep it
open for 30 days……?

-Promisory Estopo (ch12) couple questions

CH 10

- UCC

- -mirror image- acceptance of an offer, accepance should mirror offer

- -counter offer- def focus there will be a couple questions on this

- auction- call for a bid with out reserve

- options- pertaining to what?..know this

CH 11
- latent defects- hidden defects

- fiduciary

- scienter

- duress- know diff btw criminal prosecution and civil prosecution (the threat of one)

- fraud on the inducment- voidable

- -fraud in the execution

CH 12

- past consideration

- statute of limitation- the amt of time you have to file a law suit

- forebearance- to give up

- charitable subscriptions (donations to churches)

- promissory estopibble

- “paid in full”- something we see on checks

- unliquidable debt

← Ch. 10 Mutual Assent


← -Offer and acceptance

← -Offeror to offeree

← -Promise for promise (bilateral), promise for act (unilateral), act for promise (unilateral)
← -Offer MUST be communicated to offeree, have an intent to enter a contract, and be
certain

← -Must be person to person, no one else can be involved

← -Both parties must know about offer

← -Acceptance ahead of time is: preliminary negotiations, ads, and auctions

← -Preliminary negotiations: ex: if A says to B: will you buy my car for $xx? And B says
Yes, there is no contract

← -Ads: ads are NOT offers b/c they don’t contain a promise and have no terms of making
a contract

← -Offer of a reward IS a definite offer

← -Auction: “how much am I offered?”, bidder bids, can withdraw prior to auctioneer’s
acceptance but not after, auctioneer can withdraw items but only if no bids are made

← -Duration of Offers

← -Offer may be terminated by:

← -Lapse of time

← -Revocation: can withdraw an offer if he keeps it open for a stated time,


ex: ebay-if your item is never bid on, you can take it off after your day limit, or if the person sells
the item to someone else, then obviously you can’t buy it, so the offer is revoked when you learn
of this

← -Rejection: effective when offeror gets the rejection receipt and only then

← -Counteroffer: any offer on the table is terminated if other person


counteroffers

← -Death

← -Destruction of item

← -Illegality of item or contract

← -Acceptance: must be communicated


← -Silence DOES NOT indicate acceptance

← -Effective moment: an offer, revocation, rejection, and counteroffer are effective


WHEN THEY ARE RECEIVED, not a moment earlier

← -Effective moment of acceptance: WHEN THE ACCEPTANCE IS SENT

← -If there are specific ways an offeror wants communication back, the offeree
MUST do it that way, otherwise it is ineffective

← -If a rejection is sent, then an acceptance, whichever one gets there first is what
goes

← -Variant Acceptances

← -Common law: if acceptance contains different terms than offer, MUST BE


mirror image of the offer

← -Code: acceptance CANNOT vary or deviate from the terms of the offer


← Ch. 11 Invalidating Assent (Agreement); Real Assent
← - have an offer and an acceptance…you have a contract….the real assent may be lacking
therefore one person may be able to get out of the contract

← 1. (Easiest example) Duress- the wrongful force or threat that precludes and prevents the
free will from operating; note: almost all of the chapter you see the results of the contract being
voidable, the deadly force is if the contract is void; it’s a minutia

← -I was “under duress”-physical or threatening force

← -Can threaten w/ civil law suit, not criminal is not duress; threatening to sue is
NOT a wrongful threat

← -Makes contract voidable

← -The threat of a criminal prosecution is duress or can be duress

← 2. Undue Influence- one person has excessive influence over another party and uses that
influence to persuade someone into a contract; persuasion over another
← -makes contract voidable

← 3. Fraud- the misrepresentation (lie) of a material fact/ important fact made with
knowledge or culpable ignorance relied on by the other party to their detriment or injury;
basically when you lie and induce someone into a contract; normally an opinion will not suffice
for fraud, expertise is sometimes an exception

← Ex) selling a car, and lie about your car being wrecked before (it had)….change it…say
well is it a good car, and you say it’s the best car you can buy (not fraud b/c its your opinion)

← -fraud in the execution: make someone sign something but didn’t know they
were really signing something else; renders the contract void (T/F); rarely see this; the actual
document is fraudulent

← -fraud in the inducement: misrepresentation of material fact and other party


agreed to the contract b/c the relied on the misrepresented fact; renders the contract voidable

← -contract is voidable (T/F)-false fact, made w/ knowledge of its falsity-


agreement is

← 4. Mistake of fact- if you are unaware for example that your car WAS in an accident but
it was before you owned it and you were unaware of the situation; makes contract voidable

← voidable if following elements are present:

← 1.False Representation

← -concealment: keeps another of learning a fact-not lying, just not


telling
everything

← -silence-not required to say everything

← -misrepresentation of fact: a lie-ex: advertise car gets 30 mpg, but


really gets 10

← 2.Materiality: misrepresentation must be material-must make person give


his assent or knows the fact would make them do so-so they don’t
tell the fact

← 3.Knowledge of Falsity and Intent to Deceive


← -misrepresentation must have been known by the one making it to be false

← 4.Justifiable/Detrimental Reliance

← -your decision was based on the misrepresented fact-a person relies on it


“to his
detriment”-that was the primary justification I’m buying it.- ex: need efficient car-
bought one on this fact and then it didn’t do what they said it would do

← -Mutual Mistake-voidable, unilateral mistake-can’t take advantage of people

← Ch. 12 Theory or concept of Consideration


← -Consideration- each side gives something and gets something

← - gift promises can be made legal by……

← -paid in full- if you cash a check that says “paid-in-full” then you agree to the terms; if
you try to then sue it will be almost impossible for that suing to come through

← -liquidated debt- its old and the amount is not longer is not in dispute

← -unliquidated debt- dispute is to the debt or the amount

← -promise made by each person to do something


both of these must be present:

← -something of value

← -bargained-for exchange

← -Legal Sufficiency

← -the consideration exchanged for the promise must be either legal detriment to
promisee OR legal benefit to promisor-in return for the promise, the promisee must give
up something legal value (item or $) OR the promisor must receive something legal value
(item or $)

← -Adequacy: are both parties’ exchangements relatively equal

← -Outputs and Requirements Contracts


← -output: seller’s agreement to sell whole inventory

← -requirements: purchaser’s agreement to buy from a seller all their


materials they need

← -Exclusive Dealing Contract: exclusive right to sell product

← -Conditional Promises: I will pay $ IF I get my inheritance, if not I WON’T

← -Preexisting Obligation: public duty-promise’s unenforceable b/c there’s already a


public obligation to refrain from an act

← -preexisting contractual duty: can’t offer more than already in contract, unless the
contract changes-ex: job duties

← -Bargained-For Exchange

← -Past consideration: promise made on account of something that has already been
done IS NOT enforceable

← -Contracts Without Consideration: enforceable-promises to perform prior unenforceable


obligations, promises that induce detrimental reliance, promises made under seal, promises made
enforceable by statute

← -promises to perform prior unenforceable obligations: promises to pay debts, debts


discharged in bankruptcy


← Ch. 13 Illegal Bargains
← (2 parts of studying: types of contracts that may be illegal (agreements that violate a
specific statute); the second part (agreements that are illegal b/c they violate public policy)

← -no such thing as an “illegal contract” (oxymoron)


← -Violations of Statute

← -licensing statutes/laws- doctors, real estate etc.

← *Note:
← -regulatory license: regulates credit hours for license every year-dr.,
lawyer, architect, etc.

← -revenue license: purely pertaining to revenue; only one that raises $ by


selling licenses

← -gambling statutes

← -*usury statues: refers to interest rate or finance charge that is excess of what the
law allows; no there is no one usury rate; max rate for charging interest above what the law
requires; illegal when the rate is considered above the usury

← *if I put on the test something referring to something of usury referring to the
minimum interest rate, its not it’s the max rate.

← -blue laws

← -Violations of Public Policy (not a specific statue)

← -common law restraint of trade- non-compete clauses- several years ago LA


said a lawyer can sign a non-compete; can not exceed 2 yrs from leaving employment…and must
specify within parishes

← - 1)time 3-5 years

← -2) area 50-60 miles

← -1. sale of a business: refrain from entering into competition (make sure
to get the sellers to sign a non-compete)

← -2. employment contracts: can’t work for competition (same issue) ex)
train a college graduate and then years later he opens his own business.

← -*exculpatory clauses: excuse negligent conduct on grounds if they exempt-an


employer from liability to an employee, public service business from liability to a customer, or a
person from liability to a party who is a member of a protected class; “you can’t sue me”

← waiver of liability- bungee jumping, sky diving

← hold harmless- school sporting events and field trips; common in a lease contract
← -in LA one way to defeat a hold harmless: get shocked and put him on notice
beforehand, can then sue; also can sue if an accident takes place in common areas

← -unconscionable contracts: charging too much, hiding important terms in contract,


etc.

← -Effect of Illegality

← -unenforceable

← Ch. 14 Contractual Capacity

← Minor: someone not 18

← -minors can disaffirm any time they wish on a contract

← -if they continue using the product after 18, they ratify the contract (can not ratify until
after a minor becomes a major)

← -must pay for necessities they are given

← -misrepresentation of age: states are different

← -minors are responsible if a tort happens connected w/ the contract

← Incompetent Persons

← -if person is under guardianship by court order, contracts are void

← -mentally incompetent-contract is voidable

← -intoxicated: usually voidable but must prove were seriously intoxicated

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