Chapter 11 Nature and Terminology Sources of contract law
- the common law governs all contracts except when i has been modified or replaced by statutory law such as the UCC or by administrative agency regulations.
Contracts relating to service
, real estate, employment, and insurance are governed by common law of contracts.
Contacts for the sale and lease of goods are governed by the UCC. to the extent that UCC modified general contract law.
The function of contract law
- contract law is designed to provide stability and predictability, as well as certainty for both buyers and sellers in the marketplace. Contract law assures the parties to private agreements that the promise they make will be enforceable
is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty. ( an agreement that can
be enforced in a court.)
- party’s intention to enter into a legally binding agreement or contract is judged by outward objective facts.
Objective facts may include
1) what the party said when entering into the contract 2) how the party acted or appeared (intent may be manifested by conduct as well as by oral or written words) 3)
the circumstances surrounding the transaction.
Requirements of a Valid contract
offer and acceptance (one party must offer to enter into a legal agreement and another party must accept the terms of the offer.
- any promises made by the parties to the contract must be supported by legally sufficient and bargained-for consideration (something of value received or promised, such as money, to convince a person to make a deal.
3) contractual capacity
- law must recognize them as possessing characteristics that qualify them as competent.
must accomplish some goal that is legal and not against the public.
a contract may be enforceable if the following requirement are not met which are used by the defenses.
Voluntary consent. The consent of both parties must be voluntary. (if the contract was formed as a result of fraud, undue influence mistake, or duress, the contract may not be enforceable.
contract must be in whatever form the law requires
Types of contracts-
they are based on their formation, performance, and enforceability
Bilateral- a promise for a promise (If the offeree can accept simply by promising to perform.)
a promise for an act- a promise for an act (is formed not at the moment when promises are exchanged but at the moment when the contract is performed)
requires a special form for creation (ex. Negotiable instruments such as checks, drafts, promissory notes, bills of exchange, and CDs)
requires no special form for creation (
formed by words, such as oral, written, or a combination (the terms of the agreemet are fully and explicitly stated in words, oral, or written)