Contracts I Outline 2

Contracts I Outline 2 - Contracts Outline Fall 2003...

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Contracts Outline Fall 2003 BACKGROUND Contract Formation : Agreement : Offer & Acceptance Mutual Assent Consideration 3 Types of K: 1) Agreement w/ considerations (written or oral) 2) K implied in fact 3) K implied in law (quasi K) General Principles : Freedom to contract : when private agreement conflict with CL, private agreement usually prevails. However, statutes almost always prevail above all. Self determination Better resource allocation Freedom from contract : a reluctance to hold parties bound unless they intend to or outward manifested There may be non legal sanctions (future relationships, reputations in commercial setting, & psychic and social guilt) that can enforce a promise without law C ontract-no contract dichotomy : where proof of contract will allow full expectancy recovery and lack of contract will yield no recovery. There are other theories of obligation that can be used now. Unconscionable : gives the court immense power and thus contract law not always predictable. It is mainly related to gross uneven bargaining power of the parties. Contract Law are tools not rules. There is no 2 cases alike. No punitive damage to 1) encourage efficient breach and 2) thus unlike other laws, no retributive value. General Theories of Obligations : Agreement with Consideration (the leading theory) Justified reliance Unjust Enrichment (Quantum meruit) Promises for benefits received From Tort Solely from form Statutory Warranty (express, implied for merchantability, implied for use) To Prove Liabilities (Contract liability is a strict liability): Proof of a contract Reciprocal obligation (P performed) Material Breach by D (destroys further obligations) A substantial breach not trivial . (e.g. Jacobs & Youngs v. Kent: same quality pipes from different brand names are not material. It’s a Q of preference. Margin of departure : broad v. narrow. Diminished Value Rule : to prevent economic waste Damage (Remedies) Agency Rule : 1
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Real Authority : authority explicitly given or it’s part of the job Apparent Authority : may not have real authority, but have authority from reasonable customer’s standpoint AGREEMENT WITH CONSIDERATIONS General: A promise is enforceable if supported by considerations . Considerations: It’s any bargained-for exchange of a legal detriment . Considerations (legal detriments) may be: A return promise (bilateral contract) An act (unilateral contract) (cannot be under a legal duty to perform anyway) Notice of cancellation can be sufficient consideration A forbearance (cannot be something not legally entitled to do) The creation, modification or destruction of a legal relation. If it is bargained-for, the adequacy is immaterial
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Contracts I Outline 2 - Contracts Outline Fall 2003...

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