Chapter 10 Nature and Classification of Contracts Nature of a Contract – p.296 • Contract- special sort of agreement enforceable by law in event that one party does not perform its promise o It is pervasive in the average person’s everyday activity o The basic principles of contract law are the underpinning of the more specialized business-related subjects, including sales and commercial paper, partnership and corporation law, and other areas o Since the subject of contracts is essentially common-law in nature, the controversies that are presented usually require the courts to examine earlier decisions handed down in cases involving similar fact-patterns (thus the doctrine of stare decisis is illuminated and an allied question affords an opportunity to analyze more fully the process of judicial reasoning) • Need three elements: consideration, capacity, and legality Classification of Contracts – p.297 • Offers/proposals precede the making of a contract • Bilateral and unilateral contracts o Bilateral – promise for promise; can be promise to act or immediate performance of an act Bilateral offer – terms of an offer indicate that all the offeror wants at the present time from the offeree is a return promise – rather than the immediate performance of an act Offeror – person making proposal Offeree – person to whom offer is made o Unilateral – phrased in such a way that can be accepted only by performance of a particular act E.g. brokers • Express, implied, and quasi-contracts o Express – intentions of parties are stated fully and in explicit terms either orally or in writing o Implied – promises (intentions) of parties have to be inferred primarily from conduct and from circumstances in which it occurred o Quasi-contract – exceptional circumstances where court feels compelled to impose an obligation upon one person regardless of whether he or she had any intention of making a contract; imposed only in circumstances where failure to impose such obligation would result in one party receiving an “unjust enrichment” Quantum meruit – “as much as deserved” Limitations ◊ Cannot be invoked by one who has conferred benefit unnecessarily or as a result of negligence or other misconduct; if you perform service to wrong person, can’t sue that person for money ◊ Not “true” contracts but remedies can still be granted ◊ Plaintiff can’t recover from one person if originally looked to another for compensation (e.g. original offeror dies)
• Valid, voidable, and void contracts o Valid – all required elements are present; enforceable against both parties o Voidable – one of the parties has legal right to withdraw from it at a later time without liability o Void – like never existed; reasons: One of parties is wholly incompetent at time of contracting Purpose of contract is totally illegal o Unenforceable – valid at time it was made but subsequently rendered unenforceable
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- Spring '08