Contract- A legally binding agreement
ELEMENTS
Validity of Acceptance
Validity of Consideration
Validity of the Offer
Mutual Agreement
Legal Subject Matter
Formality Required Form (sometimes)
Competent Parties
The law presumes that anyone entering a contract has the legal capacity to do so. Minors (less than 18) are generally excused from contractual responsibility, as are those mentally incompetent (decided by the court)
The thing of value promised to the other party in a contract in exchange for something else of value promised by the other party. This mutual exchange binds the parties together Examples: A promise, money, a service.
When the parties (offeree and aceptee) are talking about the same thing
Is WRITING - sometimes a mutual agreement must be in writing (or not) depends on the state.
There is a requirement for a writing under: a statute of frauds for contracts concerning: insurance, marriage, > $500, > 6 months, and land.
In order to enforce the subject matter, the subject must be an expert.Parties are not allowed to enforce contracts that involve doing something that is illegal. Some illegal contracts involve agreements to commit a crime or a tort others involve activities made illegal by statutory law.
The agreement of the offeree to be bound by the terms of the offer. You must mirror the offer to make a valid acceptance. If you change the terms of the offer it is a counter offer. If you go back and forth with counter offers, it is a negotiation.
A proposal made by one party (the offeror) to another party (the offeree) indicating a willingness to enter a contract. An offer can be terminated the same way it was made - a statement to each person you made the offer to or conditions set (i.e. This offer will expire 3 days from the offer)
Detrimental Reliance - If you dig in your heels, "I have relied on our word," and will not accept other terms
Sufficient when -- detrimental to him who gives/promises it OR beneficial to him who receives/ is promised it Example: If I give you money, that's a detriment to me b/c I have less money. You have gained a benefit (more money)
Insufficient when: Preexisting duty; Moral obligation only; Promised thing has occurred NOTE: You can make a promise when there is a moral obligation (promises resurrect debt if the statute of limitations has passed)
Objective Theory of Contracts - The intent will be determined in effect, by asking, "What would a reasonable person have intended?"
RULES OF INTERPRETATION
Plain/Common Meaning Rule
Rule of Conflicting Provisions
Rule Against Ambiguities
Rule of Severability
Parol Evidence Rule
Don't torture the language
Do consider trade - usage
The handwritten will govern over the typed/printed
The added/ changed will govern over the form/ boilerplate Use Discovery to ask for the prior copy
The specific will govern over the general
Ambiguities will be construed against the author (the person who wrote the contract)
If a part of the contract becomes invalid (illegal), that part is severed from/ cult out of the rest of the contract; and, if what remains makes sense and expresses the parties' general intent, it is considered a valid contract.
Nothing outside the contract may be used to change its terms if the parties intended it to be the final and complete expression of their agreement - indicated by looking complete or having signatures present (No other evidence can be introduced after the contract is final).
Exceptions to the Rule
Evidence of subsequent modification
Evidence that the contract is void or voidable - a party who entered into the contract was deemed incompetent, not in good mental state.
Evidence of ambiguity
Evidence as to custom and usage - think vernacular. What definition was intended? Example: a bridge
Evidence of a mistake - you will have to convince the court you did not contribute to the writing of the mistake. The mistake must be mutual
Evidence that the writing was not intended to be final and complete (i.e. subject to future negotiation is written).
How is a contract different from a gift and vice versa? A contract requires consideration and a gift does not
ASSIGNMENTS AND DELEGATIONS
ASSIGNMENTS
DELEGATIONS
The transfer of rights (or benefits) to a third person
The transfer of obligations to a third person
EXCEPTIONS TO RIGHTS AND DELEGATIONS
Relationship of the parties (ex: subletting an apartment)
The assignor's rights are extinguished
Assignor's duties remain
Delegators duties remain if the delegates fails to perform
Some duties cannot be delegated (ex: PERFORMANCE, HEALTHCARE SKILLS, ART)
Performance depends on the personal skill or talent of the obligor
Special trust has been placed in the obligor
CONTRACTUAL CONDITIONS
Conditions PREcedent a condition that must be filled before a party's performance can be required. you must have XYZ certification before [date]
Conditions SUBsequent: a condition that operates to terminate a party's obligation. you must get your certification by XYZ [date]
Concurrent Conditions a condition requiring the parties to perform their obligations at the same time.
K&K Pharmacy, INC. v. Barta - precondition set to be able to sell groceries as a term. He wanted to be able to sell groceries in the pharmacy
Conditions can be Expressed (stated in the agreement) or Implied (not actually in the agreement but understood by the parties as agreed to)
COVENANTS NOT TO COMPETE or RESTRICTIVE COVENANTS
Frowned upon but are judged based upon their 1. Reasonableness and 2 Length of time, place
Law
Medicine
Theology (education)
BREACH OF CONTRACT
Material/Major/Substantial
Minor
Anticipatory (the non breaching party can sue immediately)
You must suffer damages to get money. If the breach is minor, you are wasting your time and money.
DEFENSES
IMPOSSIBILITY
PERFORMANCE
SOVEREIGN IMMUNITY
ELEMENTAL
One of the six elements of a contract are missing: Competent party, legal subject matter, validity of the offer, validity of acceptance, validity of agreement, consideration
They did not complete the contract
ALWAYS A DEFENSE! You could not do it. When something happens after the formation of the contract that makes performance of the contract by one of the parties impossible or impractical
You cannot sue a sovereign government unless they consent to be sued - which they will agree to, because they would not be able to conduct business contracts if they were not held liable (Tucker Act - Allows for certain suits against the government for breach of contract). FEDERAL TORT CLAIMS ACT - passed in 1946 allowed the federal gov't to be sued.
REMEDIES
Rescission - termination of the contract and returns the parties to the positions they occupied before the contract was made
Restitution - repays the non-breaching party for any benefit the breaching party received. Judge tries to even out the losses.
Damages pg. 33
Compensatory - for injury actually sustained and which arose directly fro m failure to carry out the bargain
CONTRACTUAL DAMAGES Purpose - put the wronged individual in the position that he would have been in had the contract been fully performed
The KEY is foreseeability (Hadley v Baxendale) - the owner should have let the manufacturer know that time was of the essence
Nominal - damages awarded when there has been a technical breach, but little if any actual loss
Liquidated - damages set by a contractual provision specifying a certain amount to be paid in the event of a future breach. CANNOT have punitive effect. Hadley vs. Baxendell
Damage Awards can change 1. Remittitur - A judge cuts down the jury's award b/c it is an absurd amount ............... 2. Additur - the judge adds money to the jury's award amount
*Specific Performance - An action to compel a party who breached a contract to perform the contract as promised.*
Reformation-a court ordered correction of a contract for the purpose of reflecting the parties' original intent
SPECIAL AREAS
SALES CONTRACTS - follow the Uniform Commercial Code
GOVERNMENTAL CONTRACTS - Follow the Federal Acquisition Regulation - a principal set of rules regarding procurement for the US (small business, organized labor, veterans, depressed areas)
THIRD PARTY CONTRACTS
A Defense is a legally acceptable excuse
FRUSTRATION OF PERFORMANCE
FRUSTRATION OF PURPOSE
RELEASE
RES JUDICATA
STATUTE OF LIMITATIONS
When circumstances occur that arise which frustrate a party's purpose in entering the contract. In other words: one party frustrates the ability to perform the contract (hiring nurses for a full day and sending them home after an hour, you still have to pay them for the day).
A defense whereby the defendant asserts he is excused from his obligation because the purpose of the contract was frustrated. In other words: the purpose of the contract is gone (a concert was cancelled, the purpose of the ticket is gone.)
It has been decided. The thing has already been judged.
Officers who want to be a JAG officer must pass the bar exam before coming on active duty
Two most common Remedies in contract are: Damages and Specific Performance
General Are not liquidated or Nominal - the pain and suffering things.
Tucker Act sets the limit at 4 years for the Federal Government
You signed a waiver releasing you from the rights of the contract
Tucker Law allowed you to sue the Government in Contracts
Beneficiaries
Incidental - NOTE: public beneficiaries of government contracts are treated as incidental unless the contract provides otherwise
Intended - Can sue for a breach of contract
Creditor
Donee
General Rule - the rights and duties arising from a contract affect only those party to it
Mirror Image Rule An offer must be accepted exactly with no modifications (validity of acceptance)
Terms
Waiver - Give up a right you have
Estoppel - prevents you from doing something
Privity - Closeness of the lawsuit
Standing - your right to sue because of your privity
Contract to Cure - a contract for a medical result (don't ever do this)
FEDERAL TORT CLAIMS ACT
Partially abrogates the doctrine of sovereign immunity with regard to torts and applies the doctrine of respondant superior to make the government liable. *
APPLIES: (1) in-scope negligent torts and (2) inside the United States *Out of Scope: contractors and Outside the United States
RULES
Trial in the U.S. District Court (where the wrong occurred)
No limit on damages
Trial by judge alone
No punitive damages
2 year Statute of Limitation
DOES NOT APPLY: (1) Intentional Torts (2) In Foreign Countries (3) Involving Combatant Activities (4) Service members injured incident to service or while exercising a military privilege
CASES: The government is not liable under the FTCA for injuries to-service members when those injuries arose out of, or where in the course of, activities incident to service
FERES - applies to both the FTCA and the Military Claims Act
The FIRST STEP is to file a claim - this must be completed by the two year mark. Once filed, if the government has not acted, you can sue at the 6 month mark.
Rational: A system of compensation already exists for service members. Preventing Soldiers from suing their commanders is necessary to maintain military discipline
Griggs
Jefferson
Feres
Appeal
Decision is made
Decision is made
MILITARY CLAIMS ACT operates oversees as the FTCA operates in the US (except it is administrative only)
4-6 Years in Civilian
Methods of Classifying Contracts
PERFORMANCE
Executed
Executory
ENFORCEABILITY
Valid
Void - the contract that never was
Voidable
FORMATION
Formal vs. Informal
Express vs. Implied
Express Terms are spelled out
Implied - at least one term is inferred from the conduct
Unilateral vs. Bilateral
Bilateral Acceptance only requires promise
Unilateral acceptance requires performance