9/20 Contracts Accounting Notes

What is the difference between a promise and a contract?

-Contracts legally binding agreement
-If there is a breach, there is a remedy
-A contract is an agreement supported by consideration that is
enforceable
-Consideration something of value supporting the contract
-Promisor vs. promise and offeror vs. offeree
-A lot of contract law is in prenuptial agreements and contracts
-Who gets what ect.
What are the sources of Contract Law?
-Common Law
-UCC Uniform Commercial Code
-Leases, contracts
-Restatement of Contracts
-Secondary source of law
What are the elements of Contracts?
Four main elements
-Agreement (offer and acceptance)
-Someone must make and offer and another must accept
-Consideration
-Anything of value, courts will not question value
-Capacity to contract
-Have to be able to think clearly enough or be older enough
-Legality
-Is the contract legal?
-Every contract has a promise
-Bilateral Contact a promise for a promise
-Unilateral Contract a promise for an act
Contract Variations
-Contracts can be formal (like under seal) or informal, written or oral,
express (terms are stated or written) or implied (terms are implied by
the facts or the history), executed (fully performed) or executor (not
yet fully performed)
-Contracts can be valid or void (not a contract at all)
-A valid contract may be enforceable, unenforceable (there is a legal
defense to it), or voidable (at a partys option a minor has an option to
void a contract, and a contact entered into due to undue influence may
be voidable)
-Always get it in writing
-Expressed contracts are very specific, write out all the details, there
is agreement, consideration, capacity, and legality

-Implied contracts You go into a coffee house, they recognize you and
you can pour yourself a cup without paying right away and you build a
tab maybe
-Are not clear in their terms, but the behavior and actions imply
-Contract can be valid or void
-Valid has all four elements
-Void is missing at least one of the elements
What are the elements of an offer?
-It is serious, its terms are reasonably certain, and its communicated
to the offeree
-Must be serious, communicated, and have terms to be valid
-Distinguished an offer from an invitation to negotiate (e.g. an ad
offering a house for sale for $250,000 does not bind the seller to sell
the house to the first person who whips out $250,000)
How long are offers valid/open
-Unless otherwise specified, for a reasonable period of time
What constitutes acceptance of an offer?
-Acceptance must be unequivocal, and by the person to whom the
offer was made
-Sometimes, silence is acceptance
-In a bilateral contract, communication of the acceptance is necessary.
In a unilateral contract full or substantial performance is necessary
-Acceptance must occur within a reasonable time (if the time to accept
is not specified), and before the offer is withdrawn or revoked
What is the effect of rejecting an offer?
-A rejection takes away the original offer. You can not reject and then
accept because the offer is gone upon rejection
-A counteroffer functions as a rejection and a new offer
-Rejection and a new offer
-Offeror and Offeree switch places
The Mailbox Rule
-Acceptance occurs when the item is dropped in the mailbox;
-The offer, a revocation, or a rejection occurs when it is received
-The mailbox rule is rendered almost meaningless due to instant
communication
What is meant by Consideration?
-Consideration is something of value
-Giving or giving up something of value
-A contract will still be based on consideration and thus enforceable if
one party gets a bad deal. If its a terrible deal, a court may declare it
unenforceable as unconscionable. A court will only evaluate
consideration if it is grossly inadequate
When is consideration lacking?
-Illegal consideration (ex extortion)
-Illusory promises
-Ill think about it

-Moral obligation
-Preexisting duty
-ex. Reward is out to find a person, a police officer finds the
missing person, and they will not get the reward because it was their
duty to do that job
-Past consideration
-ex. I have a job and work hard, Christmas time comes, boss says
they will
give you a bonus; they do not have to do the contract
Other Examples of Enforced Obligations
-A quasi contact may be imposed by a court to avoid unjust enrichment
-ex. Doctor who saves an unconscious persons life should be
paid for the
service even though there was no contract
-Settlement of Claims, Accord and Satisfaction, and Release are usually
enforceable
-Promissory Estoppel: If someone detrimentally relies on a promise, the
promisor may be estopped from revoking the promise.
-ex. You stay in your aunts condo in Maui if you fix the roof. You
buy everything and set up the plane ticket, ect. and ms. aunt
changes her mind,
you can take her to court