Lecture 11/6

I. Contracts
a. Legal purpose
b. Gift is not enforceable contract; consideration needed from both
parties
c. Steps
i. Agreement (offer and acceptance)
ii. Buy something from store
iii. Not all contracts have to be in writing – only certain types
iv. Defenses
1. Duress
v. Consideration
vi. Capacity
vii. Legal purpose
d. Objective theory
i. Actions and words – never going to look at secret motive
e. Source of law
i. Most important source of law – case law/common law
1. Made by judges
ii. Uniform commercial credit (UCC)
1. 2 diff states – common law across states
2. statue in the states that have accepted it
3. article 2
4. sale of goods
iii. Convention of contracts for the international sale of goods
1. Not as widespread as UCC
iv. The restatement laws/contracts
1. Not law, just what some scholars have prepared and
said is good
II. Types of contracts
a. Bilateral
i. Bill promises to clean tom’s garage, tom promises to pay bill
$50
ii. 2 promises
b. Unilateral
i. Tom promises to pay bill $50 if bill cleans his garage
ii. Promise + requested action
iii. Bill is not obligated to clean the garage, but when he does Tom
has to pay
iv. Rewards
c. Unexpressed – written/spoken word
d. Option – pay someone to keep the offer open, payment can be part of
the purchase price (down payment for a home)
e. Implied – based on conduct of the parties (quasi contract) –
interchangeable
 i. Receiving a benefit from someone who typically gets paid,
doesn’t do anything to stop it
f. Valid – contract that can be enforced
g. Void – not a contract at all
h. Voidable – is a contract that can be cancelled or enforced
i. Unenforceable – law won’t enforce the contract
j. Executed – all terms fully performed
k. Executory – all terms not fully completed
l. Formal
i. Contract under seal
ii. Negotiable instrument (written promise to pay)
1. House mortgage
2. Checks
iii. Recognizance – bail
iv. Letters of credit (business, from a bank)
m. Informal – most contracts we enter into
III. Agreement
a. Offer – made by offerer
i. Show serious intent to be bound in definite terms
b. Accepts offer – offeree
c. can’t overhear someone’s offer, has to be communicated tow you
d. advertisements are not offers
e. AD that is clear and definite = offer
i. Ex – first 25 people to enter store get free Xbox
f. preliminary negotiations is not an offer
g. construction projects – not offer yet either
h. contract offer – definite and certain
i. material terms
1. price
2. quantity
3. quality/type
4. subject matter – what exactly are you selling
5. timing
i. terminate an offer
i. you can reject the offer
ii. revoke the offer
iii. offer becomes illegal
iv. destruction of subject matter
v. offeror dies
1. if it was option contract, the estate would have to honor
the contract
2. “executor”
vi. lapse of reasonable time
vii. counteroffer – has to be on same subject matter
1. “test water” by saying “hey r u willing to negotiate?”
otherwise counteroffer ends the agreement/offer
 2. 1st offeror accepts = agreement
3. original offer is off the table
4. mirror image rule – accept whatever they have offered
5. need to show intent to be bound
viii. failure of conditions
1. drop out of school ex.
ix. silence is not acceptance
1. “if I don’t hear from you I will assume this”
2. person has to accept verbally in some way
3. exception
a. long standing relationship
b. businesses/suppliers
x. needs to be communicated to offeree
1. mail, text, person – anything
2. rules when things are valid
a. acceptance valid when mailed
b. text message/mail – instant
c. offer made – accept by mail – call to reject/they
call you to revoke
i. too late bc you have an agreement now