Chpt 6 Contracts_Nature and Terminology

8/15/2019 Chpt 6 Contracts_Nature and Terminology

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COPYRIGHT © 2006 West Legal Studies in Business, a part ! T"e T"#sn Crpratin$ T"#sn,

t"e Star lg, and West Legal Studies in Business are trade#ar%s used "erein under li&ense$

West’s Business Law10th Edition

Kenneth W. Clarkson, University of Miami

Roger LeRoy Miller, Institute for University Studies, Arlington, e!as

"aylord A. #ent$, University of e!as, Austin, %meritus

&rank '. Cross, University of e!as, Austin

CHAPTER 10CHAPTER 10Contracts: Nature and TerminologyContracts: Nature and Terminology

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Roscoe PoundRoscoe Pound

he noted legal

s)holar Ros)oe

*ound on)e said that

+the so)ial order rests

uon the sta-ility and

redi)ta-ility of

)ondu)t, of hi)hkeeing romises is a

large item./

0


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Contract Law: WhyContract Law: Why

1 *romises so)iety -elieves should -e legally1 *romises so)iety -elieves should -e legally

-inding. -inding.

1%!)uses so)iety ill a))et for -reaking romises.%!)uses so)iety ill a))et for -reaking romises.1*romises that are against u-li) oli)y so legally*romises that are against u-li) oli)y so legallyvoid.void.

1Imortant -e)ause foundation of )ommer)ialImortant -e)ause foundation of )ommer)iala)tivity is )ontra)ts.a)tivity is )ontra)ts.

2


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!1:!1: "#er#iew o$ Contract Law"#er#iew o$ Contract Law

Sour)es of Contra)t La.Sour)es of Contra)t La. Common La for all )ontra)ts e!)et sales and leases.Common La for all )ontra)ts e!)et sales and leases.

Sale and lease )ontra)ts 1 Uniform Commer)ial Code 4UCC5.Sale and lease )ontra)ts 1 Uniform Commer)ial Code 4UCC5.

A )ontra)t is a6A )ontra)t is a6 *romise or set of romises,*romise or set of romises,

&or -rea)h of hi)h,&or -rea)h of hi)h,

he la rovides a remedy, or he la rovides a remedy, or

he erforman)e of hi)h the la in some ay re)ogni$es ashe erforman)e of hi)h the la in some ay re)ogni$es asa duty.a duty.

7ideo67ideo6 The Big Bang Theory - room mate agreement The Big Bang Theory - room mate agreement

https:// https:// www.youtube.com/watch?v=XIm6_2!Ic"www.youtube.com/watch?v=XIm6_2!Ic"

https://www.youtube.com/watch?v=XIm6_2NzIc4https://www.youtube.com/watch?v=XIm6_2NzIc4https://www.youtube.com/watch?v=XIm6_2NzIc4https://www.youtube.com/watch?v=XIm6_2NzIc4https://www.youtube.com/watch?v=XIm6_2NzIc4https://www.youtube.com/watch?v=XIm6_2NzIc4


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!%:!%: Elements o$ a ContractElements o$ a ContractAgreement 49ffer and A))etan)e5.Agreement 49ffer and A))etan)e5. he offerormust offer to enter into an agreement, and the

offeree must accept the terms of the offeror:s offer.

Consideration.Consideration. Something of value given or

romised to )onvin)e a arty to agree to the deal.

Contra)tual Caa)ity.Contra)tual Caa)ity. 'oth arties must -e legally

)ometent to enter into the agreement.


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;efense6;efense6

Legality.Legality. he )ontra)t:s urose must -e toa))omlish some goal that is legal and not against

u-li) oli)y.

"enuineness of assent."enuineness of assent. he aarent )onsent of -oth

arties must -e genuine.

&orm.&orm. he agreement must -e in hatever form 4e.#.,

ritten, under seal5 the la re


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*arties may -e6 individuals, artnershis, )ororations,

governments

Shier Carrier

*arties to a ransortation Contra)t

Insurer Insured

*arties to an Insuran)e *oli)y

Landlord

4Lessor5

enant

4Lessee5

*arties Agreeing Uon 9))uation

of a 'uilding for Money 4a Lease5

7endor 7endee

*arties to a Sales Contra)t

*romisor49-ligor5

*romisee

49-ligee5"eneral6

%!amles6

Parties to a Contract


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!&:!&: Ty'es o$ ContractsTy'es o$ Contracts

'ilateral v. Unilateral. 'ilateral 1 9fferee must only romise to erform 4+romise

for a romise/5.

Unilateral 1 9fferee )an a))et the offer only -y )omleting

the )ontra)t erforman)e 4+a romise for an a)t/5.Irrevo)a-le6 9ffer )annot -e revoked on)e erforman)e has

-egun.

9n)e the offeree of a unilateral )ontra)t -egins to erform, the

offeror loses the a-ility to revoke her offer 4e.#., if @ offered B08 to mo @:s yard, on had su-stantially -egun to erform,

@ )ould not revoke her offer to ay for moing her yard5.


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7ideo67ideo6 Contracts – Charlie BrownContracts – Charlie Brownhtt6htt6.youtu-e.)omat)hD.youtu-e.)omat)hD

vEF*$0I$IiiGHfeatureErelatedvEF*$0I$IiiGHfeatureErelated

Case 10.1:Case 10.1: Ardito v. City of Ardito v. City of

Providence Providence (2003).(2003).

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http://www.youtube.com/watch?v=HPYz2IzIii0&feature=relatedhttp://www.youtube.com/watch?v=HPYz2IzIii0&feature=relatedhttp://www.youtube.com/watch?v=HPYz2IzIii0&feature=related


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Ardito v. City of Providencehe City of *roviden)e, Rhode Island, de)ided to -egin hiring oli)e

offi)ers to fill va)an)ies in its oli)e deartment. 'e)ause only

individuals ho graduated from the *roviden)e *oli)e A)ademy ere

eligi-le, the )ity also de)ided to )ondu)t to training sessions, the

+=Gth and =(st *oli)e A)ademies./ he ali)ants deemed most


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Ardito v. City of Providence

he )ourt issued an inun)tion to rohi-it the )ity from )ondu)tingthe =(st *oli)e A)ademy unless the laintiffs ere in)luded. he

9)to-er (8 letter as a unilateral offer that the laintiffs had

a))eted -y assing the re


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E('ress #s) *m'lied+in+,actE('ress #s) *m'lied+in+,act

%!ress6%!ress6 A )ontra)t in hi)h the terms of the agreement aree!li)itly stated orally or in riting.

Imlied In &a)t6Imlied In &a)t6 Condu)t )reates and defines the terms ofCondu)t )reates and defines the terms of

the )ontra)t. Re


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Ty'es o$ ContractsTy'es o$ Contracts&ormal v. Informal.&ormal v. Informal.

or!al Contract6 A )ontra)t that re


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Ty'es o$ ContractsTy'es o$ Contracts

%!e)uted v. %!e)utory.%!e)uted v. %!e)utory. %!e)uted 1 A )ontra)t that has -een fully erformed on -oth%!e)uted 1 A )ontra)t that has -een fully erformed on -oth

sides.sides.

%!e)utory 1 A )ontra)t that has not -een fully erformed on%!e)utory 1 A )ontra)t that has not -een fully erformed on

either side.either side.7ideo67ideo6 &ow'in#e( &ow'in#e(

htt6.youtu-e.)omat)hDvEy7"lKr$i"8%htt6.youtu-e.)omat)hDvEy7"lKr$i"8%

1;oes a )ontra)t e!istD1;oes a )ontra)t e!istD

1'ilateral or unilateralD1'ilateral or unilateralD

1%!ress or Imlied1in1&a)tD1%!ress or Imlied1in1&a)tD

1&ormal or InformalD1&ormal or InformalD

(3


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Contract En$orcea-ilityContract En$orcea-ility7alid.7alid.

%lements6 Agreement, )onsideration, )ontra)tual%lements6 Agreement, )onsideration, )ontra)tual

)aa)ity, and legality.)aa)ity, and legality.

7oid.7oid.

Oo )ontra)t. Oo )ontra)t.

7oida-le 4unenfor)ea-le5.7oida-le 4unenfor)ea-le5. 7alid )ontra)t )an -e avoided or res)inded.7alid )ontra)t )an -e avoided or res)inded.


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!.:!.: /uasi+Contracts/uasi+Contracts

+uasi Contract: A fi)tional )ontra)t imosed on arties -ya )ourt in the interests of fairness and usti)e, tyi)ally to

4(5 revent the unjust enrichment of one arty at the

e!ense of the other, and

405 allo the arty hose a)tions ould otheriseunustly enri)h the other arty to re)over in quantum

meruit .

7ideo6 Drake Sued Over !arvins "oom #y $%- Drake Sued Over !arvins "oom #y $%-&ir'friend()&ir'friend()

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!: *nter'retation o$ Contracts!: *nter'retation o$ Contracts

*lain Meaning Rule6 Courts give terms their o-vious*lain Meaning Rule6 Courts give terms their o-viousor ordinary meaning.or ordinary meaning.

Am-iguous erms. If terms are am-iguous, )ourt illAm-iguous erms. If terms are am-iguous, )ourt ill

attemt to interret am-iguous )ontra)t terms in aattemt to interret am-iguous )ontra)t terms in areasona-le, laful, effe)tive manner.reasona-le, laful, effe)tive manner.


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*nter'retation o$ Contracts*nter'retation o$ Contracts

Am-iguous erms 4)ont:d5Am-iguous erms 4)ont:d5 Se)ifi) ording given greater eight than generalSe)ifi) ording given greater eight than general

language.language.

Written or tyeritten given greater eight thanWritten or tyeritten given greater eight than

rerinted. rerinted.

Am-iguous terms interreted against the drafter.Am-iguous terms interreted against the drafter.

rade usage, rior dealing, )ourse of erforman)e torade usage, rior dealing, )ourse of erforman)e to

alloed to )larify.alloed to )larify. 7ideo67ideo6 Mit)hell H We-- 1 Oeedlessly am-iguous termsMit)hell H We-- 1 Oeedlessly am-iguous terms

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Rules o$ Contract *nter'retationRules o$ Contract *nter'retation

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Chpt 6 Contracts_Nature and Terminology

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