Chapter 9- Contracts
Terms
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- CONTRACT
- A LEGALLY ENFORCEABLE PROMISE OR SET OF PROMISES
- FREEDOM OF CONTRACT
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CONTRACTS CLAUSE OF THE U.S. CONSTITUTION
EX: FREEDOMS TO CONTRACT IN EVERYDAY BUSINESS AFFAIRS - FREEDOM FROM CONTRACT
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THE ABILITY TO AVOID CERTAIN OPPRESSIVE CONTRACTS
EX: DURESS- THREATENING SOMEONE INTO A CONTRACT - FOUR REQUIREMENTS FOR A VALID CONTRACT
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1. MUTUAL MANIFESTATION OF ASSENT
2. CONSIDERATION
3. CAPACITY
4. LEGALITY - MUTUAL MANIFESTATION OF ASSENT
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1. CONSISTS OF AN OFFER AND AN ACCEPTANCE
2. VIEWED OBJECTIVELY - CONSIDERATION
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1. VALUE GIVEN OR DETRIMENT SUFFERED IN EXCHANGE FOR A PROMISE, ALLOWING THE PROMISE TO BE ENFORCEABLE
2. A BARGAIN FOR EXCHANGE; QUID PRO QUO- "THIS FOR THAT" - CAPACITY
- RULE OF LAW: MINORS, MENTALLY INCOMPETENT PERSONS AND HIGHLY INTOXICATED PERSONS MAY NOT ENTER A VALID CONTRACT
- LEGALITY
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1. A CONTRACT INVOLVING ILLEGALITY IS VOID
2. THOSE WHO MAKE A DEAL INVOLVING A CRIME SHOULD NOT EXPECT A COURT TO ENFORCE THE "CONTRACT" - TWO PRIMARY DEFENSES TO A CONTRACT
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1. LACK OF REALITY OF CONSENT
2. NONCOMPLIANCE WITH FORMALITIES - LACK OF REALITY OF CONSENT
- WHERE ASSENT TO A CONTRACT IS NOT REAL OR NOT VOLUNTARY, THE CONTRACT IS VOIDABLE
- NONCOMPLIANCE WITH FORMALITIES
- FORMALITIES: SOME CONTRACTS MUST BE FORMALIZED BY A WRITING OR A WITNESSED WRITING TO BE ENFORCEABLE
- TYPES OF CONTRACTS
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1. BILATERAL VS UNILATERAL
2. EXPRESS VS IMPLIED
3. VALID, VOID, VOIDABLE, UNENFORCEABLE
4. EXECUTORY VS EXECUTED - BILATERAL
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A PROMISE IN EXCHANGE FOR A PROMISE
1. OFFER CONTEMPLATES A PROMISE AS ACCEPTANCE
2. DUTIES OF OFFEROR AND OFFEREE ARISE ON VERBAL ACCEPTANCE - UNILATERAL
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A PROMISE IN EXCHANGE FOR A COMPLETED ACT
1. OFFER CONTEMPLATES ACCEPTANCE BY PERFORMANCE
2. DUTY OFFEROR ARISES UPON COMPLETE PERFORMANCE
3. OFFEREE HAS NO DUTY - EXPRESS
- CREATED BY THE SPECIFIC WORDS OF THE PARTIES
- IMPLIED
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IN FACT: CREATED BY THE CONDUCT OF THE PARTIES
IN LAW (QUASI CONTRACT): CREATED BY A COURT WHEN ONE PARTY UNJUSTLY ENRICHES ANOTHER PARTY - VALID
- ENFORCEABLE BY ALL PARTIES
- VOID
- ENFORCEABLE BY NONE OF THE PARTIES
- VOIDABLE
- MAY BE AVOIDED BY ONE OR MORE PARTIES
- UNENFORCEABLE
- THE FOUR REQUIREMENTS FOR A VALID CONTRACT ARE MET, BUT THE CONTRACT IS NOT BINDING BECAUSE OF A STATUTE
- EXECUTORY
- PART OF THE PERFORMANCE IS LACKING
- EXECUTED
- ALL PERFORMANCE IS COMPLETE
- INTERPRETATION
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1. OBJECTIVE NATURE
2. RULES OF CONSTRUCTION (INTERPRETATION) - OBJECTIVE NATURE
- A JUDGE LOOKS AT THE WORDS AND ACTIONS OF THE PARTIES RATHER THAN WHAT THEY ARE THINKING
- RULES OF CONSTRUCTION
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1. PLAIN MEANING
2. ENTIRE WRITING
3. MEANING OF WORDS
4. CONFLICTS OF TERMS
5. AMBIGUOUS TERMS
6. SURROUNDING CIRCUMSTANCES - PLAIN MEANING
- IF THE WORDS OF THE CONTRACT ARE CLEAR IN THEIR MEANING, THE COURTS WILL ENFORCE THE CONTRACT AS WRITTEN- GENERALLY NO EXTRINSIC EVIDENCE ALLOWED
- ENTIRE WRITING
- THE COURT WILL DO ITS BEST TO ENFORCE THE ENTIRE CONTRACT WHEN THERE IS A POTENTIAL CONFLICT OF TERMS
- MEANING OF WORDS
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1. ORDINARY WORDS: APPLY DICTIONARY DEFINITION
2. LEGAL TERMS: LEGAL DEF.
3. TECHNICAL TERMS: APPLY TECHNICAL MEANING IN THE RELEVANT TRADE OR PROFESSION INVOLVED - CONFLICTS OF TERMS
- REVIEW THE ENTIRE CONTRACT AND APPLY THE MOST CONSISTENT WITH THE INTENT OF THE PARTIES
- AMBIGUOUS TERMS
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1. PRIMARY RULE: INTERPRET AGAINST THE DRAFTING PARTY
2. PRIORITIES OF TERMS WHEN RESOLVING CONFLICT OR AMBIGUITY:
a. HANDWRITTEN
b. TYPEWRITTEN
c. PREPRINTED
3. AN AMBIGUITY MAKES EXTRINSIC EVIDENCE ADMISSABLE - SURROUNDING CIRCUMSTANCES
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1. COURSE OF PERFORMANCE: THE WAY THE PARTIES PERFORMED THE CONTRACT BEING INTERPRETTED
2. COURSE OF DEALING: THE WAY THE PARTIES PERFORMED PREVIOUS, SIMILAR CONTRACTS
3. USAGE OF TRADE: THE WAY THE ISSUE IN QUESTION IS CUSTOMARILY DEALT WITH IN THE TYPE OF BUSINESS INVOLVED