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Chapter 2 Contract Law

Chapter 2 Contract Law. Teaching Aims and Demands. The definitions of offer and acceptance Requirements of an offer Termination of an offer

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Chapter 2 Contract Law

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  1. Chapter 2 Contract Law

  2. Teaching Aims and Demands • The definitions of offer and acceptance • Requirements of an offer • Termination of an offer • Several aspects related to acceptance: who can accept, unequivocal acceptance, silence as an acceptance, communication of acceptance, and mode and timelines of acceptance.

  3. Section 1 Contract Formation 1. Function of Contract Law 2. Definition of a Contract • Restatement(2nd) Contract: A contract is “a promise or a set of promise for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty”. • A contract is a legally binding agreement between two or more parties who agree to perform or to refrain from performing some act now or in the future.

  4. 3. Requirements of A Valid Contract Agreement Offer and acceptance Consideration Something of value Contractual Capacity Parties have the legal and mental ability Legality Subject matter not against law

  5. Types of Contracts

  6. Promise by one party Promise by another party Bilateral Contract Promise by one party Promise of specific act by the other party Unilateral Contract Bilateral versus Unilateral Contracts

  7. Express versus implied-in-fact contracts Express Contracts Implied-in-fact Contracts • In an express contract, the terms of the agreement are fully and explicitly stated in words, oral or written. • A contract thet implied from the conduct of the parties is called an implied-in-fact contact.

  8. Quasi Contract---Contract implied in law Quasi contract, or contracts implied in law, are fictional contracts created by courts and imposed on parties in the interests of fairness and justice. Quasi contracts are therefore equitable, rather than contractual, in nature. Usually, quasi contracts are imposed to avoid the unjust enrichment

  9. Executed versus Executory Contracts Executed Contracts Executory Contracts A contract that has been fully performed on both sides is called an executed contract. A contract that has not been fully performed on either side is called an executory contract.

  10. Valid, void, voidable and unenforceable contracts Valid contract valid contract has the elements necessary to entitle at least one of the parties to enforce it in court. Void contract A void contract is no contract at all. A void contract produces no legal obligations on the part of any parties. A voidable contract is a valid contract but one that can be avoided at the option of one or both of the parties. Voidable contract Unenforceable contract An enforceable contract is one that cannot be enforced because of certain legal defenses against it.

  11. An agreement is that the parties must agree on the terms of the contract and manifest to each other their mutual assent to the same bargain Definition Constitution An agreement is constituted by two events: offer and acceptance. Categories Contractual and moral (or social) agreement A contractual agreement only arises when the terms of the agreement impose legally enforceable obligations on the parties.

  12. What is an offer? • An offer is a promise or commitment to do or refrain from doing some specialized thing in the future. • Requirements of the offer: a serious intention; definite terms; communicated by the offeror to the offeree.

  13. The types of expressions and statements that are not offers • Offers made in obvious anger, jest or undue excitement • Expressions of opinion • Statements of intention • Preliminary negotiations • Agreement to agree • Advertisements

  14. Definiteness of Terms • The identification of the parties • The identification of the object or subject matter of the contract (also the quantity, when appropriate), including the work to be performed • The consideration to be paid • The time of payment, delivery or performance

  15. Termination of the Offer • Termination by the action of the parties • Revocation of the offer by the offeree • Irrevocable offers • Rejection of the offer by the offeree • Counteroffer by the offeree • Termination by operation of law • Destruction of specific subject matter of the offer • Lapse of time • Death or incompetence of the offeror or the offeree • Supervening illegality of the proposed contract

  16. What is acceptance? 1. Definition: Acceptance is a voluntary act (either words or conduct)by the offeree that shows assent(agreement) to the terms of an offer. 2. Requirements of an acceptance: 1) Acceptance on by offeree 2) Acceptance must agree with the offer (“Mirror image” rule) 3) Silence as an acceptance 4) Acceptance must be communicated to the offeror

  17. Communication of Acceptance if there is an authorized means of acceptance (Mailbox rule) Effective when sent if there is not an expressly or impliedly authorized means of acceptance, but the acceptance is sent by reasonable means Effective when received If the offeror specifies that acceptance will not be effective until actually if the offeror uses a means other than that requested by the offeror

  18. Consideration • Definition • Consideration is usually defined as the value (such as money) given in a return for a promise (such as the promise to sell a stamp collection on receipt of payment). • Nature of consideration • Does something (an act) or promise to do something he or she is not legally bound to do. • Refrains (from an act) or promises to refrain from doing something she or he has a legal right to do.

  19. Agreements That Lack Consideration • Preexisting duty • Past consideration is a promise made for an act that has already taken place. Past consideration is no consideration.

  20. Contractual capacity is the legal ability to enter into a contractual relationship. Minors Situations in which capacity is lacking or may be questionable Intoxication Mentally ill persons

  21. Fraudulent Misrepresentation Mistakes Situation Lacking of Genuineness of Assent Duress Undue influence

  22. Complete Performance Discharge by Performance Substantial Performance Performance to the Satisfaction of One of the Parties Performance to the Satisfaction of a Third Party

  23. Discharge by Rescission Discharge by Novation Discharge by Agreement Discharge by Substituted Agreement Discharge by Accord and Satisfaction

  24. Alteration of the Contract Statutes of Limitations Discharge by Operation Of Law Bankruptcy Impossibility of Performance

  25. Damages Rescission and Restitution Remedies Specific Performance Reformation

  26. Compensatory Damages Consequential Damages Types of Damages Punitive Damages Nominal Damages Liquidated Damages

  27. Exercises（1） • 1. What essential elements should a contract include, if you want to create a valid contract? • 2. List the initial step to form a contract, and explain them. • 3. Johnson said to Mehta, “I’ll sell you my stereo for $200.” Mehta replied, “I’ll buy it for $150.” Has a binding contract been formed? Why or why not? • 4. In the American Contract Law, what kind of person does not have legal and mental ability to enter into a binding contract?

  28. Exercises（2） • 5. How does a contract differ from a mere social agreement? • 6. Why does the law protect minors in their dealings with adults? • 7. Roberts was an important witness in a criminal case about to be tried. She was promised $5,000 not to testify. She then sued to collect the $5,000. Will Roberts succeed?

  29. Exercises（3） • 8. Sargent orally agreed to purchase a piece of land from Bobston. To confirm the agreement, Sargent wrote a letter to Babson that contained all the terms of the transaction and was signed by Sargent. When Sargent refused to pay, pleading the statute of frauds as his defense. Is Hill liable? • 9. What is the parol evidence rule? • 10. Under the common law, what are the three ways in which a contract can be discharged by impossibility? • 11. List the different remedies that courts possibly award to the plaintiffs in a British and American legal system country?

  30. Exercises（4） • 12. Describe the difference between offer and acceptance. • 13. The difference between the form of the contract and the valid of the contract. • 14. The various forms of breach of contract among the countries such as Britain, America, Germany and France. • 15. Write the main terms of a contract in English.

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