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Contract Law

Contract Law. Jody Blanke Professor of Computer Information Systems and Law. Contract Law As Private Law. Willing parties can agree to do most anything Freedom of contract “Meeting of the minds”. Private Law.

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Contract Law

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  1. Contract Law Jody Blanke Professor of Computer Information Systems and Law

  2. Contract Law As Private Law • Willing parties can agree to do most anything • Freedom of contract • “Meeting of the minds”

  3. Private Law • Contract between Major League Baseball and the Players Association - Collective Bargaining Agreement (241 page PDF file) • “free agent” • “salary cap” • “luxury tax” • NHL (a league that used to play ice hockey in Canada and the U.S.)

  4. Uniform Commercial Code • Poster child of uniform laws • Adopted in 49½ states • Very successful • Facilitates the ease of doing business • First place to look for “the law” • then, other state statutes • then, state case (common) law – safety net

  5. Basic Requirements • An agreement between the parties • Consideration • Capacity • Legality

  6. Agreement – The Offer • Offeror must have intention to be bound by offer • e.g., kick the tire • Terms must be reasonably definite and certain • can be written, oral or implied • can come from prior dealings or usage of trade • Offer must be communicated to offeree • e.g., reward for lost dog

  7. Figurative “Death” of an Offer • “Natural causes” – lapse of time • “Suicide” – revocation • “Murder” – rejection • Counteroffer = rejection + offer • “Execution” – by operation of law • change in law terminates offer

  8. Literal Death of An Offer • The offeror dies • The offeree dies • Destruction of subject matter

  9. Acceptance • At common law – “mirror image rule” • UCC – more relaxed (and reasonable) • “battle of the forms” • Generally effective upon receipt • exception – “mailbox rule”

  10. Consideration • Each party must provide something of value • Money, property, services, forebearance • e.g., Hamer v. Sidway – the “rich uncle” case • e.g., Jennings v. KSCS • Courts will not examine the adequacy of the consideration

  11. Capacity • Age – law protects minors • Voidable contract • Exception for necessaries • Mental competency • Void contract • Voidable contract • Intoxication

  12. Legality • Contracts must have a legal purpose • cannot take out a “contract” for that noisy neighbor • cannot purchase a gram of cocaine • gambling? • e.g., Durado Beach Hotel v. Jernigan

  13. Genuiness of Assent • Duress – “gun to the head” • Undue Influence • Fraud • Mistake • Unilateral – generally does not excuse performance • exception – if nonmistaken party knew of the mistake • Mutual – generally does excuse performance • no meeting of the minds

  14. Statute of Frauds • “An oral contract is as legally valid as a written contract unless the law requires it to be in writing” • “…as good as…” • if executed before 100 clergy people of all faiths willing to come to court and testify

  15. Must Be In Writing • Contract to transfer an interest in real property • Contract that cannot be performed within 1 year • Contract to pay the debts of another • Contract made in contemplation of marriage • dowry agreement • prenuptial agreement • Contract for the sale of goods greater than $500 • UCC drafters recommend increase to $5,000

  16. Parol Evidence Rule • Court will not permit evidence of prior or contemporaneous oral statements if there is a complete written agreement • exception – ambiguities • Morals of the story • read the contract – get it in writing

  17. Integration Clause • “I have read the above agreement and understand that it represents the entire agreement between the parties.” • Morals of the story • read the contract – get it in writing

  18. Standard Form Contracts • Read them • Modify them • and get written approval from authorized representative • Use attachments if necessary • e.g., letters, memos, specifications • Ambiguities interpreted against the drafter

  19. Choice of Law/Forum • Written contracts often contain choice of law and choice of forum clauses • These will generally be enforced as long as there is a connection to the state • Some states may also require that the choices be fair

  20. Covenants Not to Compete • May be related to sale of business • e.g., Joe the Baker • May be related to employment contract • California will not enforce such an agreement as an illegal restraint of trade • Georgia will not “blue pencil” an agreement • Brenda Woods agrees not to work as an on-air news anchor in the Atlanta/Athens television market for 6 months

  21. Covenants Not to Compete • Scope • agreement must specify what activity is to be limited • Geography • be careful of terms like Atlanta • Duration • e.g., 6 months, 1 year, 2 years

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