1RegulationModule 23: ContractsInstructor: Helen08/09/20092ContractsM23A. Types of ContractsB. Elements of a ContractC. Assignment and DelegationD. 3rd-Party Beneficiary ContractsE. Performance of ContractF. Discharge of ContractsG. Remedies3A. Types of Contracts4ATypes of Contracts1. What is a ContractIt is a legally enforceable agreement, such that you have a remedy in law if the other party breaches. 2. There are 2 sets of Contract RulesCommon LawUCCmost rules are the same, must know the differences Apply to Unmovable, Intangible propertyApply to movable, tangible goods, and personal propertyReal-EstateInsuranceServicesEmploymentRISE!5ATypes of Contracts3. Types of Contractsa) Method of Formationb) Stage of Performancec) One or two Promised) Enforceability Express ContractImplied ContractExecuted ContractExecutory ContractUnilateral Contract Bilateral ContractVoidable ContractVoid ContractTerms actually stated. formed by language, oral or writtenTerms Not specifically given, formed by conduct (implied-in-fact)Duties already performedDuties remained to be performed1 party gives promiseEach party exchange promiseA party has right to pull out.Cannot be enforced by law Not a contractNote: Quasi-Contract (Implied-in-law Contract) is not a contract, but a remedy to prevent unjust enrichment 6ATypes of Contracts3. Types of ContractsExamples:a) Ann Promises to give Bob $10 if Bob will wash Anns car.According to Method of Formation:Answer: Express Contract. The contract is formed by oral.7ATypes of Contracts3. Types of ContractsExamples:b) If Alex goes to a doctor when he is sick and the doctor examines Alex.According to Method of Formation:Answer: Implied Contract. Their conduct implies their intent to enter into a contract even though no oral or written promises.8ATypes of Contracts3. Types of ContractsExamples:c) Joanne gives Kate $10,000 as a down pmt to purchase Kates house. The contract is oral and Kate decides to back out. (According to Statute of Fraud, purchase of land must be in writing)Answer: Quasi Contract. It is not a contract since purchase of land must be in writing (statute of fraud). But Joanne can recover the down pmt to prevent Kates unjust enrichment9ATypes of Contracts3. Types of ContractsExamples:d) Ann promises to give Bob $10 if Bob will wash Anns car. According to 1 or 2 Promises: Answer: Unilateral Contract. Only Ann makes a promise. A contract is not formed until performance is completed.10ATypes of Contracts3. Types of ContractsExamples:e) Bob promises to wash Anns car if Ann will promise to pay Bob $10 upon completion According to 1 or 2 promises:Answer: Bilateral Contract. Both Ann and Bob make promises. A contract is formed as soon as the promises are exchanged.11B. Elements of a Contract12BElements of a Contract1.Offer2.Acceptance3.Consideration4.Legal capacity5.Legality6.Reality of consent7.Statute of FraudsEssential ElementsWith all 3 elements, a contract should be OAC!Note: writing is not a general rule of a contract. Situations that a contract must be in writing include (1) Statute of Frauds and (2) a Merchants Firm Offer. These will be discussed later. 13BElements of a ContractReality of ConsentAcceptanceConsiderationLegal CapacityStatute of FraudsLegalityOffer3 questions should be considered:Was there an intent to contract?Was the essential terms definite and certain?Was there communication of the above to the offeree?14BElements of a ContractReality of ConsentOfferAcceptanceConsiderationLegal CapacityStatute of FraudsLegalitya) Intent to Make a Contractii) Statement of opinion/intentiii) Invitations to negotiatei) Promise made in apparent jest (joke)Example: doctor: you are going to be fine in several days = statement of opinionExample: I am going to sell my car for $400 = statement of intentExample: Advertisement Where it is not an offerExample: I promise to give you a $1,000,000 if you give up smoking. Courts use objective test to determine intenti.e. whether a reasonable person think that offer had been intended15BElements of a ContractReality of ConsentOfferAcceptanceConsiderationLegal CapacityStatute of FraudsLegalityb) Terms must be Definite and CertainCommon LawUCCTermsException Parties Price Time of performance Quantity Nature of work Allows some reasonable terms left open if customary to do so QuantityQuantity left open under output or requirement contracts, valid if reasonableDifference 116BElements of a ContractReality of ConsentOfferAcceptanceConsiderationLegal CapacityStatute of FraudsLegalityc) Communication to OffereeNo knowledge, no offer!Example:Alex returned to Bob his lost briefcase unaware that Bob had placed an advertisement offering a $20 reward for its return.In this case, Bob is not obligated to pay the reward since Alex didnt know there is one.17BElements of a ContractReality of ConsentOfferAcceptanceConsiderationLegal CapacityStatute of FraudsLegalityd) Termination of an Offer T