Jody Blanke, ProfessorComputer Information Systems and Law

Mercer University, Atlanta

Contract Law As Private LawWilling parties can agree to do most anythingFreedom of contract“Meeting of the minds”

Private LawContract between Major League Baseball and

the Players Association - Collective Bargaining Agreement (311 page PDF file)“free agent”“salary cap”“luxury tax”

NHL (a league that used to play ice hockey in Canada and the U.S.)

Uniform Commercial CodePoster child of uniform lawsAdopted in 49½ statesVery successfulFacilitates the ease of doing businessFirst place to look for “the law”

then, other state statutesthen, state case (common) law – safety net

Basic RequirementsAn agreement between the partiesConsiderationCapacityLegality

Agreement – The OfferOfferor must have intention to be bound by

offere.g., kick the tire

Terms must be reasonably definite and certaincan be written, oral or implied can come from prior dealings or usage of trade

Offer must be communicated to offereee.g., reward for lost dog

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

Literal Death of An OfferThe offeror diesThe offeree diesDestruction of subject matter

AcceptanceAt common law – “mirror image rule”UCC – more relaxed (and reasonable)

“battle of the forms”Generally effective upon receipt

exception – “mailbox rule”

Bilateral and Unilateral ContractsBilateral – a promise for a promise

e.g., Joe promises to paint Bill’s house and Bill promises to pay Joe $1000

Unilateral – a promise for an acte.g., Susan promises to pay $500 to the first

person who scales the outside of the Business and Education Building

performance of the act is acceptance

ConsiderationEach party must provide something of value

Money, property, services, forebearancee.g., Hamer v. Sidway – the “rich uncle” casee.g., Jennings v. KSCS

Courts will not examine the adequacy of the consideration

CapacityAge – law protects minors

Voidable contractException for necessaries

Mental competencyVoid contractVoidable contract

Intoxication

LegalityContracts must have a legal purpose

cannot take out a “contract” for that noisy neighbor

cannot purchase a gram of cocainegambling?

e.g., Durado Beach Hotel v. Jernigan

Genuiness of AssentDuress – “gun to the head”Undue InfluenceFraudMistake

Unilateral – generally does not excuse performance exception – if nonmistaken party knew of the

mistakeMutual – generally does excuse performance

no meeting of the minds

Third-Party RightsEach party receives certain rights or benefits

in a contractEach party undertakes certain duties or

obligationsGenerally, rights can be assigned to third

partiesGenerally, duties can be delegated to third

partiesexception – when performance depends upon

personal skills

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

Must Be In WritingContract to transfer an interest in real

propertyContract that cannot be performed within 1

yearContract to pay the debts of anotherContract made in contemplation of marriage

dowry agreementprenuptial agreement

Contract for the sale of goods greater than $500UCC drafters recommend increase to $5,000

Parol Evidence RuleCourt will not permit evidence of prior or

contemporaneous oral statements if there is a complete written agreementexception – ambiguities

Morals of the story read the contract– get it in writing

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

Standard Form ContractsRead themModify them

and get written approval from authorized representative

Use attachments if necessarye.g., letters, memos, specifications

Ambiguities interpreted against the drafter

Discharge of ContractDischarge by performanceDischarge by agreementDischarge by impossibility

Discharge by AgreementMutual rescission

key word – “mutual”Novation

new contractAccord and satisfaction

Discharge by ImpossibilityObjective impossibility

e.g., the car got hit by a meteorite

Subjective impossibility“It’s impossible for me to go through with that

contract”Performance may be discharged by commercial

impracticability e.g., school district milk case key – was event “reasonably foreseeable?”

Remedies – Money DamagesCompensatory damages

makes one “whole” under the contractprovides the “benefit of the bargain”measure of damages is usually the difference

between the value of the contract and the market value of what was actually received

Remedies – Money DamagesConsequential damages

must be reasonably foreseeablee.g., Hadley v. Baxendaleoften disclaimed by contract

Incidental damagese.g., storage, shipping

Nominal damagesDamages in name only e.g., $1.00

Mitigation of DamagesNonbreaching party has duty to lessen the

amount of damagese.g., wrongful discharge

Anticipatory repudiationDuty to “cover”

Liquidated DamagesActual amount of damages must be difficult

to calculateAmount specified must be a reasonable

estimate of those damagesMust not be a penalty

Equitable RemediesInjunctionQuasi-Contract (Quantum Meruit)Specific Performance

generally available for unique goods or property

not appropriate for personal services

Choice of Law/ForumWritten contracts often contain choice of law

and choice of forum clausesThese will generally be enforced as long as

there is a connection to the stateSome states may also require that the

choices be fair

Promissory Estoppel“Last ditch” remedy Four requirements (Restatement of Contracts

§ 90)A promiseJustifiable relianceForeseeabilityInjustice

e.g., Hoffman v. Red Owl Stores

UnconscionabilityUCC remedy

The court “would not be able to sleep at night”The court can ignore or fix an unconscionable

contractConsumer remedy

e.g., Frostifresh v. Reynosoe.g., PEPCO v. Westinghouse