Fraud & Misrepresentation

1. intentional miss statement of a material fact
2. the person making the statement knows, or should know it to be false
3. the person to whom the statement is made justifiably relies on it
4. the person who relies upon the statement suffers damages

Mistakes

Unilateral
Where 1 of the parties is mistaken to a material fact, the agreement is never-the-less binding unless the nonmistaken party knew of the error or enforcing the contract would be unconscionable.

Caveat emptor - buyer beware

Unilateral mistake of law

ignorance of the law is no excuse

Mutual mistakes -
where both parties are operating under the same material mistake of fact or law the contract is voidable

Capacity

-An individuals ability (in the eyes of the law) to enter into a legally binding relationship

-some people do not have the requisite intent to enter into an agreement ie.
    Minors
    Mentally impaired

this is because they don't have the understanding necessary to enter into a binding agreement

In common law, people used to have to be 21 to have capacity to contract, but now the majority is 18

Void - never came into existance

Voidable - Valid, but subject to cancellation

in common law the exception to this rule was contracts for necessaries like food, shelter, or clothing.

deal with a minor at your own risk

Mentally incompetent vs officially mentally incompetent

If a court has officially determined that an individual is incompetent then all contracts are void
if something is void in the law it can never be contracted

a mentally incompetent has a reasonable time once they become competent to void a contract

Minors can Ratify an agreement
ratify means recognize and acknowledges the existence of the agreement

upon reaching the age of majority any minor recognizes and acknowledges the existence of the agreement it can not be voided and has therefore been ratified.

Consideration

A bargained for exchange between the offeror and oferee. Defined as either conferring a benefit or suffering a detriment. Consideration is the essence of what transitions a moral or ethical obligation into that which the law deems to be a legal obligation
or
What you get or give

Is the person willing to or looking to act based on the word of the other individual
In common law consideration could be nominal but now it has to be something of value and it must be reasonable

Preexisting duties and past consideration -
where 1 has a preexisting duty to perform in a manner a contract can not be made later with that as part of the bargain

Past Consideration
Son applied for college, made all arrangements, and then went to college decided he was short. paying is not an obligation because the son did not depend on it

Preclude a promisor from going back on a promise during the executory phase of an agreement
executory - to be executed
executed - already executed

Quasi Contract

Farmer leased land for 2 harvests. at the end of the 2nd harvest the farmer prepared land for next years planting. At the end of he prep work, farmer and bank could not agree on terms of the following years lease & farmer leaves the land. The bank is obligated to pay the farmer for the prep-work he completed because they had a quasi contract.

-typically unilateral

Promissory Estoppel

Family's house had a flood. The insurance company assures everything is covered & supervises family's actions to move on in life. When family submits itemized list to insurance company they are obligated to cover everything even if contract had lapsed before the accident due to Promisory Estoppel.

-Precludes a promisor from going back on a promise during the executory phase of an agreement

-typically consideration

- occurs where a promisor makes a promise to a promisee that induces the promisee to take substantial action in reliance on the promise to his or her detriment.

if consideration occurs on both sides, dont look at this

Elements
A promise that causes substantial action to be taken by the promisee
-justifiably relies on the promise
-Detriment

Express Contract

A producer asks a star to act in his movie next month for $2M & she agrees

Implied Contract

Rich guy offers to pay a kid $10 if a kid shows up & cuts his lawn. The kid does this & gets paid. On the following 5 weekends the kids cut the lawn and gets paid. However, on the sixth weekend the kid cuts the lawn and has an implied contract that he will be paid.

Properly communicating offers and acceptance

In a unilateral offer - Performance of the act itself is the acceptance of an offer.
in common law, unless the offerer specified a specific means of communication any reasonable mode is acceptable. Anything that is as quick as or quicker than the way an offer was communicated is an acceptable means of response
if the offerer specifies a communication method you must follow it.


unilateral agreements can be unreasonable and therefore there are gap fillers represented by implied/quasi contracts

How is an offer terminated?

Acceptance,
Counter offer,
rejection, (just say no)
lapse of time or inaction by the oferee - offer is not exclusive

Operation of law - independent of what parties are doing (the legal system or court determines that events operate in a certain way) ie. intervening illegality (between time offer is made and acceptance is given the subject matter becomes illegal - Prohibition)
Subject matter is destroyed (between time offer is made and acceptance the subject matter is destroyed)
Mental of physical incapacity of either party

Option contract - Pay a certain sum of money to enter into a contract to hold the offer open a certain amount if time

Bifurcated means 2 pronged

2 types of offers

Unilateral offer - a promise made looking for an act in response (1 promise for an act)

Unilateral - If you paint my house i will pay you $1000

Bilateral offer - An offerer intend to receive a promise in response for a promise (1 promise for a promise)

Bilateral - If you promise to paint my house i will pay you $1000

***Recognize the difference

Stare Decisis also means precedent

Most law we talk about and follow is based on English common law.

Stare decisis means - based on previous decisions or : a doctrine or policy of following rules or principles laid down in previous judicial decisions unless they contravene the ordinary principles of justice

• common law is based on precedent


• Statutory law is based on legislative enactment

What constitutes an actal offer?

To constitute an actual offer:

• Intent is clear and unequivocal- individual recognizes that their words and conduct can be enforceable in the eyes of the law


• terms and conditions of the offer must be clear and certain


• Offer must be properly communicated - (can not respond to something you don't know about)

Ads or price quotes are invitations to negotiate and are not actually contracts, they are offers to negotiate

A Framework For Discussing Contracts

An offer is an act or statement that proposes definite terms & permits the other party to create a contract by accepting those terms
2 terms determine if a statement is an offer
1. Did the offer intend to make a bargain
2. Are the terms of the offer definite

(A promise or refrain from doing something that an individual is not otherwise legally obligated to do)

How do you determine intent?

objective intent - what reasonable people would perceive the individual is thinking by observing their words and conduct

Subjective intent - What an individual was actually thinking

express intent - something that is said (or written, text, fax, etc.)

implied intent - actions that are taken

4 (5) Elements of a contract

As the the title explains, there are 4 (5) elements of a valid contract. They are as follows:

1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. (Legality)

Final Exam

During the first class, Professor Mellman informed us that the final exam will be 5 questions and will be broken up as follows:

3 Questions on contract,
1 Question on employment law, and,
1 Question on Partnerships

Introduction

Hello All,

I have decided to post the notes i take during class on this blog. If anyone would like to post an article let me know and i will add you as an author to this blog. Also, please feel free to post comments, and maybe we can start a discussion.

Regards