An agreement that can be enforced in court;A promise or set of promises for the

breach of which the law gives a remedy, or the performance of which the law recognizes a duty.

Simply, 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.

Key terms: Two or more

parties Performance To refrain from

performing For legal purpose

Must it be in writing to be enforced? Are there special words/forms needed to

write a contract? Must it be notarized? Must it have a legal purpose? Must it be voluntary? Who can enter into a contract? Must there be a time or event when

completed?

Promisor – A person who makes a promise.◦ Example: I promise to paint your house for

$3,500.00.

Promisee – A person to whom a promise is made.◦ Example: I promise to sell you my camper for

$7,500.00.

Offeror – A person who makes an offer.

Offeree – A person to whom an offer is made.

Promisor ----- Promisor ----- promise to sell promise to sell ----- ----- PromiseePromisee

Offeror Offeror Offeree Offeree

Seller ----- promise to pay ----- Buyer Seller ----- promise to pay ----- Buyer

Unilateral Contracts A contract that results when an offer can be accepted

only by the offeree’s performance. Offeree’s performance is the consideration for the

offeror’s offer.

Example: Smith says to Parker, “If you carry this package across the Brooklyn Bridge. I’ll give you $100.00.” Only on Parker’s complete crossing with the package does he accept Smith’s offer to pay $100.00. (If Parker does not cross, there are no legal consequences.

Example: Buying a winning lottery ticket.

Bilateral Contracts◦ If to accept the offer, the offeree must only promise

to perform, the contract is bilateral. No performance, such as the payment of money or delivery of goods. Need take place.

◦ The contract comes into existence at the moment the promises are exchanged.

◦ Example: Jeff offers to buy Ann’s digital camera for $200.00. Jeff tells Ann he will pay her next Friday; Ann accepts his offer and promises to give him the camera when he pays her on Friday.

Express Contracts: The terms are fully and explicitly stated in oral or written

words. Example: Written lease

Implied (Implied-in-fact) Contracts: A contract that is implied from the conduct of the parties.

Look for three elements: 1) the plaintiff must have furnished some service or

property 2) the plaintiff must have expected to be paid and

defendant knew or should have known that the payment was expected

3) the defendant had a chance to reject the service or property and did not

Example: Tax accountant example

Valid Contracts

A contract that has the necessary elements of offer, acceptance and consideration; parties with legal capacity and for a legal purpose.Voidable Contracts

A contract in which one of the parties has the option of avoiding (or enforcing) the contractual obligation.Void Contracts

No contract exists; void ab initio (Latin- “from the beginning”)Unenforceable Contracts

A contract that otherwise would be valid, except for a legal defense.

Agreement Offer When is an offer made? Acceptance When is acceptance?

Consideration

1) Communication to the offeree 2) Definiteness of the terms 3) Intent to become bound; serious,

objective intention Non-offers:

Expressions of opinion Statements of intention Advertising Negotiations

Executory Contracts◦ A contract in which a party has material unperformed

obligations. A contract that has not been performed by both parties. A contract that has been fully performed by one party but not by the other party is classified as an executory contract. (Although material, an obligation to pay money does not usually make a contract executory.)

Executed ContractsA contract that has been completely performed by both parties. All parties have fulfilled their promises.

Why is it important?

A fictional contract imposed by law (courts)

Implied by law A legal substitute for a

valid contract A contract that should

have been formed even though it was not

Example: Sprinkler System Case

The defendant’s liability is equal to the value of the benefit – fair market benefit; not the “price” of the item or stated in the contract.

A defense used in civil and criminal law to limit or avoid liability or criminal culpability. (Must be raised by party asserting it.)

Example: Self defense Example: Assumption of the risk Example: Statute of limitations Example: Estoppel Example: Legality Example: Capacity of one of the parties

1) Unequivical 2) By offeree or his/her agent 3) Usually by same mode as the way an

offer was made