Jody Blanke, ProfessorComputer Information Systems and LawMercer University, Atlanta

Contract Law As Private LawWilling parties can agree to do most anythingFreedom of contractMeeting of the minds

Private LawContract between Major League Baseball and the Players Association - Collective Bargaining Agreement (311 page PDF file)free agentsalary capluxury taxNHL (a league that used to play ice hockey in Canada and the U.S.)

Uniform Commercial CodePoster child of uniform lawsAdopted in 49 statesVery successfulFacilitates the ease of doing businessFirst place to look for the lawthen, 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 tireTerms must be reasonably definite and certaincan be written, oral or implied can come from prior dealings or usage of tradeOffer must be communicated to offereee.g., reward for lost dog

Figurative Death of an OfferNatural causes lapse of timeSuicide revocationMurder rejectionCounteroffer = rejection + offerExecution by operation of lawchange in law terminates offer

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

AcceptanceAt common law mirror image ruleUCC more relaxed (and reasonable)battle of the formsGenerally effective upon receiptexception mailbox rule

Bilateral and Unilateral ContractsBilateral a promise for a promisee.g., Joe promises to paint Bills house and Bill promises to pay Joe $1000Unilateral a promise for an acte.g., Susan promises to pay $500 to the first person who scales the outside of the Business and Education Buildingperformance of the act is acceptance

ConsiderationEach party must provide something of valueMoney, property, services, forebearancee.g., Hamer v. Sidway the rich uncle casee.g., Jennings v. KSCSCourts will not examine the adequacy of the consideration

CapacityAge law protects minorsVoidable contractException for necessariesMental competencyVoid contractVoidable contractIntoxication

LegalityContracts must have a legal purposecannot take out a contract for that noisy neighborcannot purchase a gram of cocainegambling?e.g., Durado Beach Hotel v. Jernigan

Genuiness of AssentDuress gun to the headUndue InfluenceMistakeUnilateral generally does not excuse performanceexception if nonmistaken party knew of the mistakeMutual generally does excuse performanceno 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 FraudsAn oral contract is as legally valid as a written contract unless the law requires it to be in writingas good asif 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 marriagedowry agreementprenuptial agreementContract 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 ambiguitiesMorals of the story read the contract get it in writing

Integration ClauseI 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 themand get written approval from authorized representativeUse attachments if necessarye.g., letters, memos, specificationsAmbiguities interpreted against the drafter

Discharge of ContractDischarge by performanceDischarge by agreementDischarge by impossibility

Discharge by AgreementMutual rescissionkey word mutualNovationnew contractAccord and satisfaction

Discharge by ImpossibilityObjective impossibilitye.g., the car got hit by a meteoriteSubjective impossibilityIts impossible for me to go through with that contractPerformance may be discharged by commercial impracticabilitye.g., school district milk casekey was event reasonably foreseeable?

Remedies Money DamagesCompensatory damagesmakes one whole under the contractprovides the benefit of the bargainmeasure of damages is usually the difference between the value of the contract and the market value of what was actually received

Remedies Money DamagesConsequential damagesmust be reasonably foreseeablee.g., Hadley v. Baxendaleoften disclaimed by contract

Mitigation of DamagesNonbreaching party has duty to lessen the amount of damagese.g., wrongful dischargeAnticipatory repudiation (UCC)Duty 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 Performancegenerally available for unique goods or propertynot 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 EstoppelLast ditch remedy Four requirements (Restatement of Contracts 90)A promiseJustifiable relianceForeseeabilityInjusticee.g., Hoffman v. Red Owl Stores

UnconscionabilityLast ditch remedy UCC remedyThe court would not be able to sleep at nightThe court can ignore or fix an unconscionable contractConsumer remedye.g., Frostifresh v. Reynosoe.g., PEPCO v. Westinghouse