Contract Law

Jody BlankeProfessor of Computer Information Systems and Law

Contract Law As Private Law Willing parties can agree to do most

anything Freedom of contract “Meeting of the minds”

Private Law Contract between Major League

Baseball and the Players Association - Collective Bargaining Agreement (241 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 Code Poster child of uniform laws Adopted in 49½ states Very successful Facilitates the ease of doing business First place to look for “the law”

then, other state statutes then, state case (common) law – safety

net

Basic Requirements An agreement between the parties Consideration Capacity Legality

Agreement – The Offer Offeror must have intention to be bound by

offer e.g., kick the tire

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

Offer must be communicated to offeree e.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 Offer The offeror dies The offeree dies Destruction of subject matter

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

“battle of the forms” Generally effective upon receipt

exception – “mailbox rule”

Consideration Each party must provide something of

value Money, property, services, forebearance e.g., Hamer v. Sidway – the “rich uncle”

case e.g., Jennings v. KSCS

Courts will not examine the adequacy of the consideration

Capacity Age – law protects minors

Voidable contract Exception for necessaries

Mental competency Void contract Voidable contract

Intoxication

Legality Contracts must have a legal purpose

cannot take out a “contract” for that noisy neighbor

cannot purchase a gram of cocaine gambling?

e.g., Durado Beach Hotel v. Jernigan

Genuiness of Assent Duress – “gun to the head” Undue Influence Fraud Mistake

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

mistake Mutual – generally does excuse performance

no meeting of the minds

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 Writing Contract to transfer an interest in real

property Contract that cannot be performed within 1

year Contract to pay the debts of another Contract made in contemplation of marriage

dowry agreement prenuptial agreement

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

Parol Evidence Rule Court will not permit evidence of prior

or contemporaneous oral statements if there is a complete written agreement exception – 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 Contracts Read them Modify them

and get written approval from authorized representative

Use attachments if necessary e.g., letters, memos, specifications

Ambiguities interpreted against the drafter

Choice of Law/Forum Written contracts often contain choice

of law and choice of forum clauses These will generally be enforced as

long as there is a connection to the state

Some states may also require that the choices be fair

Covenants Not to Compete May be related to sale of business

e.g., Joe the Baker May be related to employment contract

California will not enforce such an agreement as an illegal restraint of trade

Georgia will not “blue pencil” an agreement Brenda Woods agrees not to work as an on-

air news anchor in the Atlanta/Athens television market for 6 months

Covenants Not to Compete Scope

agreement must specify what activity is to be limited

Geography be careful of terms like Atlanta

Duration e.g., 6 months, 1 year, 2 years