Bài giảng Business Law - Chapter 9: Introduction to Contracts

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin3Introduction to ContractsThe Agreement: OfferThe Agreement: AcceptanceConsiderationReality of ConsentContractsPART3Capacity to ContractIllegalityWritingRights of Third PartiesPerformance and RemediesContractsPARTIntroduction to ContractsPAETRHC9Contracts are agreements made up of big words and little type. Sam Ewing quoted in the Saturday Evening Post May 1993Learning ObjectivesExplain the nature and purpose of contractsDescribe the elements of a contractDistinguish applicability of common law of contracts and Art. 2 of the Uniform Commercial CodeIdentify non-contract obligationsNot every promise is legally enforceableBut when a set of promises has the status of contract, a person injured by a breach of that contract is entitled to call on the government (courts) to force the breaching party to honor the contractContract law is ancient law, but has evolved to reflect social changeContracts (1) agreement made of an offer and an acceptance, (2) made voluntarily, (3) supported by consideration, (4) between parties with capacity to contract, and (5) made for a lawful purposeSee Figure 1, page 318 Elements of a Contract Bilateral contracts: two parties make promises to one anotherUnilateral contracts: one party makes a promiseFrequent buyer cards are offers for unilateral contracts; gaining points on the cards accept the offer and creates a contractContract Concepts and TypesValid contract: binding and enforceable agreementVoidable contract: agreement otherwise binding, but due to circumstances surrounding execution or lack of capacity, may be rejected at option of one partyVoid contract: agreement without legal effect because prohibited by lawContract Concepts and TypesExpress contract: agreement of parties manifested by words, written or oralImplied contract: agreement not shown by words, but by acts and conduct of partiesDifference between express & implied contracts relates to manner of proving the existence of the contract, not the effect; one or the other arisesContract Concepts and TypesTwo bodies of law govern contracts: Article 2 of Uniform Commercial CodeCommon law of contractsUniform Commercial Code (UCC) is statutory law in every state, but the common law of contracts is evolvingUCC contains nine articlesSources of Governing LawArticle 2 expressly applies to contracts for the sale of goods [2–102] (numbers in brackets refer to specific Code sections)UCC [1–105]: goods are tangible, movable, personal propertyDoes not apply to sale of services, intangible property (stocks, intellectual property), or real estateUCC Article 2Many contracts involve goods and servicesTest that courts most frequently apply to decide whether Article 2 applies is to ask which element – goods or services – predominates in the contractSee Olé Mexican Foods, Inc. v. Hanson Staple CompanyThe UCC and Hybrid ContractsThe UCC or Common LawUnited Nations Convention on Contracts for the International Sale of Goods (CISG) is body of contract rules that harmonizes contract principles from many legal systemsSeventy-seven nations, including Canada and the United States, are parties to CISGSee UN Commission on International Trade Law websiteInternational Contract LawCISG automatically applies to a contract for the sale of goods between commercial parties from nations that agreed to CISG unless the parties expressly opt out of the CISG in their contractInternational Contract LawSometimes the law enforces an obligation to pay for certain losses or benefits even in the absence of mutual agreement and exchange of value; the court then applies:Quasi-contract theoryPromissory estoppelNon-Contract ObligationsQuasi-Contract TheoryQuasi-contract is an obligation imposed by law to prevent unjust enrichment of one party in certain circumstancesE.g., work performed by painter thinking work justified by contract & other party, who receives benefit of work, denies work was justifiedE.g., company induces Joe to buy a product franchise by grossly misstating average revenues of franchisees; Joe discovers deception and elects to cancel the contractQuasi-Contract RemediesPlaintiff recovers either the reasonable value of the benefit conferred on the defendant (reasonable price) or value of labor (quantum meruit) Promissory EstoppelA court may apply doctrine of promissory estoppel when one party relies upon another party’s promise to his or her detriment (detrimental reliance), but there’s no contractCourt will force promisor to fulfill promise or pay compensationExample: Aceves v. U.S. BankReviewThought QuestionWhat contracts have you entered into recently?