Contract Law Jody Blanke Professor 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) 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