Unit 6 Contracts

Definition n An agreement between two or more parties enforceable in court.

Elements of a contract n Competent parties n Proper subject matter n Offer n Acceptance n Consideration (detriment)

Competent parties n Age n Sound mind n Exception for necessaries n Void versus voidable contracts

Proper subject matter n Not illegal n Not (excessively) immoral

Meeting of the minds n Offer must contain material terms –Newspaper ads - invitation to make an offer n Acceptance must be unqualified –Qualified acceptance is a counteroffer Terminates offer –Grudging acceptance

Consideration/Detriment n Exchange of value n Need not be money

Types of contracts n Express bilateral –Promise for a promise n Express unilateral –Promise for an act –Exception to advertising exception n Implied (Quasi-contract) –Implied in fact (real contracts where assent is implied) –Implied by law restitution to prevent unjust enrichment

Statute of frauds n Some contracts must be in writing to be enforceable n Current NC requirements n Exceptions –Partial performance –Promissory estoppel

Parol evidence rule n Written contract n Prior or contemporaneous oral statements barred –Except to clarify ambiguous terms n Subsequent oral statements admissible –Unless barred by an integration clause

Remedies n Money damages n Specific performance n Negative injunction n Rescission and restitution

Defenses n Impossibility n Impracticability n Mistake

Stipulated (liquidated) damages n No penalties n Reasonably related to actual damages

Time n Statute of limitations n Laches (equity)