1. Chapter 9 Nature of Traditional and E-Contracts

2. Definition of a Contract
Contract: A promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty
Contracts are voluntarily entered into by parties
Terms of the contract become private law between the parties
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3. Definition of a Contract
Parties to a contract
Every contract involves at least two parties
Offeror – the party who makes an offer to enter into a contract
Offeree – the party to whom an offer is made
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4. Definition of a Contract
Agreement
Consideration
Elements of a Contract
Contractual Capacity
Lawful Object
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5. Definition of a Contract
Elements of a contract
Agreement
Offer by offeror and acceptance by offeree
Mutual assent
Consideration
The promise must be supported by bargained- for consideration that is legally sufficient
Example – money, services
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6. Definition of a Contract
Elements of a contract
Contractual capacity
Parties must have contractual capacity for the contract to be enforceable against them
Minors or persons adjudged to be insane do not have contractual capacity
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7. Definition of a Contract
Elements of a contract
Lawful object
Contracts to accomplish illegal objects or contracts that are against public policy are void
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8. Defenses to the Enforcement of a Contract
Genuineness of Assent
Lacking if consent is obtained by:
Duress
Undue influence
Fraud
Writing and Form
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9. Sources of Contract Law
Common law of contracts
Contract law developed primarily by state courts
Uniform Commercial Code (UCC)
Comprehensive statutory scheme that includes laws that cover aspects of commercial transactions
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10. Sources of Contract Law
Restatement of the Law of Contracts
Compilation of model contract law principles drafted by legal scholars
Not legally binding
Lawyers and judges often refer to it for guidance in contract disputes
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11. Objective Theory of Contracts
Intent to enter into a contract is judged by the reasonable person standard
Words and conduct
Surrounding circumstances
Subjective intent is irrelevant
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12. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
E-Contracts
Courts apply traditional contract rules
State and federal statutes also apply
Uniform Computer Information Transactions Act (UCITA)
A model act that establishes uniform legal rules for the formation and enforcement of electronic contracts and licenses
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13. Classification of Contracts
Bilateral Contract
The offeror’s promise is answered with the offeree’s promise of acceptance
No act of performance is necessary
Unilateral Contract
The offeror’s offer can be accepted only by the performance of an act by the offeree
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14. Classification of Contracts
Formal Contracts
Require a special form or method of creation
Contracts Under Seal
Recognizances
Negotiable Instruments
Letters of Credit
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15. Classification of Contracts
Informal Contracts
No special form or method is required
Leases
Sales Contracts
Service Contracts
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16. Classification of Contracts
Valid Contract
Contract that meets all of the essential elements to establish a contract
Enforceable by at least one of the parties
Void Contract
Contract that has no legal effect
Neither party is obligated to perform
Neither party can enforce the contract
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17. Classification of Contracts
Voidable Contract
One or both parties can avoid contractual obligations
If a contract is avoided, both parties are released from their contractual obligations
Unenforceable Contract
Legal defense to the enforcement of the contract
Parties may voluntarily perform
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18. Classification of Contracts
Executed Contract
Fully performed on both sides
A completed contract
Executory Contract
Not fully performed by either or both sides
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19. Express and Implied Contracts
Express Contract
Expressed in writing or verbally
Implied-in-fact Contract
Agreement inferred by parties’ conduct
Implied-in-law contract
No actual contract
Court imposes agreement to avoid unjust enrichment
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20. Case 9.1: Implied-in-Fact Contract
Wrench LLC v. Taco Bell Corporation
256 F.3d 446, Web 2001 U.S. App. Lexis (2001)
United States Court of Appeals for the Sixth Circuit
Issue
Have the plaintiffs Wrench LLC, Rinks, and Shields stated a cause of action for the breach of an implied-in-fact contract?
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21. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Equity
Equity: A doctrine that permits judges to make decisions based on fairness, equality, moral rights, and natural law
There is no right to a jury trial in an equitable action
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