How to Ace FYLSE/Contracts Outline
Applicable Law[edit | edit source]
Common Law-Judge made law or case law. Certain contracts such as service and real estate contracts are governed by common law.
UCC Article 2 governs contracts for goods.
P, a computer software consultant, entered into a written services contract with D to write four computer programs for use by Danco in controlling its automated manufacturing machines.—F10Q1
Here, even though a computer software could be a possibly good, it is not a tangible, movable good and therefore, the Uniform Commercial Code does not apply. By default this contract is governed by the common law.
Predominant factor test: When a contract is for a combination of goods and services a predominate factor test is used to determine which law governs.
Time is of Essence[edit | edit source]
Performance after such time could be considered a material breach of the contract. Generally, contracts are given a reasonable time for performance under the common law.
Valid Contract[edit | edit source]
A contract exists when two parties reach a meeting of the minds (mutual assent) supported by consideration. That is there are three elements to a contract, offer, acceptance and consideration.
Formation issues come up in the validity of a contract. To see if it is properly formed analyze the structure at each stage of the elements of a valid contract.
Is the offer unilateral or bilateral?
A.Unilateral: requires complete performance as sole method of acceptance. B.Bilateral: all others; often the offer is silent as to method of acceptance.
Illusory Promise[edit | edit source]
A promise is illusory even if there appears to be legal detriment if one party is not bound to do anything at all. An illusory promise included in a contract containing other legal detriment will not void the contract, and can become part of the contract.
Anticipatory Repudiation[edit | edit source]
Anticipatory repudiation occurs where a promisor, prior to the time set for performance, unequivocally manifests an intention not to perform the agreement by words or conduct. Anticipatory repudiation will apply only when there is a bilateral contract with unperformed (executory) duties on both sides.
(15 days before due date) P called C and told C that "I'm having some problems with program 3 and I won't have it ready to deliver to you until at least May 8 (7 days after the due date)- may closer to May 15. Also I have some doubt about whether I can even write program number 4 at all because your computer hardware is nearly obsolete. But I'll get programs numbers 1 and 2 to you by May 1. (These are 2 of 4 programs were to be delivered.) F10Q1
Parol Evidence Rule[edit | edit source]
The parol evidence rule, however, only bars oral evidence prior to or during negotiations leading to the writing. Any subsequent oral modifications or agreements are admissible.
The contract stated, "This is the complete and entire contract between the parties(.)" Later P called D twice and got a few conditions waived. Later D refused to perform the contract.—F10Q1
Here, P may admit evidence of waiver of condition and anticipatory repudiation in the conversations.
3. Ben and Carl agree that this written agreement contains the full statement of their agreement.—J13Q4
No Modification[edit | edit source]
A modification under common law requires additional consideration to be valid.
The contract stated, "(N)o modification of this service contract shall be valid unless it is in writing and signed by both parties."—F10Q1
4. Ben and Carl agree that this written agreement may not be modified except upon written consent of both of them.—J13Q4
Statute of Frauds[edit | edit source]
The SoF requires that any contract for goods greater than $500, or services which may take longer than one year to be performed, must be in writing, and signed by the party to be charged. Contracts for real estate must be in writing to be enforceable.
Exceptions - Part Performance[edit | edit source]
The SoF can be satisfied by part performance.
Promissory Estoppel[edit | edit source]
Promissory estoppel arises when reliance is induced and the other party in fact justifiably relies.
Unconcionability[edit | edit source]
Wrongful Prevention[edit | edit source]
Prevention doctrine is a common-law principle of contract law which says that a contracting party has an implied duty not to do anything that prevents the other party from performing its obligation. A party who prevents performance of a contract may not complain of such nonperformance.