• What is a contract? What is the objective What is a contract? What is the objective theory of contracts?theory of contracts?• What are the four basic elements What are the four basic elements

necessary to the formation of a valid necessary to the formation of a valid contract?contract?• What is the difference between an What is the difference between an

implied-in-fact contract and an implied-in-implied-in-fact contract and an implied-in-law contract (quasi contract)? law contract (quasi contract)?

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• How does a void contract differ from How does a void contract differ from a voidable contract? What is an a voidable contract? What is an unenforceable contract?unenforceable contract?• What rules guide the courts in What rules guide the courts in

interpreting contracts?interpreting contracts?

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• Sources of Contract Law.Sources of Contract Law.–Common Law for all contracts except

sales and leases.–Sale and lease contracts - Uniform

Commercial Code (UCC).• Function of a Contract.Function of a Contract.–Provides stability and predictability for

commerce.

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• Definition of a Contract. Definition of a Contract. –Promise or set of promises,–For breach of which,–The law provides a remedy, or–The performance of which the law in

some way recognizes as a duty.

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• Objective Theory of Contacts.Objective Theory of Contacts.–Circumstances to determine intent of

parties. –Objective Facts include:• What a party said when entering into the

contract, how the party acted or appeared (intent may be inferred), and circumstances surrounding the transaction.

• Freedom of Contract and Freedom Freedom of Contract and Freedom From Contract.From Contract.

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• Requirements of a Valid Contract.Requirements of a Valid Contract.–Agreement (Offer and Acceptance).–Consideration: bargained-for-

exchange.–Contractual Capacity.–Legality: purpose of contract must be

legal at the time of execution.

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• Defenses to Enforceability of a Defenses to Enforceability of a Contract:Contract:–Voluntary Consent.–Form: some types of contracts must be

in writing.

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• Contract Formation.Contract Formation.–Bilateral - Offeree must only promise to

perform (“promise for a promise”).–Unilateral - Offeree can accept the offer

only by completing the contract performance (“a promise for an act”).• Revocation of Offers: Offer for unilateral

contract cannot be revoked once performance has begun.

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• FormalFormal versus versus InformalInformal Contracts. Contracts.–Formal: must be in writing to be

enforceable. –Informal: all other contracts.

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• ExpressExpress: Words (oral or written).: Words (oral or written).• Implied (In Fact)Implied (In Fact): Conduct creates : Conduct creates

and defines the terms of the and defines the terms of the contract. Requirements:contract. Requirements:– PL furnished good or service– PL expected to be paid– DEF had chance to reject and did not.

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• Contract Performance.Contract Performance.–Executed - A contract that has been

fully performed on both sides.–Executory - A contract that has not

been fully performed on either side.

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• Contract Enforceability.Contract Enforceability.–Valid: agreement, consideration,

contractual capacity, and legality.–Void: no contract.–Voidable (unenforceable).–Valid contract can be avoided or

rescinded based on certain legal defenses.

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• Quasi Contracts are implied Quasi Contracts are implied in law.in law. –Equitable remedy created by courts,

and imposed on parties in the interest of fairness and justice.–Quantum Meruit.–CASE 9.1 Scheerer v. Fisher Scheerer v. Fisher (2010).

What are the elements of quantum meruit?

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• Limitations on Quasi-Contractual Limitations on Quasi-Contractual Remedy: Remedy: enriched party is not held enriched party is not held liable in certain situations dealing with liable in certain situations dealing with benefit is conferred unnecessarily, benefit is conferred unnecessarily, negligently or by misconduct.negligently or by misconduct.• When an Actual Contract Exists: When an Actual Contract Exists:

ordinarily no quasi-contract.ordinarily no quasi-contract.

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• ““Plain Meaning” Rule: courts will Plain Meaning” Rule: courts will enforce contracts whose meanings enforce contracts whose meanings are clear from the face of the are clear from the face of the instrument.instrument.• If terms are clear an unambiguous, If terms are clear an unambiguous,

court will not admit “extrinsic” court will not admit “extrinsic” (external) testimony or evidence. (external) testimony or evidence.

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• ““Plain Meaning” Rule (cont’d).Plain Meaning” Rule (cont’d).–However, if terms are ambiguous,

court may admit “extrinsic” (external) evidence.–CASE 9.2 Wagner v. Columbia Pictures Wagner v. Columbia Pictures

Industries, Inc.Industries, Inc. (2004). Should the court have admitted the extrinsic evidence?

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• Other Rules of Interpretation.Other Rules of Interpretation.–Contracts are interpreted as a whole.–Terms that are negotiated separately

given greater weight.–Words given ordinary, common

meaning.–Specific wording given greater weight

than general language.

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• Other Rules of Interpretation Other Rules of Interpretation (cont’d).(cont’d).–Written or typewritten given greater

weight than preprinted.–Ambiguous terms interpreted against

the drafter.

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• Other Rules of Interpretation Other Rules of Interpretation (cont’d).(cont’d).–Trade usage, prior dealing, course of

performance to allowed to clarify.–CASE 10.3 U.S. Bank, N.A. v. U.S. Bank, N.A. v.

Tennessee Farmers Mutual Insurance Tennessee Farmers Mutual Insurance Company Company (2009). What does “increase of hazard” mean?

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