Chpt 6 Contracts_Nature and Terminology
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Transcript of Chpt 6 Contracts_Nature and Terminology
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
1/19
COPYRIGHT © 2006 West Legal Studies in Business, a part ! T"e T"#sn Crpratin$ T"#sn,
t"e Star lg, and West Legal Studies in Business are trade#ar%s used "erein under li&ense$
West’s Business Law10th Edition
Kenneth W. Clarkson, University of Miami
Roger LeRoy Miller, Institute for University Studies, Arlington, e!as
"aylord A. #ent$, University of e!as, Austin, %meritus
&rank '. Cross, University of e!as, Austin
CHAPTER 10CHAPTER 10Contracts: Nature and TerminologyContracts: Nature and Terminology
(
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
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Roscoe PoundRoscoe Pound
he noted legal
s)holar Ros)oe
*ound on)e said that
+the so)ial order rests
uon the sta-ility and
redi)ta-ility of
)ondu)t, of hi)hkeeing romises is a
large item./
0
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
3/19
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Contract Law: WhyContract Law: Why
1 *romises so)iety -elieves should -e legally1 *romises so)iety -elieves should -e legally
-inding. -inding.
1%!)uses so)iety ill a))et for -reaking romises.%!)uses so)iety ill a))et for -reaking romises.1*romises that are against u-li) oli)y so legally*romises that are against u-li) oli)y so legallyvoid.void.
1Imortant -e)ause foundation of )ommer)ialImortant -e)ause foundation of )ommer)iala)tivity is )ontra)ts.a)tivity is )ontra)ts.
2
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
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!1:!1: "#er#iew o$ Contract Law"#er#iew o$ Contract Law
Sour)es of Contra)t La.Sour)es of Contra)t La. Common La for all )ontra)ts e!)et sales and leases.Common La for all )ontra)ts e!)et sales and leases.
Sale and lease )ontra)ts 1 Uniform Commer)ial Code 4UCC5.Sale and lease )ontra)ts 1 Uniform Commer)ial Code 4UCC5.
A )ontra)t is a6A )ontra)t is a6 *romise or set of romises,*romise or set of romises,
&or -rea)h of hi)h,&or -rea)h of hi)h,
he la rovides a remedy, or he la rovides a remedy, or
he erforman)e of hi)h the la in some ay re)ogni$es ashe erforman)e of hi)h the la in some ay re)ogni$es asa duty.a duty.
7ideo67ideo6 The Big Bang Theory - room mate agreement The Big Bang Theory - room mate agreement
https:// https:// www.youtube.com/watch?v=XIm6_2!Ic"www.youtube.com/watch?v=XIm6_2!Ic"
https://www.youtube.com/watch?v=XIm6_2NzIc4https://www.youtube.com/watch?v=XIm6_2NzIc4https://www.youtube.com/watch?v=XIm6_2NzIc4https://www.youtube.com/watch?v=XIm6_2NzIc4https://www.youtube.com/watch?v=XIm6_2NzIc4https://www.youtube.com/watch?v=XIm6_2NzIc4
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
5/19
COPYRIGHT © 2006 West Legal Studies in Business, a part ! T"e T"#sn Crpratin$ T"#sn,
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!%:!%: Elements o$ a ContractElements o$ a ContractAgreement 49ffer and A))etan)e5.Agreement 49ffer and A))etan)e5. he offerormust offer to enter into an agreement, and the
offeree must accept the terms of the offeror:s offer.
Consideration.Consideration. Something of value given or
romised to )onvin)e a arty to agree to the deal.
Contra)tual Caa)ity.Contra)tual Caa)ity. 'oth arties must -e legally
)ometent to enter into the agreement.
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
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;efense6;efense6
Legality.Legality. he )ontra)t:s urose must -e toa))omlish some goal that is legal and not against
u-li) oli)y.
"enuineness of assent."enuineness of assent. he aarent )onsent of -oth
arties must -e genuine.
&orm.&orm. he agreement must -e in hatever form 4e.#.,
ritten, under seal5 the la re
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
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*arties may -e6 individuals, artnershis, )ororations,
governments
Shier Carrier
*arties to a ransortation Contra)t
Insurer Insured
*arties to an Insuran)e *oli)y
Landlord
4Lessor5
enant
4Lessee5
*arties Agreeing Uon 9))uation
of a 'uilding for Money 4a Lease5
7endor 7endee
*arties to a Sales Contra)t
*romisor49-ligor5
*romisee
49-ligee5"eneral6
%!amles6
Parties to a Contract
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
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!&:!&: Ty'es o$ ContractsTy'es o$ Contracts
'ilateral v. Unilateral. 'ilateral 1 9fferee must only romise to erform 4+romise
for a romise/5.
Unilateral 1 9fferee )an a))et the offer only -y )omleting
the )ontra)t erforman)e 4+a romise for an a)t/5.Irrevo)a-le6 9ffer )annot -e revoked on)e erforman)e has
-egun.
9n)e the offeree of a unilateral )ontra)t -egins to erform, the
offeror loses the a-ility to revoke her offer 4e.#., if @ offered B08 to mo @:s yard, on had su-stantially -egun to erform,
@ )ould not revoke her offer to ay for moing her yard5.
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7ideo67ideo6 Contracts – Charlie BrownContracts – Charlie Brownhtt6htt6.youtu-e.)omat)hD.youtu-e.)omat)hD
vEF*$0I$IiiGHfeatureErelatedvEF*$0I$IiiGHfeatureErelated
Case 10.1:Case 10.1: Ardito v. City of Ardito v. City of
Providence Providence (2003).(2003).
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http://www.youtube.com/watch?v=HPYz2IzIii0&feature=relatedhttp://www.youtube.com/watch?v=HPYz2IzIii0&feature=relatedhttp://www.youtube.com/watch?v=HPYz2IzIii0&feature=related
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
10/19
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Ardito v. City of Providencehe City of *roviden)e, Rhode Island, de)ided to -egin hiring oli)e
offi)ers to fill va)an)ies in its oli)e deartment. 'e)ause only
individuals ho graduated from the *roviden)e *oli)e A)ademy ere
eligi-le, the )ity also de)ided to )ondu)t to training sessions, the
+=Gth and =(st *oli)e A)ademies./ he ali)ants deemed most
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
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Ardito v. City of Providence
he )ourt issued an inun)tion to rohi-it the )ity from )ondu)tingthe =(st *oli)e A)ademy unless the laintiffs ere in)luded. he
9)to-er (8 letter as a unilateral offer that the laintiffs had
a))eted -y assing the re
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
12/19
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E('ress #s) *m'lied+in+,actE('ress #s) *m'lied+in+,act
%!ress6%!ress6 A )ontra)t in hi)h the terms of the agreement aree!li)itly stated orally or in riting.
Imlied In &a)t6Imlied In &a)t6 Condu)t )reates and defines the terms ofCondu)t )reates and defines the terms of
the )ontra)t. Re
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
13/19
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Ty'es o$ ContractsTy'es o$ Contracts&ormal v. Informal.&ormal v. Informal.
or!al Contract6 A )ontra)t that re
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
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Ty'es o$ ContractsTy'es o$ Contracts
%!e)uted v. %!e)utory.%!e)uted v. %!e)utory. %!e)uted 1 A )ontra)t that has -een fully erformed on -oth%!e)uted 1 A )ontra)t that has -een fully erformed on -oth
sides.sides.
%!e)utory 1 A )ontra)t that has not -een fully erformed on%!e)utory 1 A )ontra)t that has not -een fully erformed on
either side.either side.7ideo67ideo6 &ow'in#e( &ow'in#e(
htt6.youtu-e.)omat)hDvEy7"lKr$i"8%htt6.youtu-e.)omat)hDvEy7"lKr$i"8%
1;oes a )ontra)t e!istD1;oes a )ontra)t e!istD
1'ilateral or unilateralD1'ilateral or unilateralD
1%!ress or Imlied1in1&a)tD1%!ress or Imlied1in1&a)tD
1&ormal or InformalD1&ormal or InformalD
(3
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
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Contract En$orcea-ilityContract En$orcea-ility7alid.7alid.
%lements6 Agreement, )onsideration, )ontra)tual%lements6 Agreement, )onsideration, )ontra)tual
)aa)ity, and legality.)aa)ity, and legality.
7oid.7oid.
Oo )ontra)t. Oo )ontra)t.
7oida-le 4unenfor)ea-le5.7oida-le 4unenfor)ea-le5. 7alid )ontra)t )an -e avoided or res)inded.7alid )ontra)t )an -e avoided or res)inded.
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
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!.:!.: /uasi+Contracts/uasi+Contracts
+uasi Contract: A fi)tional )ontra)t imosed on arties -ya )ourt in the interests of fairness and usti)e, tyi)ally to
4(5 revent the unjust enrichment of one arty at the
e!ense of the other, and
405 allo the arty hose a)tions ould otheriseunustly enri)h the other arty to re)over in quantum
meruit .
7ideo6 Drake Sued Over !arvins "oom #y $%- Drake Sued Over !arvins "oom #y $%-&ir'friend()&ir'friend()
htt6.youtu-e.)omat)hDvEeCF3"-f$!r?
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8/15/2019 Chpt 6 Contracts_Nature and Terminology
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!: *nter'retation o$ Contracts!: *nter'retation o$ Contracts
*lain Meaning Rule6 Courts give terms their o-vious*lain Meaning Rule6 Courts give terms their o-viousor ordinary meaning.or ordinary meaning.
Am-iguous erms. If terms are am-iguous, )ourt illAm-iguous erms. If terms are am-iguous, )ourt ill
attemt to interret am-iguous )ontra)t terms in aattemt to interret am-iguous )ontra)t terms in areasona-le, laful, effe)tive manner.reasona-le, laful, effe)tive manner.
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*nter'retation o$ Contracts*nter'retation o$ Contracts
Am-iguous erms 4)ont:d5Am-iguous erms 4)ont:d5 Se)ifi) ording given greater eight than generalSe)ifi) ording given greater eight than general
language.language.
Written or tyeritten given greater eight thanWritten or tyeritten given greater eight than
rerinted. rerinted.
Am-iguous terms interreted against the drafter.Am-iguous terms interreted against the drafter.
rade usage, rior dealing, )ourse of erforman)e torade usage, rior dealing, )ourse of erforman)e to
alloed to )larify.alloed to )larify. 7ideo67ideo6 Mit)hell H We-- 1 Oeedlessly am-iguous termsMit)hell H We-- 1 Oeedlessly am-iguous terms
htt6.youtu-e.)omat)hDvEU=)ake2-nhtt6.youtu-e.)omat)hDvEU=)ake2-n
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Rules o$ Contract *nter'retationRules o$ Contract *nter'retation
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