10: Contracts
- Page ID
- 41870
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\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)- Explain what constitutes a contract.
- Understand how a contract is formed.
- Know the defenses to performance of a contract.
- Understand breach of contract and its consequences.
- Identify remedies for breach of contract.
- 10.1: Introduction
- This page explains the difference between agreements and contracts, highlighting that while agreements are mutual understandings, contracts are legally enforceable. It notes that breaches of contract permit claims for damages, and emphasizes the importance of understanding contracts, including clauses and enforceability.
- 10.2: Contract Elements
- This page outlines the three essential elements of a valid contract: offer, acceptance, and consideration. An offer proposes a deal, which must be accepted for a contract to exist. Offers can be informal and are subject to rejection or expiration. Consideration involves an exchange of value; past actions are not valid. If consideration is absent, promissory estoppel may enforce a promise to prevent injustice. Clear mutual assent is crucial for a binding contract.
- 10.3: Types of Contracts
- This page explains various contract types, including bilateral, unilateral, express, and implied contracts. It discusses quasi-contracts imposed by law to prevent unfairness and explores contract enforceability with definitions of valid, unenforceable, void, and voidable contracts. Additionally, it covers executory (not yet completed) and executed (fully completed) contracts, emphasizing conditions for ratification or disaffirmation.
- 10.4: Performance and Breach of Contract
- This page discusses contract performance, emphasizing the importance of fulfilling legal obligations. Complete performance releases parties from future duties, whereas a breach occurs when one fails to perform, potentially causing conflict. Service contracts typically allow for substantial performance, accommodating minor breaches.
- 10.5: Defenses to Contracts
- This page outlines defenses to contract performance, including voiding scenarios like illegality and lack of capacity, the necessity of written agreements per the Statute of Frauds, and the impact of the statute of limitations. It discusses how mistakes (mutual or unilateral), misrepresentation, fraud, commercial impracticability, and bankruptcy can invalidate or hinder contract enforcement.
- 10.6: Assignment, Delegation, and Third Party Beneficiaries
- This page discusses the assignment and delegation of contracts, noting that they can occur by law unless restricted. One party may assign rights or delegate duties without consent, but the original party retains liability unless there’s a novation. It also distinguishes between intended and incidental third-party beneficiaries, stating that only intended beneficiaries have enforceable rights.
- 10.7: Parol Evidence Rule
- This page outlines that courts interpret contracts mainly according to their written terms, guided by the Parol Evidence Rule, which limits modifying evidence. Exceptions include subsequent modifications and clarifications for ambiguities. As a result, businesses should draft comprehensive contracts to prevent disputes.
- 10.8: Remedies
- This page outlines the four main remedies for breach of contract: damages, specific performance, rescission, and restitution, focused on compensating the non-breaching party. Damages include compensatory, consequential, incidental, nominal, punitive, and liquidated types, each serving different purposes. Specific performance enforces contract fulfillment, rescission nullifies the contract, and restitution involves returning benefits.
- 10.9: Concluding Thoughts
- This page discusses the importance of contracts in business, emphasizing the need for a clear understanding of their formation, performance, and execution. It highlights crucial elements such as required performance, defenses against breaches, and available remedies for addressing breaches.