Jody Blanke, Professor
Computer Information Systems and Law
Mercer University, Atlanta
Contract Law As Private Law
 Willing parties can agree to do most anything
 Freedom of contract
 “Meeting of the minds”
Private Law
 Contract between Major League Baseball and the
Players Association - Collective Bargaining Agreement
(311 page PDF file)
 “free agent”
 “salary cap”
 “luxury tax”
 NHL (a league that used to play ice hockey in Canada
and the U.S.)
Uniform Commercial Code
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Poster child of uniform laws
Adopted in 49½ states
Very successful
Facilitates the ease of doing business
First place to look for “the law”
 then, other state statutes
 then, state case (common) law – safety net
Basic Requirements
 An agreement between the parties
 Consideration
 Capacity
 Legality
Agreement – The Offer
 Offeror must have intention to be bound by offer
 e.g., kick the tire
 Terms must be reasonably definite and certain
 can be written, oral or implied
 can come from prior dealings or usage of trade
 Offer must be communicated to offeree
 e.g., reward for lost dog
Figurative “Death” of an Offer
 “Natural causes” – lapse of time
 “Suicide” – revocation
 “Murder” – rejection
 Counteroffer = rejection + offer
 “Execution” – by operation of law
 change in law terminates offer
Literal Death of An Offer
 The offeror dies
 The offeree dies
 Destruction of subject matter
Acceptance
 At common law (i.e., before the UCC)– “mirror image
rule”
 UCC – more relaxed (and reasonable)
 “battle of the forms”
 General rule for all actions - effective upon receipt
 exception – “mailbox rule”
Bilateral and Unilateral Contracts
 Bilateral – a promise for a promise
 e.g., Joe promises to paint Bill’s house and Bill promises
to pay Joe $1000
 Unilateral – a promise for an act
 e.g., Susan promises to pay $500 to the first person who
scales the outside of the Business and Education
Building
 performance of the act is acceptance
Consideration
 Each party must provide something of value
 Money, property, services, forebearance
 e.g., Hamer v. Sidway – the “rich uncle” case
 e.g., Jennings v. KSCS
 Courts will not examine the adequacy of the
consideration
Capacity
 Age – law protects minors
 Voidable contract
 Exception for necessaries
 Mental competency
 Void contract
 Voidable contract
 Intoxication
Legality
 Contracts must have a legal purpose
 Contracts involving commission of a crime
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cannot take out a “contract” for that noisy neighbor
cannot purchase a gram of cocaine
 Gambling?
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e.g., Durado Beach Hotel v. Jernigan
Genuiness of Assent
 Duress – “gun to the head”
 Undue Influence
 Mistake
 Unilateral – generally does not excuse performance
exception – if non-mistaken party knew of the mistake
 Mutual – generally does excuse performance
 no meeting of the minds
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Third-Party Rights
 Each party receives certain rights or benefits in a
contract
 Each party undertakes certain duties or obligations
 Generally, rights can be assigned to third parties
 Generally, duties can be delegated to third parties
 exception – when performance depends upon personal skills
Statute of Frauds
 “An oral contract is as legally valid as a written contract
unless the law requires it to be in writing”
 “…as good as…”
 if executed before 100 clergy people of all faiths willing
to come to court and testify
Must Be In Writing
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Contract to transfer an interest in real property
Contract that cannot be performed within 1 year
Contract to pay the debts of another
Contract made in contemplation of marriage
 dowry agreement
 prenuptial agreement
 Contract for the sale of goods greater than $500
 UCC drafters recommend increase to $5,000
Parol Evidence Rule
 Court will not permit evidence of prior or
contemporaneous oral statements if there is a
complete written agreement
 exception – ambiguities
 Morals of the story
 read the contract
– get it in writing
Integration Clause
 “I have read the above agreement and understand that
it represents the entire agreement between the
parties.”
 Morals of the story
 read the contract
– get it in writing
Standard Form Contracts
 Read them
 Modify them
 and get written approval from authorized representative
 Use attachments if necessary
 e.g., letters, memos, specifications
 Ambiguities interpreted against the drafter
Discharge of Contract
 Discharge by performance
 Discharge by agreement
 Discharge by impossibility
Discharge by Agreement
 Mutual rescission
 key word – “mutual”
 Novation
 new contract
 Accord and satisfaction
Discharge by Impossibility
 Objective impossibility
 e.g., the car got hit by a meteorite
 Subjective impossibility
 “It’s impossible for me to go through with that contract”
 Performance may be discharged by commercial
impracticability
 e.g., school district milk case
 key – was event “reasonably foreseeable?”
Remedies – Money Damages
 Compensatory damages
 makes one “whole” under the contract
 provides the “benefit of the bargain”
 measure of damages is usually the difference between
the value of the contract and the market value of what
was actually received
Remedies – Money Damages
 Consequential damages
 must be reasonably foreseeable
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e.g., Hadley v. Baxendale
 often disclaimed by contract
Mitigation of Damages
 Nonbreaching party has duty to lessen the amount of
damages
 e.g., wrongful discharge
 Anticipatory repudiation
 Duty to “cover”
Liquidated Damages
 Actual amount of damages must be difficult to
calculate
 Amount specified must be a reasonable estimate of
those damages
 Must not be a penalty
Equitable Remedies
 Injunction
 Quasi-Contract (Quantum Meruit)
 Specific Performance
 generally available for unique goods or property
 not appropriate for personal services
Choice of Law/Forum
 Written contracts often contain choice of law and
choice of forum clauses
 These will generally be enforced as long as there is a
connection to the state
 Some states may also require that the choices be fair
Unconscionability
 “Last ditch” remedy
 UCC remedy
 The court “would not be able to sleep at night”
 The court can ignore or fix an unconscionable contract
 Consumer remedy
 e.g., Frostifresh v. Reynoso
 e.g., PEPCO v. Westinghouse