• What is a contract? What is the objective theory of contracts?
• What are the four basic elements necessary to the formation of a valid contract?
• What is the difference between an implied-in-fact contract and an impliedin-law contract (quasi contract)? 
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• How does a void contract differ from a voidable contract? What is an unenforceable contract?
• What rules guide the courts in interpreting contracts?
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• 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.
– Provides stability and predictability for commerce.
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• 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.
– 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
From Contract.
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• Requirements of a Valid Contract.
– Agreement (Offer and Acceptance).
– Consideration: bargained-forexchange.
– Contractual Capacity.
– Legality: purpose of contract must be legal at the time of execution.
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• Defenses to Enforceability of a
Contract:
– Voluntary Consent.
– Form: some types of contracts must be in writing.
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• 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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• Formal versus Informal Contracts.
– Formal: must be in writing to be enforceable.
– Informal: all other contracts.
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• Express: Words (oral or written).
• Implied (In Fact): Conduct creates and defines the terms of the 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.
– 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.
– 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 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 (2010).
What are the elements of quantum meruit?
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• Limitations on Quasi-Contractual
Remedy: enriched party is not held liable in certain situations dealing with benefit is conferred unnecessarily, negligently or by misconduct.
• When an Actual Contract Exists: ordinarily no quasi-contract.
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• “Plain Meaning” Rule: courts will enforce contracts whose meanings are clear from the face of the instrument.
• If terms are clear an unambiguous, court will not admit “extrinsic”
(external) testimony or evidence. 
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• “Plain Meaning” Rule (cont’d).
– However, if terms are ambiguous, court may admit “extrinsic” (external) evidence.
– CASE 9.2 Wagner v. Columbia Pictures
Industries, Inc.
(2004). Should the court have admitted the extrinsic evidence?
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• 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
(cont’d).
– Written or typewritten given greater weight than preprinted.
– Ambiguous terms interpreted against the drafter.
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• Other Rules of Interpretation
(cont’d).
– Trade usage, prior dealing, course of performance to allowed to clarify.
– CASE 10.3 U.S. Bank, N.A. v.
Tennessee Farmers Mutual Insurance
Company (2009). What does “increase of hazard” mean?
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