CONTRACT LAW IN THE FIRST-YEAR
LAW CURRICULUM
Defining Terminology.
1. Contract: The term “contract” ordinarily means an “agreement”
between two or more persons.
2. How does the following term shed any light on the meaning of the
term “contract:”
3. The term contract means “something more than an shared understanding between the parties to an agreement.”
4. Do words clearly express the message the speaker or writer intends to
communicate, or does meaning depend on the recipient of the
communication?
5. The term “contract” may also refer to the set of papers on which the
terms of the agreement may be found, the “document.”
6. To an attorney, the terms contract refers to an agreement that has
legal effect:
a. The agreement creates legally enforceable obligations between the
parties.
b. The law would provide a remedy if one of both of the parties do
not fulfill their obligations under the contract.
CONTRACT LAW IN THE FIRST-YEAR
LAW CURRICULUM
A transaction involving the sale and purchase of a House will have
three elements, each of which may be called a contract:
1. The agreement-in-fact
2. The agreement as written
3. The set of rights and duties created by the agreement-in-fact
and/or the agreement as written.
I will sell you my home
I will pay you $150,000 for your home
CONTRACT LAW IN THE FIRST-YEAR
LAW CURRICULUM
During the first year contracts course, we will study
1. The ways in which agreements are made;
2. The ways agreements are enforced in our legal system;
3. The role judges and lawyers play in creating contracts;
4. The role judges and lawyers play in deciding disputes over performance;
and
5. The role judges and lawyers play in fashioning remedies.
I will sell you my home
I will pay you $150,000 for your home
CONTRACT LAW IN THE FIRST-YEAR
LAW CURRICULUM
How does the contracts course fit into to first year law curriculum?
1. In our legal system many things are susceptible to ownership: home, stock,
copyrights, and patents.
2. In our legal system, the state will protect the right of a party who owns
property to use, enjoy and consume that property;
3. In the first year Property course, the focus is on rules governing ownership
of real property and, in some cases, personal property.
4. Both Criminal Law and Tort law reflects how society’s responds to certain
violations of property, and for that matter, personal rights.
5. Criminal Law deals with violations of personal and property right which are
so serious that society will deter by serious punishment.
6. Tort Law deals with remedies that will be available to individuals how have
been injured by violations of their personal and property rights.
CONTRACT LAW IN THE FIRST-YEAR
LAW CURRICULUM
How does the contracts course fit into to first year law curriculum?
1. In our legal system many things are susceptible to ownership: home, stock,
copyrights, and patents.
2. In our legal system, the state will protect the right of a party who owns
property to use, enjoy and consume that property;
3. In the first year Property course, the focus is on rules governing ownership
of real property and, in some cases, personal property.
4. Both Criminal Law and Tort law reflects how society’s responds to certain
violations of property, and for that matter, personal rights.
5. Criminal Law deals with violations of personal and property right which are
so serious that society will deter by serious punishment.
6. Tort Law deals with remedies that will be available to individuals how have
been injured by violations of their personal and property rights.
CONTRACT LAW IN THE FIRST-YEAR
Contract Law is the legal mechanism society’s uses to protect the
expectation that arises from agreements for future performance.
1. Agreements for exchange (contracts) are the means by which
resources (property) are assembled and put to more productive use.
2. Simultaneous or Immediate Exchanges. These exchange
agreements are completed simultaneously.
3. Future Exchanges. Some exchanges require considerable planning
and the performances are usually extended over a prolonged period of
time.
I will sell you my home
I will pay you $150,000 for your home
THE SOURCES OF CONTRACT LAW
Where is the law of contracts found?
1. Primary authority.
a. Prior judicial decisions, collectively making up the “common law.”
b. Statutes ordinances, expressions of the will of a duly constituted
legislative body on a subject within its sphere.
2. Secondary authority anything that could appropriately influences a
court.
a. Restatements of the Law (American Law Institute).
b. Commentaries by legal scholars (articles, treaties)
3. Judicial Opinions.
a. The bulk of contract law has developed through case law: Laws or
rules of law synthesized from prior judicial decisions. What we
commonly refer to as common law.
b. “Stare decisis” Our judicial system of decision-making is said to
be stare decisis: it is characterized by the adherence to past
decision or “precedent.”
c. “Precedent”. A precedent is a prior decision with facts sufficiently
similar to the case under adjudication that the court feels
obliged to follow it and to render a similar decision.
THE SOURCES OF CONTRACT LAW
Where is the law of contracts found?
3. Judicial Opinions.
a. Precedent
1. Offer: After a lengthy conversation regarding the merits of his
1999 Ford Tarsus and his discussion with a colleague at work
regarding the same matter, Bill says to Mary, who knew Bill wanted
to sell his car, “I will sell you my Tarsus if you promise to pay
me $2,100. Knowing this price was about $500 below market
price, Mary immediately responded, “I’ll take the deal.” Since Mary
jumped on the deal so quickly, Bill began to have second thoughts
and refused to sell. Mary sued. Bill defended the lawsuit claiming
that his statement to Mary regarding his Tarsus could not have
been taken seriously by a reasonable person. Rule: Offer is a
manifestation of assent so made as to lead the other party
to reasonably understand that her assent would close the
deal.
THE SOURCES OF CONTRACT LAW
Where is the law of contracts found?
3. Judicial Opinions.
a. Precedent
2. Offer: During their regular Friday night poker game, believing
she had an unbeatable hand, Sally turned to Tom and said, “My
hand is so good, I am willing to put my 1999 Ford Tarsus on the
table. In fact, where are my keys? If you beat my hand, I will sell
you my 1999 Ford Tarsus for $300.” When she found her keys,
Sally threw them in the middle of the table. This type of gesturing
between the two parties was not unusual. They had done this sort
of wagering every Friday night for over five years. After Tom won
the hand, he said to Sally, I accept. When Sally failed to deliver
the car, Tom sued. RULE?
b. Justification for system of law based on precedent is two
fold
1. Offers high degree of predictability of decisions, enabling those
who so desire to order their affairs in accordance with
ascertainable rules of law.
2. It puts a rein on what might otherwise be the natural proclivity
of judges to decide cases on the basis of prejudice, personal
THE SOURCES OF CONTRACT LAW
Where is the law of contracts found?
4. Statutory Law.
a. Contract law has developed through the common law rather than
by statute. The "statute of frauds" is one noticeable exception.
b. Contracts law still remains fundamentally a common law system.
However, in recent years significant changes in the common law of
contracts has been made by the Uniform Commercial Code (UCC).
c. The UCC does not regulate all commercial transactions.
5. Secondary authority: Restatements Of Contracts.
a. In a continuing attempt to eliminate uncertainty and promote
uniformity in commercial transactions, the American Law Institute
was formed. The organization's major undertaking was the
drafting and promulgation of an accurate and authoritative
summary of the rules of common law in various fields of law:
contract, torts, property and others.
6. Secondary authority: Legal Commentary.
a.
Published articles, books and multi volume treatises are another
secondary source of persuasive authority for shaping the
development of the law.
THE SOURCES OF CONTRACT LAW
Where is the law of contracts found?
7. International Commercial Law.
a. Because of globalization, many lawyers will find themselves in
international commercial transactions. The sources of law for
International transactions include the following:
1. GATT: General Agreement on Tariffs and Trade. Although Congress
did not give formal approval to this treaty until the World Trade
Organization (WTO) was created to administer GATT, the United
States has been a party to GATT from it inception.
2. Under the sponsorship of the United Nations Commission on
International Trade (UNCITRAL), many countries adopted the
United Nations Convention on the International Sale of
Goods (CISG). Like the UCC, CISG applies to the sale of goods.
One very important difference between the two laws is that CISG
does not cover consumer transactions.
3. Since CISG does not purport to cover all issues of international
contract law, a private organization, the International Institute
for the Unification of Private Law (UNIDROIT) sponsored the
preparation of Principles of International Commercial Contracts.
These principles are analogous to the Restatement of Contracts
CONTRACT THEORY
1. As we consider rules of contract law that are traditionally regarded by
Judges and lawyers as comprising the present-day law of contracts , we
must be aware that many legal scholars have gone beyond analysis
centered on mere identification and classification of rules of law to be
applied in resolving specific disputes.
2. Legal scholarship has focused on examining the fundamental nature of law
and, in particular, contract law. Legal scholars have attempted to develop
theoretical justifications for the current structure of contract law.
a. The aim of contract law scholarship is to demonstrate that the contract
rules applied by courts are intelligible (comprehensible) and
determinable.
b. Understanding the fundamental nature of contract law and the
principles expressed in contract rules enable us to predict decisions
courts would make in any given dispute.
c. In theory, this ability to predict judicial decisions enables us to order or
affairs in accordance with ascertainable rules of law.
d. The secondary effect of determinable rules of contract law is that these
rules put a rein on the natural proclivity of judges to decide cases on
the basis of prejudice, personal emotion, or other factors that we might
regard as improper grounds for decisions.
CONTRACT THEORY
3. Classical v. Neoclassical Contract Law.
a. Classical Contract Law is a body of law and legal rules usually
associated with the age of Homles, Williston, and the First
Restatement of Contracts.
b. The general structure of classical contract law recognized a series of
dichotomies that defined the relationships among legal actors in terms
of private and public spheres.
1. Private Sphere: Under the classical theory, the private sphere
represented a realm in which individual freedom or individual
autonomy is protected from state intervention or coercion. This
concept is generally expressed in contract law as the notion of
“freedom of contract.”
a. Under this conception of contract law, the individual always
voluntarily assumed liability through the making of a promise.
Individual actors were free to voluntarily assume liability by
agreement.
b. The state has no authority to imposed liability or obligations
that individual actors did not voluntarily assume through
contract.
CONTRACT THEORY
3. Classical v. Neoclassical Contract Law.
1. Private Sphere:
c. To the extent that judges established an obligation in a
contract between individuals that the parties did not expressly
agreed to, the state (judges are an extension of the state)
would be acting outside of its real of authority. In such an
instance individual freedom would be trampled because this
involuntarily imposition of liability would be an illegitimate
exercise of authority.
d. The goal of contract law would be to protect individual
freedoms by limiting the ability of judges to act outside their
field of authority. The role of contract rules is therefore to put a
rein on judges.
2. Public Sphere: Public law of represented regulated relations
between individuals and the state. The relationship was not
consensual.
a. Tort law, where liability was imposed by the legal system
without regard for the individual's consent, is an example of
public sphere action. This would be a legitimate exercise of
authority.
CONTRACT THEORY
3. Classical v. Neoclassical Contract Law.
c. Formalism: Courts were to mechanically apply formal contract rules.
When the court applied these abstract, formal doctrines, they protected
the individual's right to assume contract liability.
1. The law, according to legal formalists, was founded on neutral
principles, which, if correctly applied, would allow the judge to
avoid having their moral, or political values affect the decision
before them.
2. Law was viewed as a self-contained system -- a science -- in
which decisions flowed necessarily from a limited number of
discoverable and foundational conceptual principles and
doctrines.
3. Christopher Columbus Langdell, Dean of the Harvard Law School
from 1870-1895, conceived the case method of teaching and
studying law.
4. This method of study implicitly relied on Darwinian ideas.
5. Langdell believed that “each of these doctrines had arrived at its
present state by slow degrees, in other words it is a growth,
extending in many cases through centuries ... [T]he shortest and
the best, if not the only way of mastering the doctrine effectually is
by studying the cases in which it is embodied.”
CONTRACT THEORY
3. Classical v. Neoclassical Contract Law.
c. Formalism: Courts were to mechanically apply formal contract rules.
When the court applied these abstract, formal doctrines, they protected
the individual's right to assume contract liability.
6. The law, which according to legal formalists was founded on
neutral principles, was pure.
7. The problem with Formalism is that Contract liability, like all other
liability, did not arise solely from the individual’s choice but came
from the court’s imposition of legal obligation as a matter of public
policy;
8. A contract was binding because the court determined that
imposition of liability served social interests, not because the
individual had voluntarily assumed liability through his
manifestation of assent.
CONTRACT THEORY
c. Formalism:
9. Law was so pure, that judges and the legal system they
enforced embraced a political system denied Blacks basic
human freedoms.
10. Blacks were property.
11. Negroes ... such that he has no civil, social or political rights
or capacity, whatever, except such as are bestowed on him
by Statute; that he can neither contract, nor be contracted
with; that the free Negro can act only by and through his
guardian; that he is in a state of perpetual pupilage or
wardship; and that this condition he can never change by
his own volition.