NATURE OF CONTRACTS

    Paper instructions:
    Read the knowledge first and follow it to answer the

    case question. total 6 cases thank you
    NATURE OF CONTRACTS:

    A contract is a legally enforceable agreement. The

    modern contract action can be traced back to the

    dawn of British common law. The law acknowledged

    that remedy was due for injuries resulting from the

    defendant’s failure to perform a professional duty. Early

    actions were taken in “assumpsit” for nonfeasance

    (failure to perform a promise). In assumpsit actions,

    however, judges refused to order specific performance

    (doing what was promised) if they thought that

    consideration was inadequate. (Consideration is what is

    given up in exchange for the other party’s promise.)

    The standard was “equivalent value.” This made the

    enforceability of contracts uncertain because judges

    could invalidate agreements that had been voluntarily

    created by the parties simply because those bargains

    seemed unfair to them.
    By 1850, American courts accepted the notion that

    contracts should be based exclusively on the reciprocal

    promises of the parties rather than on a subjective

    notion of fairness. A promise, in turn, is simply a

    statement of intent to be bound. Therefore, intent

    became the underlying principle of contracts. Intent is

    the conscious desire to produce a consequence. The

    state of mind of the contracting parties, therefore,

    became the deciding factor in determining whether or

    not a contract existed.
    In order to establish an enforceable contract, the

    following elements must be present:
    1.There must be an agreement, which usually

    consists of matching promises (offer and acceptance).
    2.The parties must be competent; i.e., capable of

    formulating intent.
    3.There must be genuine assent; i.e., voluntary

    compliance.
    4.There must be consideration although the specific

    magnitude is left to the parties.
    5.The promises must be lawful in their performance;

    i.e., can’t be crimes or torts.
    6.The contract must be in writing in certain limited

    circumstances. (Needless to say, many oral and even

    implied contracts are enforceable. The promises

    constitute the contract, not the document.)
    Typical contracts include insurance policies,

    mortgages and purchases via credit cards.
    Most principles of contract law exist in court

    decisions (common law) although states have passed

    statutes affecting certain types of contracts, notably

    those involving employment and insurance.

    CASE QUIZ:
    A, Mr. Lacy and Mr. Zimmerman were talking in a

    restaurant. After a couple of drinks, Lacy asked

    Zimmerman if he had sold the Ferguson farm.

    Zimmerman replied that he hadn’t and didn’t want to.

    Lacy offered to buy the farm for $50,000. After some

    bantering back and forth, Zimmerman wrote on the

    back of a pad, “I agree to sell the Ferguson place to

    W.O. Lacy for $50,000 cash.” Lacy said, “All right,

    get your wife to sign it.” Zimmerman subsequently

    went to his wife who was sitting in the restaurant and

    said, “Do you want to put your name on this?” She

    said, “No.” But then Zimmerman said, in an undertone,

    “It is nothing but a joke.” She signed it. At that time,

    Zimmerman wasn’t too drunk to make a valid contract.

    The Zimmerman’s refused to convey title and Lacy

    sued for specific performance.
    1.What is meant by the term “specific performance”?
    2.What defense would the Zimmermans use?
    3.What legal reasoning would be followed in

    determining whether or not a contract actually existed

    (whether there had been an offer and an acceptance)?
    4.Who should win?
    B, Grayson singed a roofing contract with Clay Tile,

    as agent for Sure-Seal Roofing Company, to have a

    new roof put on his house. The agreement stated that

    the contract was subject to Sure-Seal’s approval and

    that the agreement would become binding upon written

    notice of acceptance or commencement of work. Nine

    days later, Clay Tile loaded up his truck and drove to

    Grayson’s house only to find someone else was already

    doing the job. Sure-Seal wishes to sue for damages.
    1.In the context of this case, what is meant by the

    term “damages”?
    2.What is meant by the term “revoke an offer”?
    3.Was Grayson’s offer to Sure-Seal revoked before

    it was accepted?
    4.Specifically, what is the evidence showing that

    acceptance did or did not occur?
    5.Who should win?
    C,Please read Carter v. Matthews (find the case

    online..)
    1. Fraud is an intentional act of deception. There is

    no evidence, however, that Matthews said anything at

    all about the propensity of the land to flood or not to

    flood nor is there any evidence that he knew it might be

    prone to frequent flooding. Upon what legal logic

    could Carter have based her allegation (charge) of

    fraud? (That is, what could have been the legal basis

    for her argument?)
    2. Matthews cross-appealed arguing that restitution

    and rescission were improper remedies for “mutual

    mistake.” Our text, however, confirms that they are

    proper remedies. Upon what legal logic could he have

    based his claim?

    CONSIDERATION:
    Consideration is that which is bargained for and

    given in exchange for another’s promise. It must be

    “legally sufficient,” meaning that it must be either a

    detriment to the promisee or a benefit to the promisor.

    Benefit in the legal sense means the receipt by the

    promisor of some legal right that the person had not

    previously been entitled to. Legal detriment is the taking

    on of a legal obligation or the doing of something or

    giving up of a legal right by the promisee.
    A court will not concern itself with the terms of a

    contract as long as the parties have capacity and there

    has been genuine assent to the terms. Whether there

    has been a fair exchange, is for the parties to decide.

    D,Workers agreed to work aboard a canning ship

    during the salmon canning season. The contract, signed

    by each worker, was to last for the length of time it

    took to sail from San Francisco, California, to Pyramid

    Harbor, Alaska, and back. Each worker was to

    receive a stated compensation. They arrived in Alaska

    at the height of the fishing and canning season.

    Knowing that every day’s delay would be financially

    disastrous and that it would be impossible to find

    workers to replace them, the workers refused to work

    unless they were given substantial wage increases. The

    owner of the canning ship acceded to their demand

    (i.e., he accepted their offer and agreed to pay the

    higher wage). When the ship returned to San

    Francisco, the owner paid them in accordance with the

    original agreement. The workers now bring suit to

    recover the additional amounts due under the second

    agreement.
    1. Please cite two defenses that the ship’s owner

    could adopt.
    2. Would the court enforce the second agreement?

    Why or why not?

    CAPACITY:
    Capacity refers to each party’s ability to make

    promises. It hinges specifically on the ability to

    formulate intent (conscious desire to bring about

    consequences). Needless to say, people who are

    unable to appraise the consequences of a decision

    aren’t legally able to formulate intent. Their contracts

    are voidable; i.e., not automatically void but avoidable

    by the impaired party at his/her election.
    Those under 18 years of age are defined as lacking

    capacity based on their presumed immaturity and lack

    of experience. However, minors can be held for the fair

    value of necessities such as food, lodging, education or

    medical services. As a general rule, minors must return

    whatever consideration was given to them but, even if it

    has been destroyed, may nevertheless disaffirm and

    recover the consideration they gave. This effectively

    discourages adults from marketing aggressively to

    minors.
    Generally, minors who lie about their age in order to

    secure a contract can, nevertheless, disaffirm.

    However, minors are liable for their torts and can be

    sued for fraud in such situations.
    Contracts made by those who are intoxicated or

    temporarily insane are also voidable. The standard

    employed by the courts is whether a reasonable person

    would have known that the plaintiff was impaired.
    ILLEGALITY and PUBLIC POLICY:
    The courts will generally not permit a person to sue

    for performance of an illegal contract; i.e., one in which

    the performance itself is criminal, tortious or a violation

    of public policy. The court will simply “leave the parties

    where it finds them.” Generally, if one party has

    performed, that party cannot recover property

    transferred to the other. There are certain limited

    exceptions to that rule, however.

    E, R.D. Simpson owned Bavarian Motors, an

    automobile dealership in Ft. Worth, Texas. One day

    Lee Lewis discussed purchasing a BMW M-1 from

    Simpson for $125,000. Simpson suggested a double-

    or-nothing coin flip. If Simpson won the coin-flip,

    Lewis would have to pay him $250,000 for the car; if

    Lewis won the flip, he would get the car for free! The

    coin was flipped and Lewis won. Simpson said, “It’s

    yours.” He handed Lewis the keys and title. Lewis

    drove away in the BMW. Simpson subsequently sued

    to recover the car.
    1. Who should win and why?
    2. How would the case have turned out if Simpson

    had refused to turn over the keys and title after Lewis

    had won the coin-flip? Who would get the car?

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