A. Intent to Contract – Mutual Assent – Privity of Contract
An “offer” is a proposal to enter into a contract which is communicated to another person in a manner that is calculated to elicit an “acceptance” leading to a legally binding contract. An acceptance occurs when the person to whom the offer is communicated acts in a manner which manifests acceptance of the offer.
For a contract to be legally binding, it must be either supported by consideration or a party to the contract must have relied to its detriment on the promise of the other party.
E. Expiration – Termination – Termination of Contracts Prior to Full Performance – Rescission
F. Definite Term – Indefinite Term – Perpetual
G. Implied Covenant of Good Faith and Fair Dealing
The common law recognizes that the express terms of a contract may not give full practical effect to the intent of the parties. A court is empowered to imply that a term exists in the contract if such an implied term is necessary to effect the intent of the parties or to avoid substantial injustice. Because the courts must not re-write the contract, the courts rarely use this power.
A contract is without legal force or effect if the mutual assent of the parties was based on a mistake as to a fact which is fundamental to the contract. The parties may reform the contract by substituting a correct provision or term in place of the mistake.
An agreement, including a constituent agreement, which two or more parties conclude is a contract to the same extent as is a written agreement. The problem is that determining whether mutual assent occurred, resolving ambiguities as to the means and manner of performance and proving the contract terms are difficulties which the parties usually encounter.
The Statute of Frauds was enacted by the English Parliament in 1677 to prevent fraud or perjury. It mandated that certain contracts must be in writing to be enforceable in court. It entered US law during the colonial period and remains in US law. The United Kingdom repealed the Statute of Frauds in 1954. Most states maintain a form of the Statute of Frauds. A contract must be writing and signed at least by the party to be charged if it cannot be performed within one year from the date on which the contract is concluded. Certain contracts under the Uniform Commercial Code (UCC) must be in writing.
As long as a party knows that it is signing a contract, the party is presumed to know and understand the contents of the contract. Ignorance of the terms of the contract is not a defense. M. Breach of Contract – Legal Remedies and Equitable Remedies
A breach of contract occurs when a party fails to timely perform its obligations under the contract. Unless there exists a legally cognizable excuse of performance, the aggrieved party is entitled to a remedy. The two categories of remedies are legal remedies and equitable remedies.
Specific performance – A court orders the breaching party to perform.
Restitution – A court orders the breaching party to restore to the aggrieved party any benefit which the breaching party unjustly gained as the result of the breach. The benefit can include damages.
Rescission – A court orders that the contract is annulled, meaning that the contract was never formed. The parties are placed as far as possible in the same position they would have been if the contract had not been concluded.