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Law School Resources

Contract Law



    A. Definition: A "contract" is an agreement that the law will enforce.

      1. Written v. oral contracts: Although the word "contract" often refers to a written document, a writing is not always necessary to create a contract. An agreement may be binding on both parties even though it is oral. Some contracts, however, must be in writing under the Statute of Frauds.


    A. The UCC: Contract law is essentially common law, i.e. judge-made, not statutory. However, in every state but Louisiana, sales of goods are governed by a statute, Article 2 of the Uniform Commercial Code.

      1. Common-law: If the UCC is silent on a particular question, the common law of the state will control. UCC 1-103.


Chapter 2 


    A. Objective theory of contracts: Contract law follows the objective theory of contracts. That is, a party's intent is deemed to be what a reasonable person in the position of the other party would think that the first party's objective manifestation of intent meant. For instance, in deciding whether A intended to make an offer to B, the issue is whether A's conduct reasonably indicated to one in B's position that A was making an offer. [10 - 11]

    Example: A says to B, "I'll sell you my house for $1,000." If one in B's position would reasonably have believed that A was serious, A will be held to have made an enforceable offer, even if subjectively A was only joking.

    B. Legal enforceability: The parties' intention regarding whether a contract is to be legally enforceable will normally be effective. Thus if both parties intend and desire that their "agreement" not be legally enforceable, it will not be. Conversely, if both desire that it be legally enforceable, it will be even if the parties mistakenly believe that it is not. [11 - 12]

    Example: Both parties would like to be bound by their oral understanding, but mistakenly believe that an oral contract cannot be enforceable. This arrangement will be enforceable, assuming that it does not fall within the Statute of Frauds.

      1. Presumptions: Where the evidence is ambiguous about whether the parties intended to be bound, the court will follow these rules: (1) In a "business" context, the court will presume that the parties intended their agreement to be legally enforceable; (2) but in a social or domestic situation, the presumption will be that legal relations were not intended.

      Example: Husband promises to pay a monthly allowance to Wife, with whom he is living amicably. In the absence of evidence otherwise, this agreement will be presumed not to be intended as legally binding, since it arises in a domestic situation.

    C. Intent to put in writing later: If two parties agree (either orally or in a brief writing) on all points, but decide that they will subsequently put their entire agreement into a more formal written document later, the preliminary agreement may or may not be binding. In general, the parties' intention controls. (Example: If the parties intend to be bound right away based on their oral agreement, they will be bound even though they expressly provide for a later formal written document.)...more