Discharge of Contracts Legal Definition of Discharge of Contracts

11/29/2015
DischargeofContractslegaldefinitionofDischargeofContracts
DischargeofContractslegaldefinitionofDischargeof
Contracts
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Contracts
Agreementsbetweentwoentities,creatinganenforceableobligationtodo,ortorefrainfromdoing,aparticularthing.
NatureandContractualObligation
Thepurposeofacontractistoestablishtheagreementthatthepartieshavemadeandtofixtheirrightsanddutiesin
accordancewiththatagreement.Thecourtsmustenforceavalidcontractasitismade,unlesstherearegroundsthat
baritsenforcement.
Statutesprescribeandrestrictthetermsofacontractwherethegeneralpublicisaffected.Thetermsofaninsurance
contractthatprotectacommoncarrierarecontrolledbystatuteinordertosafeguardthepublicbyguaranteeingthat
therewillbefinancialresourcesavailableintheeventofanaccident.
Thecourtsmaynotcreateacontractfortheparties.Whenthepartieshavenoexpressorimpliedagreementonthe
essentialtermsofacontract,thereisnocontract.Courtsareonlyempoweredtoenforcecontracts,nottowritethem,
fortheparties.Acontract,inordertobeenforceable,mustbeavalid.Thefunctionofthecourtistoenforce
agreementsonlyiftheyexistandnottocreatethemthroughtheimpositionofsuchtermsasthecourtconsiders
reasonable.
Itisthepolicyofthelawtoencouragetheformationofcontractsbetweencompetentpartiesforlawfulobjectives.As
ageneralrule,contractsbycompetentpersons,equitablymade,arevalidandenforceable.Partiestoacontractare
boundbythetermstowhichtheyhaveagreed,usuallyevenifthecontractappearstobeimprovidentorabad
bargain,aslongasitdidnotresultfromFraud,duress,orUndueInfluence.
ThebindingforceofacontractisbasedonthefactthatitevincesameetingofmindsoftwopartiesinGoodFaith.A
contract,onceformed,doesnotcontemplatearightofapartytorejectit.Contractsthatweremutuallyenteredinto
betweenpartieswiththecapacitytocontractarebindingobligationsandmaynotbesetasideduetothecapriceof
onepartyortheotherunlessastatuteprovidestothecontrary.
TypesofContracts
ContractsunderSealTraditionally,acontractwasanenforceablelegaldocumentonlyifitwasstampedwithaseal.
Thesealrepresentedthatthepartiesintendedtheagreementtoentaillegalconsequences.Nolegalbenefitor
detrimenttoanypartywasrequired,asthesealwasasymbolofthesolemnacceptanceofthelegaleffectand
consequencesoftheagreement.Inthepast,allcontractswererequiredtobeundersealinordertobevalid,butthe
sealhaslostsomeorallofitseffectbystatuteinmanyjurisdictions.Recognitionbythecourtsofinformalcontracts,
suchasimpliedcontracts,hasalsodiminishedtheimportanceandemploymentofformalcontractsunderseal.
ExpressContractsInanexpresscontract,thepartiesstatetheterms,eitherorallyorinwriting,atthetimeofits
formation.Thereisadefinitewrittenororalofferthatisacceptedbytheofferee(i.e.,thepersontowhomtheofferis
made)inamannerthatexplicitlydemonstratesconsenttoitsterms.
ImpliedContractsAlthoughcontractsthatareimpliedinfactandcontractsimpliedinlawarebothcalledimplied
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contracts,atrueimpliedcontractconsistsofobligationsarisingfromamutualagreementandintenttopromise,which
havenotbeenexpressedinwords.Itismisleadingtolabelasanimpliedcontractonethatisimpliedinlawbecausea
contractimpliedinlawlackstherequisitesofatruecontract.Thetermquasicontractisamoreaccuratedesignation
ofcontractsimpliedinlaw.Impliedcontractsareasbindingasexpresscontracts.Animpliedcontractdependson
substanceforitsexistencetherefore,foranimpliedcontracttoarise,theremustbesomeactorconductofaparty,
inorderforthemtobebound.
Acontractimpliedinfactisnotexpressedbythepartiesbut,rather,suggestedfromfactsandcircumstancesthat
indicateamutualintentiontocontract.Circumstancesexistthat,accordingtotheordinarycourseofdealingand
commonunderstanding,demonstratesuchanintentthatissufficienttosupportafindingofanimpliedcontract.
Contractsimpliedinfactdonotarisecontrarytoeitherthelawortheexpressdeclarationoftheparties.Contracts
impliedinlaw(quasicontracts)aredistinguishableinthattheyarenotpredicatedontheassentoftheparties,but,
rather,existregardlessofassent.
Theimplicationofamutualagreementmustbeareasonabledeductionfromallofthecircumstancesandrelations
thatcontemplatepartieswhentheyenterintothecontractorwhicharenecessarytoeffectuatetheirintention.No
impliedpromisewillexistwheretherelationsbetweenthepartiespreventtheinferenceofacontract.
Acontractwillnotbeimpliedwhereitwouldresultininequityorharm.Wheredoubtanddivergenceexistintheminds
oftheparties,thecourtmaynotinferacontractualrelationship.If,afteranagreementexpires,thepartiescontinueto
performaccordingtoitsterms,animplicationarisesthattheyhavemutuallyassentedtoanewcontractthatcontains
thesameprovisionsastheoldagreement.
Acontractimpliedinfact,whichisinferredfromthecircumstances,isatruecontract,whereasacontractimpliedin
lawisactuallyanobligationimposedbylawandtreatedasacontractonlyforthepurposesofaremedy.Withrespect
tocontractsimpliedinfact,thecontractdefinesthedutyinthecaseofquasicontracts,thedutydefinesand
imposestheagreementupontheparties.
ExecutedandExecutoryContractsAnexecutedcontractisoneinwhichnothingremainstobedonebyeitherparty.
Thephraseis,toacertainextent,amisnomerbecausethecompletionofperformancesbythepartiessignifiesthata
contractnolongerexists.Anexecutorycontractisoneinwhichsomefutureactorobligationremainstobeperformed
accordingtoitsterms.
BilateralandUnilateralContractsTheexchangeofmutual,reciprocalpromisesbetweenentitiesthatentailsthe
performanceofanact,orforbearancefromtheperformanceofanact,withrespecttoeachparty,isaBilateral
Contract.Abilateralcontractissometimescalledatwosidedcontractbecauseofthetwopromisesthatconstituteit.
Thepromisethatonepartymakesconstitutessufficientconsideration(seediscussionbelow)forthepromisemade
bytheother.
Aunilateralcontractinvolvesapromisethatismadebyonlyoneparty.Theofferor(i.e.,apersonwhomakesa
proposal)promisestodoacertainthingiftheoffereeperformsarequestedactthatheorsheknowsisthebasisofa
legallyenforceablecontract.Theperformanceconstitutesanacceptanceoftheoffer,andthecontractthenbecomes
executed.Acceptanceoftheoffermayberevoked,however,untiltheperformancehasbeencompleted.Thisisa
onesidedtypeofcontractbecauseonlytheofferor,whomakesthepromise,willbelegallybound.Theoffereemay
actasrequested,ormayrefrainfromacting,butmaynotbesuedforfailingtoperform,orevenforabandoning
performanceonceithasbegun,becauseheorshedidnotmakeanypromises.
UnconscionableContractsAnUnconscionablecontractisonethatisunjustorundulyonesidedinfavorofthe
partywhohasthesuperiorbargainingpower.Theadjectiveunconscionableimpliesanaffronttofairnessanddecency.
Anunconscionablecontractisonethatnomentallycompetentpersonwouldacceptandthatnofairandhonest
personwouldenterinto.Courtsfindthatunconscionablecontractsusuallyresultfromtheexploitationofconsumers
whoarepoorlyeducated,impoverished,andunabletoshoparoundforthebestpriceavailableinthecompetitive
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marketplace.
Themajorityofunconscionablecontractsoccurinconsumertransactions.Contractualprovisionsthatindicategross
onesidednessinfavorofthesellerincludelimitingdamagesortherightsofthepurchasertoseekcourtreliefagainst
theseller,ordisclaimingaWarranty(i.e.,astatementoffactconcerningthenatureorcaliberofgoodssoldtheseller,
giveninordertoinducethesale,andrelieduponbythepurchaser).
Unconscionabilityisascertainedbyexaminingthecircumstancesofthepartieswhenthecontractwasmade.This
doctrineisappliedonlywhereitwouldbeanaffronttotheintegrityofthejudicialsystemtoenforcesuchacontract.
AdhesionContractsAdhesioncontractsarethosethataredraftedbythepartywhohasthegreaterbargaining
advantage,providingtheweakerpartywithonlytheopportunitytoadhereto(i.e.,toaccept)thecontractortorejectit.
(Thesetypesofcontractareoftendescribedbythesaying"Takeitorleaveit.")Theyarefrequentlyemployed
becausemostbusinessescouldnottransactbusinessifitwerenecessarytonegotiateallofthetermsofevery
contract.Notalladhesioncontractsareunconscionable,asthetermsofsuchcontractsdonotnecessarilyexploitthe
partywhoassentstothecontract.Courts,however,oftenrefusetoenforcecontractsofadhesiononthegroundsthat
atruemeetingofthemindsneverexisted,orthattherewasnoacceptanceoftheofferbecausethepurchaser
actuallyhadnochoiceinthebargain.
AleatoryContractsAnaleatorycontractisamutualagreementtheeffectsofwhicharetriggeredbytheoccurrenceof
anuncertainevent.Inthistypeofcontract,oneorbothpartiesassumerisk.Afireinsurancepolicyisaformof
aleatorycontract,asaninsuredwillnotreceivetheproceedsofthepolicyunlessafireoccurs,aneventthatis
uncertaintooccur.
VoidandVoidableContractsContractscanbeeithervoidorVoidable.Avoidcontractimposesnolegalrightsor
obligationsuponthepartiesandisnotenforceablebyacourt.Itis,ineffect,nocontractatall.
Avoidablecontractisalegallyenforceableagreement,butitmaybetreatedasneverhavingbeenbindingonaparty
whowassufferingfromsomelegaldisabilityorwhowasavictimoffraudatthetimeofitsexecution.Thecontractis
notvoidunlessoruntilthepartychoosestotreatitassuchbyopposingitsenforcement.Avoidablecontractmaybe
ratifiedeitherexpresslyorimpliedlybythepartywhohastherighttoavoidit.Anexpressratificationoccurswhenthat
partywhohasbecomelegallycompetenttoactdeclaresthatheorsheacceptsthetermsandobligationsofthe
contract.Animpliedratificationoccurswhentheparty,byhisorherconduct,manifestsanintenttoratifyacontract,
suchasbyperformingaccordingtoitsterms.Ratificationofacontractentailsthesameelementsasformationofa
newcontract.Theremustbeintentandcompleteknowledgeofallmaterialfactsandcircumstances.Oral
Acknowledgmentofacontractandapromisetoperformconstitutesufficientratification.Thepartywhowaslegally
competentatthetimethatavoidablecontractwassignedmaynot,however,assertitsvoidablenaturetoescapethe
enforcementofitsterms.
WhichLawGoverns
Althoughageneralbodyofcontractlawexists,someaspectsofit,suchasconstruction(i.e.,theprocessof
ascertainingtheproperexplanationofequivocalterms),varyamongthedifferentjurisdictions.Whencourtsmust
selectthelawtobeappliedwithrespecttoacontract,theyconsiderwhatthepartiesintendedastowhichlawshould
governtheplacewherethecontractwasenteredintoandtheplaceofperformanceofthecontract.Manycourts
applythemoderndoctrineofthe"groupingofcontracts"orthe"centerofgravity,"inwhichthelawofthejurisdiction
thathastheclosestormostsignificantrelationshipwiththematterinissueapplies.
Courtsgenerallyapplythelawthatthepartiesexpresslyorimpliedlyintendtogovernthecontract,providedthatit
bearsareasonablerelationtothetransactionandthepartiesactedingoodfaith.Somejurisdictionsfollowthelawof
theplacewherethecontractwasperformed,unlesstheintentofthepartiesistothecontrary.Whereforeignlaw
governs,contractsmayberecognizedandenforcedunderthedoctrineofcomity(i.e.,theacknowledgmentthatone
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nationgiveswithinitsterritorytothelegislative,executive,orjudicialactsofanothernation).
ElementsofaContract
Therequisitesforformationofalegalcontractareanoffer,anacceptance,competentpartieswhohavethelegal
capacitytocontract,lawfulsubjectmatter,mutualityofagreement,consideration,mutualityofobligation,and,if
requiredundertheStatuteofFrauds,awriting.
OfferAnofferisapromisethatis,byitsterms,conditionaluponanact,forbearance,orreturnpromisebeinggivenin
exchangeforthepromiseoritsperformance.Itisademonstrationofwillingnesstoenterintoabargain,madesothat
anotherpartyisjustifiedinunderstandingthathisorherassenttothebargainisinvitedandwillconcludeit.Anyoffer
mustconsistofastatementofpresentintenttoenteracontractadefiniteproposalthatiscertaininitstermsand
communicationoftheoffertotheidentified,prospectiveofferee.Ifanyoftheseelementsaremissing,thereisno
offertoformthebasisofacontract.
Preliminarynegotiations,advertisements,invitationstobidPreliminarynegotiationsareclearlydistinguishedfrom
offersbecausetheycontainnodemonstrationofpresentintenttoformcontractualrelations.Nocontractisformed
whenprospectivepurchasersrespondtosuchterms,astheyaremerelyinvitationsorrequestsforanoffer.Unless
thisinterpretationisemployed,anypersoninapositionsimilartoasellerwhoadvertisesgoodsinanymediumwould
beliablefornumerouscontractswhenthereisusuallyalimitedquantityofmerchandiseforsale.Anadvertisement,
pricequotation,orcatalogueiscustomarilyviewedasonlyaninvitationtoacustomertomakeanofferandnotasan
offeritself.Thecourtsreasonthatanestablishmentmightnothavesufficientstocktosatisfypotentialdemandand
thatitwouldnotbereasonableforacustomertoexpecttoformabindingcontractbyrespondingtoadvertisements
thatareintendedtomakeconsumersawareofaproductforsale.Inaddition,thecourtshaveheldthatan
advertisementisanofferforaunilateralcontractthatcanberevokedatthewilloftheofferor,thebusinessenterprise,
priortoperformanceofitsterms.
Anexceptionexists,however,tothegeneralruleonadvertisements.Whenthequantityofferedforsaleisspecified
andcontainswordsofpromise,suchas"firstcome,firstserved,"courtsenforcethecontractwherethestorerefuses
toselltheproductwhenthepriceistendered.Wheretheofferisclear,definite,andexplicit,andnomattersremain
openfornegotiation,acceptanceofitcompletesthecontract.Newconditionsmaynotbeimposedontheofferafterit
hasbeenacceptedbytheperformanceofitsterms.
Anadvertisementorrequestforbidsforthesaleofparticularpropertyortheerectionorconstructionofaparticular
structureismerelyaninvitationforoffersthatcannotbeacceptedbyanyparticularbid.Asubmittedbidis,however,
anoffer,whichuponacceptancebytheoffereebecomesavalidcontract.
MistakeinsendingofferIfanintermediary,suchasatelegraphcompany,errsinthetransmissionofanoffer,most
courtsholdthatthepartywhoselectedthatmethodofcommunicationisboundbythetermsoftheerroneous
message.Thesameruleappliestoacceptances.Inreachingthisresult,courtsregardthetelegraphcompanyasthe
agentofthepartywhoselectedit.Othercourtsjustifytheruleonbusinessconvenience.Afewcourtsrulethatif
thereisanerrorintransmission,thereisnocontract,onthegroundsthateitherthetelegraphcompanyisan
IndependentContractorandnotthesender'sagent,ortherehasbeennomeetingofthemindsoftheparties.
However,anoffereewhoknows,orshouldknow,ofthemistakeinthetransmissionofanoffermaynottake
advantageoftheknownmistakebyacceptingtheofferheorshewillbeboundbytheoriginaltermsoftheoffer.
TerminationofanofferAnofferremainsopenuntiltheexpirationofitsspecifiedtimeperiodor,ifthereisnotime
limit,untilareasonabletimehaselapsed.Areasonabletimeisdeterminedaccordingtowhatareasonableperson
wouldconsidersufficienttimetoaccepttheoffer.
Thedeathorinsanityofeitherparty,beforeanacceptanceiscommunicated,causesanoffertoexpire.Iftheoffer
hasbeenaccepted,thecontractisbinding,evenifoneofthepartiesdiesthereafter.Thedestructionofthesubject
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matterofthecontractconditionsthatrenderthecontractimpossibletoperformorthesuperveningillegalityofthe
proposedcontractresultsintheterminationoftheoffer.
Whentheofferor,eitherverballyorbyconduct,clearlydemonstratesthattheofferisnolongeropen,theofferis
consideredrevokedwhenlearnedbytheofferee.Whereanofferismadetothegeneralpublic,itcanberevokedby
furnishingpublicnoticeofitsterminationinthesamewayinwhichtheofferwaspublicized.
IrrevocableoffersAnoptionisarightthatispurchasedbyapersoninordertohaveanofferremainopenatagreed
uponpriceandterms,foraspecifiedtime,duringwhichitisirrevocable.Itconstitutesanexceptiontothegeneralrule
thatanoffermaybewithdrawnpriortoacceptance.Theofferormaynotwithdrawthisofferbecausethatpartyis
boundbytheconsiderationgivenbytheofferee.Theoffereeisfree,however,todecidewhetherornottoacceptthe
offer.
Mostcourtsholdthatanofferforaunilateralcontractbecomesirrevocableassoonastheoffereestartstoperform
therequestedact,becausethatactionservesasconsiderationtopreventrevocationoftheoffer.Whereitisdoubtful
whethertheofferinvitesanact(asinthecaseofaunilateralcontract)orapromise(asinthecaseofabilateral
contract),thepresumptionisinfavorofapromise,andthereforeabilateralcontractarises.Ifanoffertoforma
unilateralcontractrequiresseveralacts,itisinterpretedasinvitingacceptancebycompletionoftheinitialact.
Performanceofthebalanceconstitutesaconditiontotheofferor'sdutyofperformance.Wheresuchanofferinvites
onlyasingleact,itincludesbyimplicationasubsidiarypromisetokeeptheofferopeniftheoffereewillcommence
performance.Somecourtsholdthatanofferforaunilateralcontractmayberevokedatanytimepriortocompletionof
theactbargainedfor,evenaftertheoffereehaspartiallyperformedit.RejectionofanofferAnofferisrejectedwhen
theofferorisjustifiedinunderstandingfromthewordsorconductoftheoffereethatheorsheintendsnottoaccept
theoffer,ortotakeitunderfurtheradvisement.Rejectionmightcomeintheformofanexpressrefusaltoacceptan
offerbyacounteroffer,whichisanewproposalthatrejectstheofferbyimplicationorbyaconditionalacceptance
thatoperatesasacounteroffer.Theoffermaycontinue,however,iftheoffereeexpresslystatesthatthecounteroffer
shallnotconstitutearejectionoftheoffer.
Ifanofferisrejected,thepartywhomadetheoriginaloffernolongerhasanyliabilityforthatoffer.Thepartywho
rejectedtheoffermaynotsubsequently,athisorherownoption,convertthesameofferintoacontractbya
subsequentacceptance.Insuchacase,theconsentoftheofferormustbeobtainedforacontracttobeformed.
AcceptanceAcceptanceofanofferisanexpressionofassenttoitsterms.Itmustbemadebytheoffereeina
mannerrequestedorauthorizedbytheofferor.Anacceptanceisvalidonlyiftheoffereeknowsoftheofferthe
offereemanifestsanintentiontoaccepttheacceptanceisunequivocalandunconditionalandtheacceptanceis
manifestedaccordingtothetermsoftheoffer.
Thedeterminationofavalidacceptanceisgovernedbywhetherapromiseoranactbytheoffereewasthebargained
forresponse.Sincetheacceptanceofaunilateralcontractrequiresanactratherthanapromise,itisunnecessaryto
furnishnoticeofintendedperformanceunlesstheofferorrequestedit.If,however,theoffereehasreasontobelieve
thattheofferorwillnotlearnoftheacceptancewithreasonablepromptness,thedutyoftheofferorisdischarged
unlesstheoffereemakesareasonableattempttogivenoticetheofferorlearnsoftheperformanceortheoffer
indicatesthatnonoticeisrequired.
Inbilateralcontracts,theofferiseffectivewhentheoffereereceivesit.Theoffereemayacceptituntiltheofferee
receivesnoticeofrevocationfromtheofferor.Thereafter,anofferisrevoked.Underthemajorityrule,whichisknown
asthe"mailboxrule,"anacceptanceiseffectiveupondispatchiftheofferorexplicitlyauthorizesthatmethodof
acceptancetobeemployedbytheofferee,eveniftheacceptanceislostordestroyedintransit.
Themajorityruleisinapplicable,however,unlesstheacceptanceisproperlyaddressedandpostageprepaid.Ithas
noapplicationtomostoptioncontracts,asacceptanceofanoptioncontractiseffectiveonlywhenreceivedbythe
offeror.
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Iftheacceptancemodeusedbytheoffereeisimplicitlyauthorizedbytheofferor,suchastheselectionbytheofferee
ofthesamemethodusedbytheofferor,whoneglectedtodesignateamethodofcommunication,anacceptanceis
effectiveupondispatchifitiscorrectlyaddressedandtheexpenseofitsconveyanceisprepaid.Aswithexpressly
authorizedmethods,theacceptanceneednoteverreachtheofferorinordertoformthecontract.
Insomejurisdictions,theuseofamethodnotexpresslyorimpliedlyauthorizedbytheofferor,evenifmorerapidin
nature,resultsinacontractonlyuponreceiptoftheacceptance.Inmostjurisdictions,however,iftheacceptance
modeisinherentlyfaster,itisdeemedtobeanimpliedlyauthorizedmeans,andacceptanceiseffectiveupon
dispatch.
Iftheacceptanceistransmittedbyanexpresslyorimpliedlyauthorizedmethodtothewrongaddress,itiseffective
onlyuponreceiptbytheofferor.Awrongaddressisanyaddressotherthanthatimplicitlyauthorized,evenifthe
offerorwereinapositiontoreceivetheacceptanceatthesubstitutedaddress.
Anofferorwhospecificallystatesthatthereisnocontractuntiltheacceptanceisreceivedisentitledtoinsistupon
theconditionofreceiptoruponanyotherprovisionconcerningthemannerandtimeofacceptancespecified.
Rejectionoftheofferorrevocationofconditionalacceptanceiseffectiveuponreceipt.Alateordefectiveacceptance
istreatedasacounteroffer,whichwillnotresultinacontractunlesstheofferoracceptsit.Ifofferscrossinthemail,
therewillbenobindingcontract,asanoffermaynotbeacceptedifthereisnoknowledgeofit.
Asageneralrule,anoffermaybeacceptedonlybytheoffereeoranauthorizedagent.If,however,theofferis
containedinanoptioncontract,itmaybethesubjectofanassignmentortransferwithouttheconsentoftheofferor,
unlesstheoptioninvolvesapurchaseoncreditorexpresslyprohibitsanassignment.
Incontractsthatdonotinvolvethesaleofgoods,acceptancemustcomplyexactlywiththerequirementsoftheoffer
(thisisknownasthe"mirrorimagerule"),andmustomitnothingfromthepromiseorperformancerequested.Anoffer
ofaprizeinacontest,forexample,becomesabindingcontractwhenacontestantsuccessfullycomplieswiththe
termsoftheoffer.Ifaresponsetoanofferpurportstoacceptit,butaddsqualificationsorconditions,thenitisa
counterofferandnotanacceptance.
Acceptancemaybeinferredfromtheofferee'sacts,conduct,orsilencebutasageneralrule,silence,withoutmore,
canneverconstituteacceptance.TheeffectofsilenceaccompaniedbyAmbiguitymustbeascertainedfromallthe
circumstancesinthecase.
Priordealingsbetweenthepartiesmaycreateadutytoact.Silenceorthefailuretotakesomeactionundersuch
circumstancesmightconstituteacceptance.Forexample,ifthepartieshaveengagedinaseriesofbusiness
transactionsinvolvingthemailingofgoodsandpaymentbytherecipient,therecipientwillnotbepermittedtoretain
anarticlewithoutpayingforitwithinareasonabletime,duetotheirpriordealings.Arecipientwhodoesnotintendto
acceptthegoodsisunderadutytoinformthesender.Silence,wherethereisadutytospeak,preventstheofferee
fromrejectinganofferandtheofferorfromclaimingthatthereisnoacceptance.Ifownershiprightsareexercisedover
anitem,thismightbedeemedanacceptance.
UnsolicitedgoodsAtCommonLaw,therecipientofunsolicitedgoodsinthemailwasnotrequiredtoacceptorto
returnthem,butifthegoodswereused,acontractandaconcomitantobligationtopayforthemwerecreated.Today,
inordertoofferprotectionagainstunwantedsolicitations,somestatestatuteshavemodifiedthecommonlawruleby
providingthatwhereunsolicitedmerchandiseisreceivedaspartofanoffertosell,thegoodsareanoutrightgift.The
recipientmayusethegoodsandisundernodutytoreturnorpayforthemunlessheorsheknowsthattheywere
sentbymistake.
AgreementstoagreeAn"agreementtoagree"isnotacontract.Thistypeofagreementisfrequentlyemployedin
industriesthatrequirelongtermcontractsinordertoensureaconstantsourceofsuppliesandoutletofproduction.
Mutualmanifestationsofassentthatare,inthemselves,sufficienttoformabindingcontractarenotdeprivedof
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operativeeffectbythemerefactthatthepartiesagreetoprepareawrittenreproductionoftheiragreement.In
determiningwhether,onagivensetoffacts,thereismerelyan"agreementtoagree"orasufficientlybindingcontract,
thecourtsapplycertainrules.Ifthepartiesexpresstheirintentioneithertobeboundornotbounduntilawritten
documentispreparedthenthatintentioncontrols.Iftheyhavenotexpressedtheirintention,buttheyexchange
promisesofadefiniteperformanceandagreeuponallessentialterms,thenthepartieshaveformedacontracteven
thoughthewrittendocumentisneversigned.Iftheexpressionsofintentionareincompleteas,forexample,ifa
materialtermsuchasquantityhasbeenlefttofurthernegotiationthepartiesdonothaveacontract.The
designationofthematerialtermforfurthernegotiationisinterpretedasdemonstratingtheintentionofthepartiesnotto
bebounduntilacompleteagreementhasbeenreached.
CompetentPartiesAnaturalpersonwhoagreestoatransactionhascompletelegalcapacitytobecomeliablefor
dutiesunderthecontractunlessheorsheisaninfant,insane,orintoxicated.
InfantsAninfantisdefinedasapersonundertheageof18or21,dependingontheparticularjurisdiction.Acontract
madebyaninfantisvoidablebutisvalidandenforceableuntilorunlessheorshedisaffirmsit.Heorshemayavoid
thelegaldutytoperformthetermsofthecontractwithoutanyliabilityforbreachofcontract.Infantsaretreatedin
suchawaybecausepublicpolicydeemsitdesirabletoprotecttheimmatureandnaiveinfantfromliabilityforunfair
contractsthatheorsheistooinexperiencedtonegotiateonequaltermswiththeotherparty.
Onceaninfantattainsmajority(i.e.,theageatwhichapersonisnolongerlegallyconsideredaninfant),heorshe
mustchooseeithertodisaffirmoravoidthecontract,ortoratifyoracceptit.Afterreachingtheageofmajority,a
personimplicitlyratifiesandbecomesboundtoperformthecontractifheorshefailstodisaffirmitwithina
reasonabletime,whichisdeterminedbythecircumstancesoftheparticularcase.Apersonwhodisaffirmsacontract
mustreturnanybenefitsorconsiderationreceivedunderitthatheorshestillpossesses.Ifsuchbenefitshavebeen
squanderedordestroyed,thepersonusuallyhasnolegalobligationtorecompensetheotherparty.Thelawimposes
liabilityontheinfantincertaincases,however.Althoughthecontractofaninfantorotherpersonmaybevoidable,the
personstillmaybeliableinquasicontractinordertopreventUnjustEnrichmentforthereasonablevalueofgoodsor
servicesfurnishediftheyarenecessariesthatarereasonablyrequiredfortheperson'shealth,comfort,oreducation.
Themajorityofcourtsholdthataninfantwhowillfullymisrepresentshisorheragemay,nevertheless,exercisethe
powertoavoidthecontract.Asageneralrule,however,theinfantmustplacetheadultpartyinthestatusquoante
(i.e.,hisorherpositionpriortothecontract).Thejurisdictionsareindisagreementinregardtowhetheraninfantis
liableinTORT(i.e.,acivilwrongotherthanbreachofcontract)forwillfulmisrepresentationofhisorherage.This
divergencearisesfromtherulethatatortactionmaynotbemaintainedagainstaninfantifitessentiallyentailsthe
enforcementofacontract.Somecourtsregardtheactionforfraudthatwouldbecommencedagainsttheinfantas
beingbasedonthecontract.Othersrulethatthetortissufficientlyindependentofthecontractsothatthegrantingof
reliefwouldnotinvolveindirectenforcementofthecontract.Theotherparty,however,isabletoavoidacontract
enteredintoonthebasisofaninfant'sfraudulentMisrepresentationwithrespecttoageorothermaterialfacts
becauseheorsheistheinnocentvictimoftheinfant'sfraud.
MentalincapacityWhenapartydoesnotcomprehendthenatureandconsequencesofthecontractwhenitis
formed,heorsheisregardedashavingmentalincapacity.Adistinctionmustbedrawnbetweenthosepersonswho
havebeenadjudicatedincompetentbyacourtandhavehadaguardianappointed,andthosementallyincompetent
personswhohavenotbeensoadjudicated.Apersonwhohasbeendeclaredincompetentinacourtproceedinglacks
thelegalcapacitytoenterintoacontractwithanother.Suchapersonisunabletoconsenttothecontract,asthe
courthasdeterminedthatheorshedoesnotunderstandtheobligationsandeffectsofthecontract.Acontractmade
bysuchapersonisvoidandwithoutanylegaleffect.Neitherpartymaybelegallycompelledtoperformorcomply
withthetermsofthecontract.Iftherehasbeennoadjudicationofinsanity,acontractmadebyamentally
incapacitatedindividualisvoidablebyhimorher.
Manycontractprinciplesthatapplytominorsalsoapplytoinsanepersons.Thereisanobligationtorecompensethe
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injuredpartywhereavoidablecontractisavoided,andtopayfornecessariesbaseduponquasicontractforthe
reasonablevalueofthegoodsorservices.Theincompetent,aguardian,oraPersonalRepresentativeafterdeath
mayavoidthecontract.Theincompetentmayratifyavoidablecontractonlyiftheyrecoverthecapacitytocontract.
Therighttoavoidthecontractbelongstotheincompetenttheotherpartymaynotavoidthecontractualobligation.A
contractthatisordinarilyvoidablemaynotbesetasidewhenitisinherentlyfairtobothpartiesandhasbeen
executedtosuchanextentthattheotherpartycannotberestoredtothepositionthattheyoccupiedpriortothe
contract.
IntoxicatedpersonsAcontractmadebyanintoxicatedpersonisvoidable.Whenapersonisinebriatedatthetimeof
enteringintoacontractwithanotherandsubsequentlybecomessoberandeitherpromisestoperformthecontractor
failstodisaffirmitwithinareasonabletimeafterbecomingsober,thenthatpersonhasratifiedhisorhervoidable
contractandislegallyboundtoperform.
SubjectMatterAnyundertakingmaybethesubjectofacontract,providedthatitisnotproscribedbylaw.Whena
contractisformedinrestraintoftrade,courtswillnotenforceit,becauseitimposesanillegalandunreasonable
burdenoncommercebyhinderingcompetition.Contractsthatprovideforthecommissionofacrimeoranyillegal
objectivearealsovoid.
Futurerightsandliabilitiesperformingorrefrainingfromsomedesignatedact,orassumingparticularrisksor
obligationsmayconstitutethebasisofacontract.Anideathatneverassumesconcreteformatthetimeof
disclosure,suchasaconceptforashortstory,eventhoughnewandunusual,maynot,however,bethesubjectofa
contract.
Apersonmaynotlegallycontractconcerningarightthatheorshedoesnothave.Asellerofahomewhodoesnot
possesscleartitletothepropertymaynotpromisetoconveyitwithoutencumbrances.Neithermayasellerpromise
thatpropertywillnotbeappropriatedbyEminentDomain,whichisaninherentpowerofgovernmentthatisnot
subjecttorestrictionsimposedbyindividuals.
MutualAgreementTheremustbeanagreementbetweentheparties,ormutualassent,foracontracttobeformed.
Inorderforanagreementtoexist,thepartiesmusthaveacommonintentionorameetingofmindsonthetermsof
thecontractandmustsubscribetothesamebargain.Asidefromcertainstatutoryexceptionspertainingtothesaleof
goods,asprescribedbyArticle2oftheUniformCommercialCode(UCC),ifanyoftheproposedtermsisnot
settled,orifnomethodofsettlementisprovided,thenthereisnoagreement.Thepartiesmaysettleonetermata
time,buttheircontractbecomescompleteonlywhentheyassenttothefinalterm.Anagreementisbindingifthe
partiesconcurwithrespecttotheessentialtermsandintendtheagreementtobebinding,eventhoughallofthe
detailsarenotdefinitelyfixed.Thequantityofgoodsareusuallyessentialtermsofthecontractthatmustbeagreed
uponifthecontractistobeenforced.Exceptionstotherulerequiringthetermsofanagreementtobedefiniteand
certainarecontainedinarticle2oftheUCC,whichpermitsthecourtstoimplyreasonablythemissingtermsifthe
essentialtermsunambiguouslydemonstratethemutualagreementoftheparties.
ConsiderationConsiderationisalegaldetrimentthatissufferedbythepromiseeandthatisrequestedbythe
promisorinexchangeforhisorherpromise.Avalidcontractrequiressomeexchangeofconsideration.Asageneral
rule,inabilateralcontract,onepromiseisvalidconsiderationfortheother.Inaunilateralcontract,theagreed
performancebytheoffereefurnishesthenecessaryconsiderationandalsooperatesasanacceptanceoftheoffer.
Considerationmayconsistofapromiseanactotherthanapromiseaforbearancefromsuingonaclaimthatisthe
subjectofanhonestandreasonabledisputeorthecreation,modification,ordestructionofalegalrelationship.It
signifiesthatthepromiseewillrelinquishsomelegalrightinthepresent,orthatheorshewillrestricthisorherlegal
freedomofactioninthefutureasaninducementforthepromiseoftheotherparty.Itisnotsubstantiallyconcerned
withthebenefitthataccruestothepromisor.
Loveandaffectionarenotpermissibleformsofconsideration.Apromisetomakeagiftcontainsnoconsideration
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becauseitdoesnotentailalegalbenefitreceivedbythepromisororalegaldetrimentsufferedbythepromisee.
Becauseapromisetogiveagiftisfreelymadebythepromisor,whoisnotsubjecttoanylegaldutytodoso,the
promiseisnotenforceableunlessthereisPromissoryEstoppel.Promissoryestoppelisadoctrinebywhichacourt
enforcesapromisethatthepromisorreasonablyexpectswillinduceactionorforbearanceonthepartofapromisee,
whojustifiablyreliedonthepromiseandsufferedasubstantialdetrimentasaresult.Whereacourtenforcesa
promisebyapplyingthisdoctrine,promissoryestoppelservesasasubstitutefortherequiredconsideration.
Atcommonlaw,courtsrefusedtoinquireintotheadequacyorfairnessofabargain,findingthatthepaymentofsome
priceconstitutedlegallysufficientconsideration.Ifoneisseekingtoprovemistake,misrepresentation,fraud,or
duressortoassertasimilardefensetheinadequacyofthepricepaidforthepromisemightrepresentsignificant
evidenceforsuchdefenses,butthelawdoesnotrequireadequacyofconsiderationinordertofindanenforceable
contract.
MutualityofObligationWherepromisesconstitutetheconsiderationinabilateralcontract,theymustbemutually
binding.Thisconceptisknownasmutualityofobligation.Ifoneparty'spromisedoesnotactuallybindhimorhersto
someperformanceorforbearance,itisanillusorypromise,andthereisnoenforceablecontract.
Wherethecontractprovidesonepartywiththerighttocancel,theremightbenoconsiderationbecauseoflackof
mutualityofobligation.Ifthereisanabsoluteandunlimitedrighttocanceltheobligation,thepromisebythepartywith
therightofcancellationisillusory,andthelackofconsiderationmeansthatthereisnocontract.Ifthepowerto
cancelthecontractisrestrictedinanymanner,thecontractisusuallyconsideredtobebinding.Performanceofa
voidpromiseinadefectivebilateralcontractmayrendertheotherpromiselegallybinding,however.Forexample,in
virtuallyallstates,anoralcontracttotransfertitletolandisnotmerelyunenforceable,itisabsolutelyvoid.(See
discussionofthestatuteoffrauds,below.)Asellerwhoorallypromisestotransferlandtoapurchaser,forwhichthe
purchaserorallypromisesadesignatedsum,maysuethepurchaserforthepriceifthepurchaserreceivestitletothe
landfromtheseller.Thepurchaserisnotrelievedofhisorherpromisetopay,becauseoftheperformanceofthevoid
oralpromisebytheseller.
Apromisetoperformanactthatoneislegallyboundtododoesnotqualifyasconsiderationforanotherpromise.
Pastconsiderationconsistsofactionsthatoccurredpriortothemakingofthecontractualpromise,withoutany
purposeofinducingapromiseinexchange.Itisnotvalid,becauseitisnotfurnishedasthebargainedforexchange
ofthepresentpromise.Thereareexceptionstothisrule,suchasapresentpromisetopayadebtthathasbeen
dischargedinBankruptcy,whichconstitutesvalidconsiderationbecauseitrenewsaformerpromisetopayadebt
thatwassupportedbyconsideration.
Moststatesdonotrecognizemoralobligationasconsideration,asthereisnoacceptablemethodofsettingthe
parametersofmoralduty.Somecourtswillenforceamoralobligationwheretherehasbeenabenefitconferredonthe
promisor.
StatuteofFraudsThestatuteoffraudswasenactedbytheEnglishParliamentin1677andhassincebeenthelawin
bothEnglandandintheUnitedStatesinvaryingforms.Itrequiresthatcertaintypesofcontractsbeinwriting.The
principalcharacteristicofvariousstatelawsmodeledaftertheoriginalstatuteistheprovisionthatnosuitoraction
shallbemaintainedonacontractunlessthereisanoteormemorandumofitssubjectmatter,termsandconditions,
andtheidentityoftheparties,signedbythepartytobechargedorobligatedunderitoranauthorizedagent.The
purposeofthestatuteistopreventtheproofofanonexistentagreementthroughfraudorperjuryinactionsforbreach
ofanallegedcontract.
RealityofConsent
Thepartiesmustmutuallyassenttotheproposedobjectivesandtermsofacontractinorderforittobeenforceable.
Themanifestationofthecommonintentofthepartiesisdiscernedfromtheirconductorverbalexchanges.
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Whatonepartysecretlyintendedisirrelevantifhisorherconductappearstodemonstrateagreement.Inafewlimited
cases,however,wherethereisnostatedexpressionoftheparties'intent,theirsubjectiveintentionsmayestablishan
enforceablecontractifbothbelieveinthesametermsofthecontract.
Therewillbenobindingcontractwithouttherealconsentoftheparties.Apparentconsentmaybevitiatedbecauseof
mistake,fraud,innocentmisrepresentation,duress,orundueinfluence,allofwhicharedefensestotheenforcement
ofthecontract.
MutualMistakeWhenthereisamutualMistakeofFactwithrespecttothesubjectofthecontract,thesubjective
intentionofthepartiesisevaluatedbythecourtstodeterminewhethertherehadbeen,infact,ameetingoftheminds
oftheparties.
Ifthemutualmistakesignificantlychangedthesubjectmatterofthecontract,acourtwillrefusetoenforcethe
contract.If,however,thedifferenceinthesubjectmatterofthecontractconcernedsomeincidentalqualitythathas
no(ornegligible)effectonthevalueofthecontract,thecontractisbinding,eventhoughthemistakealteredor
removedwhathadbeentheincentivetooneorbothpartiestoenterthecontract.
UnilateralMistakeOrdinarily,aunilateralmistake(i.e.,anerrormadebyoneparty)affordsnobasisforavoidinga
contract,butacontractthatcontainsatypographicalerrormaybecorrected.Acontractmaybeavoidediftheerrorin
valueinwhatistobeexchangedissubstantial,orifthemistakeiscausedbyorknowntotheotherparty.Unilateral
mistakesfrequentlyoccurwhereacontractorsubmitsanerroneousbidforaPublicContract.Wheresuchabidis
accepted,thecontractorwillbepermittedtoavoidthecontractonlyiftheagreementhasnotbeenexecutedorifthe
otherpartycanbeplacedinthepositionthattheyoccupiedpriortothecontract.Ifthemistakeisobvious,the
contractwillnotbeenforced,butifitisinconsequential,thecontractwillbeupheld.Themistakemustconsistofa
clericalerrororamistakeincomputation,asanerrorinjudgmentwillnotpermitacontractortoavoidacontract.
MistakeofLawWhenapartywhohasfullknowledgeofthefactsreachesanerroneousconclusionastotheirlegal
effect,suchaMISTAKEOFLAWwillnotinvalidateacontractoraffectitsenforceability.
IlliteracyIlliteracyneitherexcusesapartyfromthedutyoflearningthecontentsofawrittencontractnorpreventsthe
mutualagreementoftheparties.Anilliteratepersoniscapableofgivingrealconsenttoacontractthepersonhasa
dutytoasksomeonetoreadthecontracttohimorherandtoexplainit,ifnecessary.Illiteracycan,however,serve
asabasisforinvalidatingacontractwhenconsideredinrelationtootherfactors,suchasfraudoroverreaching.Ifthe
personwhomtheilliteratedesignatestoreadorexplainthecontractmisrepresentsitandactsincollusionwiththe
otherpartytothecontract,thecontractmaybesetaside.
FraudFraudpreventsmutualagreementtoacontractbecauseonepartyintentionallydeceivesanotherastothe
natureandtheconsequencesofacontract.Itisthewillfulmisrepresentationorconcealmentofamaterialfactofa
contract,anditisdesignedtopersuadeanothertoenterintothatcontract.Ifaspecialrelationshipexists,suchas
thatofattorneyandclient,nondisclosureofamaterialfactisfraud.Manycourtshaveheldthatmeresilence
concerningamaterialfactdidnotconstitutefraud,buttheemergingtrendistofindadutytodiscloseand,therefore,
deliberateconcealmentofamaterialfactgivesrisetoanactionforfraud.
Acontractthatisbasedonfraudisvoidorvoidable,becausefraudpreventsameetingofthemindsoftheparties.If
thefraudisinthefactum,(i.e.,duringtheexecutionofthecontract)sothatthepartywouldnothavesignedthe
documentifheorsheunderstooditsnature,thenthecontractisvoidabinitio(i.e.,fromitsinception).Thesignatory
isnotboundifadifferentcontractissubstitutedfortheonethatheorshehadintendedtoexecute.If,however,a
partynegligentlychoosestosignthecontractwithoutreadingit,thennofraudexistsandthecontractisenforceable.
Ifthefraudisintheinducement,bywhichapartyisfalselypersuadedtosignacontract,thetermsofwhichheorshe
knowsandunderstands,thenthecontractisnotvoidbutisvoidablebytheinnocentparty,asthatpartyexecutes
whatisintendedtobeexecuted.If,however,duetofraud,acontractfailstoexpresstheagreementthattheparties
intendedittoexpress,thenthedefraudedpartymayseekadecreeofreformation,bywhichthecourtwillrewritea
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writtenagreementtoconformwiththeOriginalIntentoftheparties.
MisrepresentationwithoutFraudAcontractmaybeinvalidatedifitwasbasedonanyinnocentmisrepresentation
pertainingtoamaterialmatteronwhichonepartyjustifiablyrelied.
DuressDuressisawrongfulactorthreatbyonepartythatcompelsanotherpartytoperformsomeact,suchasthe
signingofacontract,whichheorshewouldnothavedonevoluntarily.Asaresult,thereisnotruemeetingofminds
ofthepartiesand,therefore,thereisnolegallyenforceablecontract.Blackmail,threatsofphysicalviolence,or
threatstoinstitutelegalproceedingsinanabusivemannercanconstituteduress.Theconsensusofmostjurisdictions
isthatthethreattocommencelegalproceedings,whichotherwisemightbejustifiable,becomeswrongfulwhendone
withthecorruptintenttocoerceatransactionthatbearsnorelationtothesubjectofsuchproceedingsandisgrossly
unjusttothevictim.
Acontractthatisinducedbyduressiseithervoidorvoidable.Iftheduressconsistsofonepartytakingtheother's
handasamechanicalinstrumentbywhichtosignhisorhernametoacontract,thenthecontractisvoidabinitiofor
lackofanyintentonthevictim'sparttoperformtheact.Theresultisthesameifthevictimiscompelledtosigna
contractatgunpointwithoutanyknowledgeofitscontents.Thesearehighlyunusualsituations.Inmostcases
involvingduress,thecontractisvoidable,andthepersonwhowassubjectedtotheduressmayaskthecourtto
declarethecontractunenforceable.
UndueInfluenceUndueinfluenceisunlawfulcontrolexercisedbyonepersonoveranotherinordertosubstitutethe
firstperson'swillforthatoftheother.Itgenerallyoccursintwotypesofsituations.Inthefirst,apersontakes
advantageofthepsychologicalweaknessofanother,inordertoinfluencethatpersontoagreetoacontracttowhich,
undernormalcircumstances,heorshewouldnototherwiseconsent.Thesecondsituationentailsundueinfluence
basedonafiduciaryrelationshipthatexistsbetweentheparties.Thisoccurswhereonepartyoccupiesapositionof
trustandconfidenceinrelationtotheother,asinfamilialorprofessionalclientrelationships.Thequestionofwhether
theassentofeachpartytothecontractisrealorinducedbyfactorsthatinhibittheexerciseoffreechoicedetermines
theexistenceofundueinfluence.Merelegitimatepersuasionandsuggestionthatdonotdestroyfreewillarenot
consideredundueinfluenceandhavenoeffectonthelegalityofacontract.
Assignments
Anassignmentofacontractisthetransfertoanotherpersonoftherightsofperformanceunderit.Contractswerenot
assignableatearlycommonlaw,buttodaymostcontractsareassignableunlessthenatureofthecontractorits
provisionsdemonstratesthatthepartiesintendtomakeitpersonaltothemandthereforeincapableofassignmentto
others.
JointandSeveralContracts
Jointandseveralcontractsalwaysentailmultiplepromisesforthesameperformance.Twoormorepartiestoa
contractwhopromisetothesamepromiseethattheywillgivethesameperformanceareregardedasbinding
themselvesjointly,severally,orjointlyandseverally.
Promisesimposeseveralliabilityonlywhenpromisorssinglypromisetopayortoact.Ifthethreepromisorssingly
promisetopaytheparty$500,itisasthoughtherearethreediscreteandindividualcontracts,exceptthatthe
promiseeistoreceiveatotalofonly$500.Thethreepromisorsdonotpromiseasaunit,buteachindividually
assumestopaytheentiresum.
Jointliabilityensuesonlywhenpromisorsmakeonepromiseasaunit.Ifthreepromisorspromisetopay$500,then
thethreewillowethedebtasaunit,notindividually.Thepartymayenforcethecontractonlyagainstonepromisoror
againstanynumberofjointpromisors.Thepromiseeisentitled,however,toonlyoneawardoftheamountdue.
Promisesimposejointandseveralliabilitywhenthepromisorspromisebothasaunitandindividuallytopayor
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performaccordingtothetermsofthecontract.
Ifapromisorwhoisjointlyorjointlyandseverallyliableonacontractperformsorpaysthepromiseeinfull,thenthe
otherpromisorsaretherebydischargedfromtheirobligationsonthecontracttothepromisee,asheorshemayonly
collecttheamountduetohimorher.Thepromisorwhoperformed,however,hasarighttocontributionfromtheco
promisorsthatis,therighttoreceivefromtheothercopromisorstheirproportionateshareofthedebt.Thegeneral
ruleisthatacoobligorwhohaspaidinexcessofhisorherproportionateshareisentitledtocontribution,unlessthere
isaparticularagreementtothecontrary.
Jointandseveralpromisescanexistifapromisorpromisestopaytwopromiseesacertainsumofmoney.The
promiseesarejointandseveralpromiseesorobligees,andthepromisorhasthedutytopay.Bothpromiseesare
entitledtoperformanceofthepromisejointlyandseparately,eventhoughthereisonlyonepromisemadetotwo
people.Anyoneofthejointobligeesinacontracthasthepowertodischargethepromisorfromtheobligation.Ifthe
promisorpaysonepromisee,thispaymentoperatesasadischargeofthepromisor'sliabilityunderthecontract.The
promiseewhohasnotbeenpaidmaynotcompelthepromisortopayhimorher,asthepromisorhasbeendischarged
bythepaymenttotheotherpromisee.Theunpaidpromiseemayseekcontributionfromthepromiseewhohasbeen
paid,however.
ThirdPartyBeneficiaries
Thereareonlytwoprincipalparties,theofferorandtheofferee,toanordinarycontract.Thetermsofthecontractbind
oneorbothpartiestorenderperformancetotheotherinconsiderationofreceiving,orhavingreceived,theother's
performance.Contractssometimesspecifythatthebenefitsaccruingtoonepartywillbeconferreduponathirdparty.
Theeffectofathirdpartycontractistoprovide,toapartywhohasnotassentedtoit,alegalrighttoenforcethe
contract.
Acreditorbeneficiaryisanonpartytoacontractwhoreceivesthebenefitwhenapromiseismadetosatisfyalegal
duty.Forexample,supposethatadebtorowedacreditor$500.Thedebtorlends$500toathirdperson,who
promisestousethemoneytopaythedebtor'sdebt.Thethirdpersonisthepromisor,whomakesthepromisetobe
enforced.Thedebtoristhepromisee,towhomthepromiseismade.Thecontractisbetweenthedebtorandthethird
person,thepromisor,andtheconsiderationforthepromiseisthe$500loanthatthepromisorreceivedfromthe
debtor.Thecreditoristhethirdpartybeneficiary.Ifthepromisorrefusestopaythecreditor$500,thenthecreditor
maysuethepromisorandprevail.Althoughthecreditorisnotapartytotheircontract,boththedebtorandthe
promisorintendthatthecreditorshouldbethebeneficiaryofthecontractandhaveenforceablerightsagainstthe
promisor,sinceheorsheistopaythecreditor.Thedebtororthecreditormaysuetoenforcethepromisor'spromise
topay.Thecreditor'srighttoenforcethecontractbetweenthedebtorandthepromisoriseffectiveonlywhenheor
shelearnsof,andassentsto,thecontract.Thecreditormayalsosuethedebtorforthe$500,asthedebtorhada
legaldutytopaythisloan.Thedebtorthenmaysuethepromisorforbreachofcontractforrefusingtopaythe
creditor.
Adoneebeneficiaryofthecontractisanonpartywhobenefitsfromapromisethatismadeforthepurposeofmaking
agifttohimorher.Adonorwishestogiveadonee$200asananniversarypresent.Thedonorplanstosella
televisionsetfor$200toapurchaser,whopromisestopaythedoneethe$200directly.Thedoneeisadonee
beneficiaryofthepurchaser'spromisetopaythemoneyandmayenforcethisclaimagainstthepurchaser.Thedonee
hasnoclaimagainstthedonor,thepromisee,asthedonorhasnolegaldutytothedoneebutismerelygivingthe
doneeagift.However,thedonorwillbeabletosuethepurchaserforrefusaltopaythedonee,becauseitwouldbea
breachofthetermsoftheircontractofsale.
Thedifferencebetweenacreditorbeneficiaryandadoneebeneficiarybecomessignificantwhenthepartiestoa
contractattempttoaltertherightsofthethirdpartybeneficiary.Thepromisorandthepromiseehavenorightorpower
toaltertheaccruedrightsofthedoneebeneficiarywithoutconsentunlessthispowerwasexpresslyreservedinthe
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contract,regardlessofwhetherthedoneeknowsaboutthecontract.Adoneebeneficiary'srightsbecomeeffective
whenthecontractismadeforhisorherbenefit,regardlessofwhetherheorsheknowsaboutthecontract.In
contrast,acreditorbeneficiary'srightsvestonlywhenthecreditorbeneficiarylearnsof,andassentsto,thecontract.
ConditionsandPromisesofPerformance
Thedutyofperformanceundermanycontractsiscontingentupontheoccurrenceofadesignatedconditionor
promise.Aconditionisanactorevent,otherthanalapseoftime,thataffectsadutytorenderapromised
performancethatisspecifiedinacontract.Aconditionmaybeviewedasaqualificationplaceduponapromise.A
promiseordutyisabsoluteorunconditionalwhenitdoesnotdependonanyexternalevents.Nothingbutalapseof
timeisnecessarytomakeitsperformancedue.Whenthetimeforperformanceofanunconditionalpromisearrives,
immediateperformanceisdue.Adependentorconditionalpromiseisnoteffectiveuntiltheoccurrenceofsome
externaleventthatthepartieshavespecified.Animpliedconditionisonethatthepartiesshouldhavereasonably
comprehendedtobepartofthecontractbecauseofitspresencebyimplication.
TypesofConditionsConditionsprecedent,conditionsconcurrent,andconditionssubsequentaretypesofconditions
thatarecommonlyfoundincontracts.Aconditionprecedentisaneventthatmustexistasafactbeforethepromisor
incursanyliabilitypursuanttoit.Forexample,supposethatanemployerinformsanemployeethatiftheemployee
successfullycompletesanaccountingcourse,heorshewillreceive$500.Thecompletionofthecoursemustexist
asafactbeforetheemployerwillbeliabletotheemployeewhenthatfactoccurs,theemployerbecomesliable.
Aconditionconcurrentmustexistasafactwhenbothpartiestoacontractaretoperformsimultaneously.Neither
partyhasadutytoperformuntiltheotherhasperformedorhastenderedperformance.Practicallyspeaking,however,
thepartywhowantstocompletethetransactionmustperforminordertoestablishthedutyofperformancebythe
otherparty.Theperformancesareconcurrentlycontingentuponeachother.Concurrentconditionsareusuallyfoundin
contractsforthesaleofgoodsandincontractsfortheconveyanceofland.
Aconditionsubsequentisonethat,whenitexists,endsthedutyofperformanceorpaymentunderthecontract.For
example,supposethataninsurancecontractprovidesthatsuitagainstitforalosscoveredbythepolicymustbe
commencedwithinoneyearoftheinsured'sloss.Ifthedestructionoftheinsured'sbuildingbyfireisariskthatthe
policycovers,thentheinsuredmustfilesuitagainsttheinsurerwithinthetimespecified,ortheconditionsubsequent
willendthedutyofthecompanypursuanttothepolicy.
SubstantialPerformanceThefailuretocomplystrictlywiththetermsofaconditionwillnotpreventrecoveryifthere
hasbeensubstantialperformanceofthecontractualobligation.Courtscreatedthisdoctrineinordertoprevent
forfeituresandtoensurejustice.Whererecoveryispermittedforsubstantialperformance,itisoffsetbydamagesfor
injuriescausedbyfailuretorendercompleteperformance.Courtsdeterminewhethertherehasbeenabreachora
substantialperformanceofacontractbyevaluatingthepurposetobeservedtheexcusefordeviationfromtheletter
ofthecontractandthecrueltyofenforcedadherencetothecontract.Ifthedeviationfromthecontractwere
accidentalandresultedinonlyatrivialdifferencebetweenwhatwasrequiredbythecontractandwhatwasperformed,
theplaintiffwillreceiveonlynominaldamages.
SatisfactoryPerformanceAcontractmaybecontingentuponthesatisfactionofaperson'sopinion,taste,orfancy.
Mostcourtsapplyagoodfaithtestindeterminingwhetherrejectionofaperformancewasreasonable.Ifarejectionis
madeinbadfaith,thecourtwillenforcethecontract.
Ifsatisfactioncanbemeasuredwithreferencetothecommercialvalueorcaliberofthesubjectmatterofthecontract,
theperformancemustbeprovedtobedeficientintheserespectsandthedissatisfactionmustbeproventobe
sufficientlyreasonableandwellfoundedtojustifynonenforcementofthecontract.Thetestis:Whatwouldsatisfya
reasonableperson?Theconditionofsatisfactionneednotbemetwhentheexpressionofdissatisfactionismadein
badfaithandnotrelatedtothequalityorcommercialvalueofthesubjectofthecontract.
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DivisibleContractsTheentireperformanceofacontractcanbeaconditiontotheotherparty'sdutytoperform.Ifthe
contractislegallydivisible,theperformanceofadivisibleportioncanfulfilltheconditionprecedenttotheotherparty's
correspondingdivisibleperformance.Acontractisdivisiblewhentheperformanceofeachpartyisdividedintotwoor
morepartseachpartyowestheotheracorrespondingnumberofperformancesandtheperformanceofeachpartby
onepartyistheagreedexchangeforacorrespondingpartbytheotherparty.Ifitisdivisible,thecontract,forcertain
purposes,istreatedasthoughitwereanumberofcontracts,asinemploymentcontractsandleases.Ifanemployer
hiresaprospectiveemployeeforoneyearataweeklysalary,thecontractisdivisible.Eachweek'sperformanceisa
constructiveorimpliedconditionprecedenttotheemployee'srighttoaweek'ssalary.Therighttothesalaryisnot
contingentonperformanceoftheobligationtoworkforoneyear.Inmostcontractsofemployment,thecourtsallow
recoverytotheemployeeforthenumberofweeksormonthsofservicerendered,onthetheorythatsuchcontractis
divisible.Thesameistrueforaleaseofrealpropertyoranapartment.Iftheleaseisbreachedbeforetheentireterm
hasexpired,thetenantisliablefortheremainingrentaseachmonthoccurs,butisnotliablepriortothattime.In
effect,thecourttreatstheleaseasacontractforeachmonth,withrentdueonthefirstofeachmonth.Inadivisible
contract,theperformanceofaseparateunitthatistreatedasaseparatecontractentitlestheperformingpartyto
immediatepayment,whereasinanentirecontract,thepartywhoisfirsttoperformmustrenderfullperformancein
ordertobeentitledtoperformancefromtheotherparty.
BreachofConditionsCompliancewithaconditioncanbeexcusedundercertaincircumstances.Asageneralrule,if
thefactswouldexcusecompliancewithacondition,theywillalsoexcuseperformanceofapromise.Anexcusefor
nonperformanceofaconditioncanexistinmanyforms,suchasawaiver(theintentionalrelinquishmentofaknown
right)ofperformanceofthecondition.
IfanunintentionalfailuretoperformaconditionwouldresultinaForfeiture,acourtmayexcusecomplianceinorder
topreventinjustice.Thedutyofperformancebytheotherpartyarisesjustasthoughtheconditionhasbeenfulfilledif
compliancewithaconditionisexcused.
DischargeofContracts
ThedutiesunderacontractaredischargedwhenthereisalegallybindingterminationofsuchdutybyaVoluntary
Actofthepartiesorbyoperationoflaw.Amongthewaystodischargeacontractualdutyareimpossibilityor
impracticabilitytoperformpersonalservicesbecauseofdeathorillnessorimpossibilitycausedbytheotherparty.
ThetwomostsignificantmethodsofvoluntarydischargeareAccordandSatisfactionandnovation.Anaccordisan
agreementtoacceptsomeperformanceotherthanthatwhichwaspreviouslyowedunderapriorcontract.Satisfaction
istheperformanceofthetermsofthataccord.Bothelementsmustoccurinorderfortheretobedischargebythese
means.
Anovationinvolvesthesubstitutionofanewpartywhiledischargingoneoftheoriginalpartiestoacontractby
agreementofallthreeparties.Anewcontractiscreatedwiththesametermsastheoriginalone,butthepartiesare
different.
Contractualliabilitymaybevoluntarilydischargedbytheagreementoftheparties,byestoppel,andbythe
cancellation,intentionaldestruction,orsurrenderofacontractundersealwithintenttodischargetheduty.
Thedischargeofacontractualdutymayalsooccurbyoperationoflawthroughillegality,merger,statutoryrelease,
suchasadischargeinbankruptcy,andobjectiveimpossibility.Mergertakesplacewhenonecontractisextinguished
becauseitisabsorbedintoanother.
Therearetwotypesofimpossibilityofperformancethatdischargethedutyofperformanceunderacontract.
Subjectiveimpossibilityisduetotheinabilityoftheindividualpromisortoperform,suchasbyillnessordeath.
Objectiveimpossibilitymeansthatnoonecanrendertheperformance.Thedestructionofthesubjectmatterofthe
contract,thefrustrationofitspurpose,orsuperveningimpossibilityafterthecontractisformedaretypesofobjective
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impossibility."Impracticability"becauseofextremeandunreasonabledifficulty,expense,injury,orlossinvolvedis
consideredpartofimpossibility.
BreachofContract
Anunjustifiablefailuretoperformallorsomepartofacontractualdutyconstitutesabreachofcontract.Itensues
whenapartywhohasadutyofimmediateperformancefailstoperform,orwhenonepartyhindersorpreventsthe
performanceoftheotherparty.
Atotal,major,material,orsubstantialbreachofcontractconstitutesafailuretoperformproperlyamaterialpartofthe
contract.Apartialorminorbreachofcontractismerelyaslightdeviationfromthebargainedforperformance.A
breachmayoccurbyAnticipatoryRepudiation,wherebythepromisor,withoutjustificationandbeforecommittinga
breach,makesanaffirmativestatementtothepromisee,indicatingthatheorshewillnotorcannotperformthe
contractualduties.
Thedifferencesinthetypesofbreacharesignificantinascertainingthekindsofremediesanddamagesavailableto
theaggrievedparty.
Remedies
Damages,reformation,Rescission,restitution,andSpecificPerformancearethebasicremediesavailablefor
breachofcontract.
DamagesThetermdamagessignifiesasumofmoneyawardedasacompensationforinjurycausedbyabreachof
contract.Thetypeofbreachgovernstheextentofthedamagestobeawarded.
FailuretoperformThemeasureofdamagesinbreachofcontractcasesisthesumthatwouldbenecessaryto
recompensetheinjuredpartyfortheamountoflossesincurredthroughbreachofcontract.Theinjuredpartyshouldbe
placedinthepositionthatheorshewouldhaveoccupiedifthecontracthadbeenperformed,andtheyareentitledto
receivethebenefitofthebargain,thenetgainthatwouldhaveaccruedtothemunderthecontract.Theinjuredparty
isnot,however,tobeputinabetterpositionthanheorshewouldhaveoccupiedhadperformancetakenplace.
Damagesforanticipatoryrepudiationareordinarilyassessedasofthescheduledperformancedatesthatarefixedby
thebreachedcontract.Themeasureofdamagesforthebreachofaninstallmentcontractisdeterminedatthetime
eachinstallmentisdue.
WhenthepartieshaveincludedaLiquidatedDamagesclauseinacontract,itgenerallywillbeenforced.Such
clauseisaprioragreementbythepartiesastothemeasureofdamagesuponbreach.Additionaldamagesmaynot
beclaimed.
PartialperformanceWhenthedefendanthasfailedtocompleteperformanceofanagreementaccordingtoitsterms,
theplaintiffmayrecoversuchdamagesaswillcompensatehimorhertothesameextentasthoughthecontracthad
beencompletelyperformed.Thecustomarymeasureofdamagesisthereasonableexpenseofcompletion.
Completionreferstoafulfillmentofthesamework,ifpossible,whichdoesnotinvolveunreasonableeconomicwaste.
Theinjuredpartyisnotautomaticallyentitledtorecoverthedifferencebetweenthecontractpriceandtheamountit
wouldcosttohavetheworkcompletedwhenacontractisbreachedafterpartialperformanceheorshewillbe
entitledtorecoverthatamountonlyifcompletionisactuallyaccomplishedatagreatercost.
Aprovisioninabuildingcontractthatallowstheowner,intheeventofadefaultbythecontractor,tocompletethejob
andtodeducttheexpensesfromthecontractpricedoesnotprecludetheowner'srecoveringdamagesalsowherethe
contractorintentionallyleavestheworkundone.Aplaintiffmayalsorecoverthemonetaryvalueofmaterialsthatare
lostthroughabreachofcontract.
Aplaintiffcontractorwhosubsequentlyperformstheworkuponbreachofacontractwillordinarilyrecoverthe
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reasonablevalueofthelaborandmaterialsthatheorshehasfurnished,withthecontractpriceusedasaguideline.
Theawardmaynotproperlyexceedthebenefitthattheownerreceivedintheproperlycompletedwork,anditwillbe
reducedbytheamountofdamagesthattheownerincursasaresultofthecontractor'sfailuretocomplete
performanceofthecontractualobligation.Ifthevalueoftheworkperformedexceedsthecontractprice,thecontractor
willnotreceivetheexcess.
Whereacontractfortheperformanceofservicesexistswithpaymenttobemadeininstallments,andtheobligation
topayforeachinstallmentconstitutesanindependentpromise,theindividualwhoisentitledtopaymentmayrecover
onlytheinstallmentsthatareduewhenthesuitisbrought.
DefectiveperformanceDamagesfordefectiveperformanceofacontractualagreementaremeasuredbycalculating
thedifferenceinvaluebetweenwhatisactuallytenderedandwhatisrequiredasperformanceundertheagreement.If
theperformancetenderediseitherofnovalueorunsuitableforthepurposethatthecontractcontemplated,theproper
measureofdamagesisthesumthatisnecessarytorepairthedefect.Ifadefectcanbeeasilyremediedthrough
repairs,themeasureofdamagesisthepriceoftherepairsperformed.
Generally,thetotalcontractpricemaynotberecoveredforsubstantialperformance.Iftheplaintifffurnishedmaterials
foritemsthatweremanufacturedfortheplaintiffinsuchamannerastoberenderedworthless,thepropermeasureof
damagesordinarilyhasbeenheldtobethediscrepancybetweenthecontractpriceandthemarketpriceofsuch
itemsiftheyhadbeenmanufacturedaccordingtothecontractterms.
Whenabuildingorconstructioncontractisdefectivelyperformed,thepropermeasureofdamagesisthedifference
betweenthevalueofthepropertywiththedefectivework,anditsvaluehadtherebeenstrictcompliancewiththe
contract.Wherethecontractordeliberatelydeviatesfromthecontractualagreement,buttherehasbeennosubstantial
performance,damagesaredeterminedbytheactualexpenseofreconstructingthebuildingaccordingtothetermsof
thecontract.
DelayinperformanceThelossprecipitatedbythewrongfuldelayoftheperformanceofacontractiscalculatedby
fixingtherentaloruseofthepropertyorinterestasaresultofthelossincurredthroughincreasedmaterialandlabor
expenses,asdistinguishedfromwhatthevaluewouldhavebeenhadthecontractbeenperformedontime.
ReformationReformationisanequitableremedythatisappliedwhenthewrittenagreementdoesnotcorrespondto
thecontractthatwasactuallyformedbytheparties,asaresultoffraudormutualmistakeindraftingtheoriginal
document.Quasicontractualreliefforthereasonablevalueofservicesrenderedisalsoavailable,althoughitapplies
onlywhenthereisnoenforceablecontract.
RescissionRescissionterminatesthecontract,andthepartiesarerestoredtothepositionofneverhavingentered
intothecontractinthefirstplace.
RestitutionRestitutionisaremedythatisdesignedtorestoretheinjuredpartytothepositionthattheyoccupiedprior
totheformationofthecontract.
SpecificPerformanceSpecificperformanceisanequitableremedybywhichacontractingpartyisrequiredto
execute,asnearlyaspracticable,apromisedperformancewhenmonetarydamageswouldbeinadequateto
compensateforthebreach.Acontracttoselllandisspecificallyenforceablebecauselandisconsideredtobeunique
andnotcompensablebymoney.Inaddition,propertythathassentimentalvalue,aswellasantique,heirloom,orone
ofakindarticles,areviewedasunique,andthereforeitwouldbeimpossibletoestimatedamages.Apersonalservice
contractoranemploymentcontract,however,cannotbespecificallyenforcedbecausetheThirteenthAmendment
totheU.S.ConstitutionprohibitsSlavery.If,however,thecontractproscribesapersonfromperformingsomeact,
breachofthatnegativecovenantmaybespecificallyenforced.
ParolEvidenceRule
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Tentativetermsdiscussedinpreliminarynegotiationsaresubsumedbytheprovisionsofthecontractexecutedbythe
parties.TheParolEvidencerulegovernstheadmissibilityofevidenceotherthantheactualagreementwhena
disputearisesoverawrittencontract.Whenpartiesmemorializetheiragreementsinwriting,allpriororalandwritten
agreements,andallcontemporaneousoralagreements,mergeinthewriting,whichisalsoknownasanintegration.
Thewrittencontractmaynotbemodified,altered,orvariedbyparolororalevidence,providedthatithasbeenlegally
executedbyapersonwhointendsforittorepresentthefinalandcompleteexpressionofhisorherunderstandingof
thecontract.Thisisnotthecase,however,wheretherehasbeensomemistakeorfraudinthedraftingofthe
document.
Theparolevidenceruleeffectuatesthepresumedintentionofthepartiesachievescertaintyandfinalityastothe
rightsanddutiesofthecontractingpartiesandpreventsfraudulentandperjuredclaims.Ithasnoapplicationto
subsequentoralcontractsthatmodifyordischargethewrittencontract,however.
Ambiguity
Ambiguityinthetermsofacontractexistswhenthecourtcannot,afterapplyingtherulesortoolsofinterpretation,
giveameaningtothelanguageusedinanagreementordocument.Theplainmeaningruleisoftenappliedjudicially
toascertainwhetheracontractisambiguous.Ifthecontractappearstothetrialjudgetobeclearandunequivocalon
itsface,thenthereisnoneedforparolevidence.However,whenawritingisambiguous,parolevidenceisadmissable
onlytoelucidate,nottovary,theinstrumentaswritten.
Courtshaveusedotherrulestoresolveambiguousterms.Whereneitherpartyknows,orhasreasontoknow,ofthe
ambiguity,orwherebothpartiesknoworhavereasontoknowofit,theambiguoustermisgiventhemeaningthat
eachpartyintendedittoconvey.Asapracticalmatter,thismeansthatifthepartiesgivetheequivocalexpression
thesamemeaning,thenacontractisformedbutiftheygiveitadifferentmeaning,thenthereisnocontract,atleast
iftheambiguitypertainstoamaterialterm,asthereisnomeetingoftheirminds.Whereonepartyknows,orhas
reasontoknow,oftheambiguity,andtheotherdoesnot,itconveysthemeaninggiventoitbythelatterwhich
means,inessence,thatthereisacontractpredicateduponthemeaningofthepartywhoiswithoutfault.
ContractsfortheSaleofGoods
Thenatureofatransactiondeterminesthetypeofcontractlawthatapplies.Generalcontractlawdescribedabove
appliestosuchtransactionsasserviceagreementsandsalesofrealproperty.Contractsforthesaleofgoods,
however,aregovernedbyArticle2oftheUCC,whichhasbeenadopted,atleastinpart,ineverystate.TheUCC
defines"goods"asallthingsthataremovableatthetimeofthesale.
ThedraftersoftheUCCadheredtoamoreliberalviewofcontracts,sosomeofitsprovisionsdiffersignificantlyfrom
thosethatarefoundingeneralcontractlaw.Acontractforthesaleofgoodsmaybemadeinanymannerthatis
sufficienttoshowagreement,andcourtsmayconsidertheconductofthepartieswhenmakingthisdetermination.An
offertosellgoodsmaybemadeinanymannerthatinvitesacceptance.CourtsalsomayconsidertheCourseof
Performancebetweenthepartieswhendeterminingwhetheracontractforthesaleofgoodsexists.
TheUCCprovidesfor,andrecognizes,certainwarrantiesthatrelatetothegoodsbeingsold.Forexample,an
affirmationoffactorapromisemadebythesellertothebuyercreatesanexpresswarranty.Salesalsocreateimplied
warranties,suchastheimpliedwarrantiesofmerchantabilityandfitnessforaparticularpurpose.Remediesandother
damagesforbreachofasaleofgoodscontractarealsogovernedbytheUCC.Inadditiontomonetarydamages,
buyersandsellersmaytakeseveralactionswhentheotherpartybreachesasalescontract.Forexample,aseller
whohasbeeninjuredbyabreachofcontractmaywithholddeliveryofthegoodsresellthegoodsthataresubjectto
thecontractorrecovermonetarydamages.Abuyermayseekto"cover"bymakingagoodfaithpurchaseof
substitutegoodsfromadifferentseller,andthenmayrecoverfromtheoriginalselleranydifferencebetweenthe
substitutecontractandtheoriginalcontract.
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Furtherreadings
Collins,Hugh.1999.RegulatingContracts.NewYork:OxfordUniv.Press.
DiMatteo,LarryA.1998.ContractTheory:TheEvolutionofContractualIntent.EastLansing:MichiganStateUniv.
Press.
Hare,J.I.Clark.2003.TheLawofContracts.Clark,N.J.:LawbookExchange.
Marsh,P.D.V.2001.ContractNegotiationHandbook.Burlington,Vt:Gower.
Contracts
ChristopherC.Langdell,1871
The1871publicationofASelectionofCasesontheLawofContractsbyChristopherColumbusLangdell
revolutionizedlegaleducation.Thebook,whichconsistedofacollectionofmostlyEnglishjudicialopinions,was
meanttoassisttheprofessorindevelopingwithinthestudentascientificapproachtothelaw.Langdellchosethe
casesforthefundamentalprinciplestheycontained.Studentswereexpectedtodispensewiththeideathattheywere
attendingavocationalschool.Instead,theyweretoapplytheprinciplestheylearnedinthescientificsearchfortruth.
InhisprefaceLangdellsaidthathesoughtto"select,classify,andarrangeallcaseswhichhadcontributedinany
importantdegreetothegrowth,development,orestablishmentofanyofitsessentialdoctrines."
Contracts
PREFACE
Ientereduponthedutiesofmypresentposition,ayearandahalfago,withasettledconvictionthatlawcouldonlybe
taughtorlearnedeffectivelybymeansofcasesinsomeform.IhadentertainedsuchanopinioneversinceIknew
anythingofthenatureoflaworlegalstudybutitwaschieflythroughmyexperienceasalearnerthatitwasformed,
aswellassubsequentlystrengthenedandconfirmed.Ofteachingindeed,asabusiness,Iwasentirelywithout
experiencenorhadIgivenmuchconsiderationtothatsubject,exceptsofaraspropermethodsofteachingare
involvedinpropermethodsofstudy.
Now,however,Iwascalledupontoconsiderdirectlythesubjectofteaching,nottheoreticallybutpractically,in
connectionwithalargeschoolwithitsmoreorlesscomplicatedorganization,itsdailyroutine,anddailyduties.Iwas
expectedtotakealargeclassofpupils,meetthemregularlyfromdaytoday,andgivethemsystematicinstructionin
suchbranchesoflawashadbeenassignedtome.Toaccomplishthissuccessfully,itwasnecessary,first,thatthe
effortsofthepupilsshouldgohandinhandwithmine,thatis,thattheyshouldstudywithdirectreferencetomy
instructionsecondly,thatthestudythusrequiredofthemshouldbeofthekindfromwhichtheymightreapthe
greatestandmostlastingbenefitthirdly,thattheinstructionshouldbeofsuchacharacterthatthepupilsmightat
leastderiveagreateradvantagefromattendingitthanfromdevotingthesametimetoprivatestudy.Howcouldthis
threefoldobjectbeaccomplished?Onlyonemodeoccurredtomewhichseemedtoholdoutanyreasonableprospect
ofsuccessandthatwas,tomakeaseriesofcases,carefullyselectedfromthebooksofreports,thesubjectalikeof
studyandinstruction.ButhereIwasmetbywhatseemedatfirsttobeaninsuperablepracticaldifficulty,namely,the
wantofbooksforthoughitmightbepracticable,incaseofprivatepupilshavingfreeaccesstoacompletelibrary,to
referthemdirectlytothebooksofreports,suchacoursewasquiteoutofthequestionwithalargeclass,allofwhom
wouldwantthesamebooksatthesametime.Norwouldsuchacoursebewithoutgreatdrawbacksand
inconveniences,eveninthecaseofasinglepupil.Ashewouldalwayshavetogowherethebookswere,andcould
onlyhaveaccesstothemthereduringcertainprescribedhours,itwouldbeimpossibleforhimtoeconomizehistime
orworktothebestadvantageandhewouldbeliabletobeconstantlyhauntedbytheapprehensionthathewas
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spendingtime,labor,andmoneyinstudyingcaseswhichwouldbeinaccessibletohiminafterlife.
Itwaswithaviewtoremovingtheseobstacles,thatIwasfirstledtoinquireintothefeasibilityofpreparingand
publishingsuchaselectionofcasesaswouldbeadaptedtomypurposeasateacher.Themostimportantelementin
thatinquirywasthegreatandrapidlyincreasingnumberofreportedcasesineverydepartmentoflaw.Inviewofthis
fact,wasthereanysatisfactoryprincipleuponwhichsuchaselectioncouldbemade?Itseemedtomethatthere
was.Law,consideredasascience,consistsofcertainprinciplesordoctrines.Tohavesuchamasteryoftheseasto
beabletoapplythemwithconstantfacilityandcertainlytotheevertangledskeinofhumanaffairs,iswhat
constitutesatruelawyerandhencetoacquirethatmasteryshouldbethebusinessofeveryearneststudentoflaw.
Eachofthesedoctrineshasarrivedatitspresentstatebyslowdegreesinotherwords,itisagrowth,extendingin
manycasesthroughcenturies.Thisgrowthistobetracedinthemainthroughaseriesofcasesandmuchthe
shortestandbest,ifnottheonlywayofmasteringthedoctrineeffectuallyisbystudyingthecasesinwhichitis
embodied.Butthecaseswhichareusefulandnecessaryforthispurposeatthepresentdaybearanexceedingly
smallproportiontoallthathavebeenreported.Thevastmajorityareuselessandworsethanuselessforanypurpose
ofsystematicstudy.Moreover,thenumberoffundamentallegaldoctrinesismuchlessthaniscommonlysupposed
themanydifferentguisesinwhichthesamedoctrineisconstantlymakingitsappearance,andthegreatextentto
whichlegaltreatisesarearepetitionofeachother,beingthecauseofmuchmisapprehension.Ifthesedoctrinescould
besoclassifiedandarrangedthateachshouldbefoundinitsproperplace,andnowhereelse,theywouldceasetobe
formidablefromtheirnumber.Itseemedtome,therefore,tobepossibletotakesuchabranchofthelawas
Contracts,forexample,and,withoutexceedingcomparativelymoderatelimits,toselect,classify,andarrangeallthe
caseswhichhadcontributedinanyimportantdegreetothegrowth,development,orestablishmentofanyofits
essentialdoctrinesandthatsuchaworkcouldnotfailtobeofmaterialservicetoallwhodesiretostudythatbranch
oflawsystematicallyandinitsoriginalsources.
West'sEncyclopediaofAmericanLaw,edition2.Copyright2008TheGaleGroup,Inc.Allrightsreserved.
See:dealings
Burton'sLegalThesaurus,4E.Copyright2007byWilliamC.Burton.UsedwithpermissionofTheMcGrawHillCompanies,Inc.
Copyright20032015Farlex,Inc
Disclaimer
Allcontentonthiswebsite,includingdictionary,thesaurus,literature,geography,andotherreferencedata
isforinformationalpurposesonly.Thisinformationshouldnotbeconsideredcomplete,uptodate,andis
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