Research Proposal on "Contract Law"

Research Proposal 5 pages (1543 words) Sources: 5 Style: APA

[EXCERPT] . . . .

Contract Law Principles and Definitions

The Elements of Contract:

Under American law, contracts must satisfy certain specific criteria in order to be enforceable at law. They must represent a genuine meeting of the minds in which the parties to the contract all understand their respective rights, benefits, and obligations under the contract (Freidman, 2005; Halbert & Ingulli, 2007). Valid contracts must be specific in their terms and include sufficient detail on all material elements such as price and date of anticipated completion. Contracts that fail to do so sufficiently are unenforceable at law simply because no legal contract arises without a meeting of the minds (Freidman, 2005; Halbert & Ingulli, 2007).

Consideration is also an essential element of contracts because both parties must receive some benefit under a valid contract. Therefore, a promise to give someone a car on his birthday is not an enforceable contract because the promisor receives no benefit under the agreement (Dershowitz, 2002; Miller, 1999). That is the origin of the traditional practice of including the phrase spelling out the transfer of "one dollar and other valuable consideration" in contracts (Miller, 1999).

Generally, a contract also involves an offer and acceptance of that offer as well (Freidman, 2005; Miller, 1999). The circumstances of the offer and acceptance must be definitive on both parties to trigger a legally enforceable agreement. Proposal of different terms in response to an offer is considered a rejection of the initial offer and a counteroffer that can be accepted or rejected by the original party making the offer (Freidman, 2005). In that case, the terms of the counteroffer become the only terms of any contract where the parties come to any agreement (Miller, 1999).

Types of Contracts:

Most contracts are formal express contracts where the parties both express exactly what they expect from the agreement and formalize that understanding in a writing signed by both parties. Verbal contracts are equally enforceable except that they are much more difficult to prove, especially if both parties claim different facts and statements. Assuming that both parties admit to their respective statements or other proof (such as a legally made tape recording of the conversation exists), verbal contracts are valid and enforceable with several exceptions such as employment contracts longer than a year and the sale of real property (Dershowitz, 2002; Miller, 1999).

Typical examples of express contracts would be statements such as "I will paint the outside of your house by the end of this month for $3,000" or "I will pay you $5,000 for your 1999 Toyota." However, there are also implied contracts that arise without explicit conversation of the terms of the agreement by common social practice and understanding. Examples of implied informal contracts would be where a person sits in a restaurant and asks "Could I please have an egg omelette and a glass of orange juice?" Technically, that is merely a question or a request for food without any promise to pay for it. However, common understanding and social practice makes that request a valid and enforceable contract for the sale of the meal for the price published in the restaurant's menu (Miller, 1999).

Generally, most valid contracts are bilateral because both parties agree to do something (or not to do something) for the benefit of the other (Freidman, 2005). However, it is also possible to form a unilateral contract where only one party promises to do something under certain circumstances. For example, Jones tells Williams "If you can wait until next month, I will paint your house for free because I miss painting." One week later, Williams says to Jones "Are you still going to paint my house for free next month? I'm asking because there is a 50% sale on house painting at Home Depot that expires next week. If you're not still planning on painting my house for free, I would like to have it done for half off the usual price at Home Depot." If Jones reaffirms his promise and Williams relies on that promise by not taking advantage of the Home Depot sale, Jones' promise becomes an enforceable unilateral contract at that point even without consideration from Williams. That is because Williams relied on Jones' promise to his detriment. If Jones later reneges on his promise, he is liable to Williams in the amount of money that Williams pays to Home Depot the following month that Williams pays above the cost (i.e. 50%) that the painting job would have cost him had Jones not let Williams rely on his promise.

Where both parties agree to perform specific actions in trade and only one performs at the time of contract, the agreement is considered an executory contract because one party has already executed his obligations while the other has not yet (Halbert & Ingulli, 2007). For example, the agreement "I will paint your car today if you fix my car next weekend" becomes an executory contract because the obligation of the second performing party does not take place for a week after the first performing party (Halbert & Ingulli, 2007).

Quasi-contracts come into existence where no prior understanding or agreement between parties exists but one party performs a valuable service or provides valuable goods to the other that the receiving party accepts. For example, Jones is a homeowner who always mows his own lawn while Williams pays a commercial landscaper to take care of his lawn. The landscaper sends his new employee who mistakenly shows up at Jones' house instead of Williams' and says "I'm here to mow the lawn" to which Jones says "Sure, go right ahead." If Jones later refuses to pay claiming that he never asked for or agreed to pay for landscaping, the courts will usually find that a quasi-contract existed, especially where Jones could have corrected the mistake before the work.

Where the party receiving the benefit erroneously was not present and played no role in the mistake, the court may determine that no quasi-contract existed. In the alternative, it may apply the doctrine of quantum meruit in which case it will award a fair value for services rendered but not the profit that would normally be awarded where the recipient could have helped prevent the error (Miller, 1999).

Interpretation of Contracts:

Generally, courts use the four corners rule to interpret written contracts (Freidman, 2005). That means that the court will not consider any verbal statements that contradict the express terms contained within the four corners of the written document. To avoid any possible claims that verbal statements made by the party drafting the contract contradict the express terms of the written contract, many contracts will include an integration clause that specifically provides language to the effect that "This party represents the entire agreement of the parties and no other terms apply unless they are in writing and signed by both parties" (Halbert & Ingulli, 2007; Miller, 1999).

In interpreting contracts, courts also resolve any unclear terms or other ambiguities against the party drafting the contract (Dershowitz, 2002). That means if the existing terms of the contract are sufficient to create a valid contractual obligation, any language that is capable of being understood more than one way will usually be construed by the court against the party who drafted the contract and in favor of the party who was not responsible for any mistake or ambiguity (Dershowitz, 2002).

Void, Voidable, and Unenforceable Contracts:

Contracts that violate the law are unenforceable as a matter of law and cannot be enforced (Schmalleger, 2008). Therefore, even a formal express written contract with specific terms and consideration for the sale of illegal drugs cannot be enforced. Likewise, parties cannot contract to any other arrangements that violate other laws, such as the agreement to lend money at usurious interest rates. Other contracts are not illegal… READ MORE

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