ContractsClassOutline-LawSchool.docVIP

INTRODUCTION The Legal Meaning of “Contract” A contract may be defined as an exchange relationship created by oral or written agreement between two or more persons, containing at least one promise, and recognized in law as enforceable. An oral or written agreement between two or more persons It is a voluntary, consensual relationship, created only because the parties, acting with free will and intent to be bound, reach an agreement on the essential terms of their relationship. It is enough that the words and conduct of a part, evaluated on an objective standard, would lead the other party to reasonably understand that an agreement was reached. Under the statute of frauds, there are some types of contracts that must be recorded in a signed writing to be enforceable. However, most contracts are not covered by the statute of frauds. An exchange relationship The very essence of contract is a reciprocal relationship in which each party gives up something to get something. At least one promise For a contract to exist there must be a promise – that is, some commitment for the future, some assumption of liability lasting beyond the instant of the agreement. A promise is an undertaking to act or refrain from acting in a specified way at some future time. This promise may be made in clear and express words, or it could be implied – inferred from conduct or from the circumstances of the transaction. An Instantaneous Exchange = No Contract Where an exchange is entirely instantaneous, and neither party makes any promise to the other, their exchange is not regarded as a contract. A Promissory Exchange = Bilateral Contract If promises exist on both sides after the moment of agreement, then a bilateral contract exists. A Promissory Exchange by Implication = Bilateral Contract It is not always necessary for promises to be stated in express terms. Often, the circumstances of the transaction, the conventions of the marketplace, or the policy of the law imply a promise