Study guide: Contract Law

📋 Course Outline

1. Illegal Bargains and Public Policy
2. Contractual Capacity
3. Written Contracts and Evidence
4. Performance, Breach, and Discharge
5. Contract Remedies and Damages

📖 1. Illegal Bargains and Public Policy

★ Must-know

• Courts will not hear a case based on an illegal bargain that violates a statute or public policy.

• The public-policy violations identified include:

  • restraints of trade
  • exculpatory clauses
  • unconscionable contracts

Further detail

• The statutory violations identified are:

  • licensing statutes
  • gambling statutes
  • usury statutes
  • Sunday statutes or blue laws

• Licensing statutes regulate licensed occupations such as certified public accountants, engineers, and medical doctors.

• Sunday statutes or blue laws prohibit commercial business on Sunday.

📌 A restraint-of-trade restriction in a sale of a business may address time and area, while an employment restriction may address competition during or after employment, customer lists, or trade secrets.

💡 Memory Hook

A statutory violation breaks a written legal limit; a public-policy violation conflicts with a broader public interest.

📖 2. Contractual Capacity

🔑 Key Concepts & Definitions

• Minor: A person below the age of majority, which is 18 or 21 depending on the state.

★ Must-know

• The three groups are:

  • minors
  • incompetent persons
  • intoxicated persons

• A minor may disaffirm a contract while still a minor or within a reasonable time after reaching majority, provided the minor has not ratified or affirmed the contract.

• A minor cannot disaffirm a contract for necessaries actually furnished and used or consumed, but may owe their reasonable value if it is less than the contract price.

• A contract made by a person under guardianship is void, a contract made by a person with mental illness or defect is voidable, and a contract made by an intoxicated person is voidable but may be ratified when the person becomes sober.

Further detail

• A minor who disaffirms must return the property received, in whatever condition it is in, for a full refund.

📌 A minor who misrepresents their age may still disaffirm but is responsible for damage to the property.

📖 3. Written Contracts and Evidence

🔑 Key Concepts & Definitions

• Statute of Frauds: An enforcement mechanism, not a prevention mechanism, that applies to specified categories of contracts.

★ Must-know

• The listed Statute of Frauds categories are: suretyship promises, an executor's or administrator's personal promise to answer for a decedent, agreements made in consideration of marriage, transfers of interests in land, agreements not performable within one year, agreements for the sale of goods under the Uniform Commercial Code

📌 A contract within the Statute of Frauds must specify the parties, the subject matter and essential terms, and be signed by the party to be charged; both parties need not sign.

📌 The parol evidence rule applies to all written contracts and excludes oral agreements that would change their terms.

Further detail

📌 The main-purpose doctrine is an exception to the suretyship category of the Statute of Frauds.

• For an employment agreement, the one-year period runs from the date of hiring, not from the beginning of performance.

• Courts interpret contracts in accordance with the parties' intent.

📖 4. Performance, Breach, and Discharge

★ Must-know

• Concurrent conditions are the most common conditions, and closing commonly involves concurrent delivery of the deed and payment.

📌 A condition precedent must occur before a duty of performance arises, while a condition subsequent discharges a duty after it has arisen.

• A contract may be discharged by performance, breach, agreement of the parties, or operation of law.

Further detail

• A mortgage commitment is an example of a condition precedent.

• An express condition makes performance depend on the stated condition, while satisfaction clauses may require subjective or objective satisfaction.

• The listed grounds are:

  • impossibility
  • destruction of the subject matter
  • subsequent illegality

💡 Memory Hook

A contract moves from conditions to performance, then may end through breach, agreement, or operation of law.

📖 5. Contract Remedies and Damages

🔑 Key Concepts & Definitions

• Compensatory Damages: Place the injured party in the position they would have occupied had there been no breach.
• Liquidated Damages: Damages that the parties agree in advance will be payable if the contract is breached.

★ Must-know

• The equitable remedies listed are:
  • specific performance
  • injunctions
  • restitution

Further detail

• Compensatory damages may include:
  • loss of value
  • incidental damages
  • consequential damages

📌 Punitive damages are rarely awarded and are intended to punish malicious conduct rather than compensate the injured party.

📌 Foreseeability limits recoverable damages, and mitigation requires an injured party who is fired to try to find another job.

💡 Memory Hook

Damages compensate with money; equitable remedies act on the parties or restore what they gave.

📊 Synthesis Tables

Contractual Capacity Outcomes

Contract Remedy Types