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Chapter 6 Overview and Formation of Contracts

McGraw-Hill/Irwin

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Written versus Oral Contracts n While the word “contract” is often used to describe a written document, many contracts are not in writing and yet are enforceable.

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Bilateral Contracts versus Unilateral Contracts n A bilateral contract involves two promises and two performances. A unilateral contract involves one promise, followed by one performance, which then triggers a second performance.

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Express Contracts versus Implied Contracts versus Quasi-Contracts n An express contract is created when the parties have expressly agreed on the terms. An implied contract is one in which the agreement is reached by the parties actions. The law permits quasi-contracts to be enforceable where one party suffers losses as a result of another party’s unjust enrichment.

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Valid versus Void Contracts n When a contract has the necessary elements, it is said to be a valid contract. Void contracts are agreements that have not been formed in conformance with the law from the outset of the agreement and, thus, cannot be enforced by either party.

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Voidable versus Unenforceable Contracts n An unenforceable contract is one that meets the elements required by law for an otherwise binding agreement, but is subject to a legal defense. Example-the statutory requirement that certain contracts be in writing in order to be enforceable.

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SOURCES OF CONTRACT LAW n Statutory Law = UCC Common Law = Cases

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State vs Federal n Very little federal contract law q Usually only when contracting with federal government agency

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Almost all contract law is state law q Statutory and Common law

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