Running Head: CONTRACT LAW DISCUSSION

Contract Law Discussion

Lindsay Lohan
University of California Los Angeles

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Abstract

This is a discussion of contract law. It covers the essential elements of contracts, agreement,
acceptance, offer, consideration, and other elements and what constitutes legal versions of them.
It goes over what makes a valid contract. It then looks at all the remedies available in the case of
breach of contract, including monetary damages, and the types of equitable remedies.

CONTRACT LAW DISCUSSION

Contract Law Discussion

The word contract and the word agreement are often used
interchangeably (Cheeseman, 2013, p. 183). Basically contracts are just agreements between
two parties that specify what actions will take place, and what will be exchanged for those
actions. A contract is an exchange of promises with mutual assent that is legally enforceable in
a court of law (Cheeseman, 2013, p. 183). The first part of a contract that is essential to all
contracts is the offer. This falls under the mutual assent portion of the contract. Basically an offer
is when one party offers to another party to sell or lease property or provide services, and there is
always an offeror and an offeree, the offeree is the one who creates the contract by agreeing to
accept the offer (Cheeseman, 2013, p. 184). This is usually fairly basic, and if I offer to sell you
an apple for $5, a contract is created if you say, I accept your offer, and then you are legally
obligated to pay me $5 in exchange for my apple, and I am obligated to give you my apple for
your $5. For an offer to be valid though the offeror must objectively intend to be bound by the
offer, the terms of the offer must be certain, and the offer must be communicated to the offeree
(Cheeseman, 2013, p. 184).
The objective intent is determined by the objective theory of contracts that basically just
says that if any reasonable person reviewed the circumstances of the offer, they would conclude
that the parties entered into a legally binding contract (Cheeseman, 2013, p. 184). To achieve the
necessary certainty the contract has to be made in express terms. This means the contracts terms
must include identification of the parties involved in the contract, identification of the subject
matter and quantity, consideration to be paid, and time of performance at a bare minimum,
though more complex terms can be added in as well (Cheeseman, 2013, p. 184). The offer must
then actually be presented to the offeree, you cannot just write down and offer to someone on a

CONTRACT LAW DISCUSSION

piece of paper and file it away in your drawer without them ever seeing it, as it will simply be a
void contract. This is because acceptance is an essential component of every contract, and is
defined as a manifestation by the offeree to the terms of the offer in a manner invited or
required by the offer as measure by the objective theory of contracts (Cheeseman, 2013, p. 191).
Acceptance must be unequivocal, i.e. clear and unambiguous, and the acceptance must be
precisely of the terms stated in the contract under the mirror image rule (Cheeseman, 2013, p.
191). Offerors cannot say that silence will constitute acceptance of contracts as a sneaky way of
getting people to accept them either since an unequivocal response is always necessary to create
a valid contract.
In general, contracts need to be made in writing (Cheeseman, 2013, p. 170). In addition
to agreement, and acceptance, contracts also require consideration to be valid. Consideration is
something of legal value given in exchange for a promise (Cheeseman, 2013, p. 197).
Consideration includes money, personal property, real property, provision of services, and
other things that are legally sufficient to support the promises that the contract bargains for
(Cheeseman, 2013, p. 170). Contracts also require that parties have contractual capacity to enter
into the contract, i.e. minors lack contractual capacity to purchase alcohol, and the contract must
have a lawful object, i.e. contract that try to bargain for sex would not have a legal object in the
United States (Cheeseman, 2013, p. 170). Consideration cannot be about illegal acts/objects, nor
can it be illusory, i.e. either party in the contract can decide not to perform its promise), and the
promised action cannot be a preexisting duty, i.e. something a party is already under obligation to
perform (Cheeseman, 2013, pg. 200-201).
In case of breach the non-breaching party may be able to get the court to enforce a
contract that lacks consideration via a court-applied measure of promissory estoppel if they were

CONTRACT LAW DISCUSSION

relying on the promise and ended up being damaged due to the non-performance of the party,
despite the fact that there was no legal consideration in the contract (Cheeseman, 2013, p. 203).
The most common remedy is the award of monetary damages, called law remedy,
which may take the form of compensatory, consequential, liquidated, or nominal damages;
besides monetary damages there are also equitable remedies, specific performances,
reformations, and injunctions at the disposal of courts (Cheeseman, 2013, p. 265). Monetary
damages are available whether the breach of contract was minor, or material and usually are
recovered in the amount the contract stipulates was to be paid, and which the non-breaching
party has already paid, or is obligated to pay at the point of breach; compensatory damages may
be awarded based on loss incurred due to non-performance, consequential damages are paid only
when the breaching party could have reasonably foreseen the consequences of the breach, and
nominal damages are just to make a point that the contract was breached (Cheeseman, 2013, p.
265-272). Parties can agree in advance on the damages paid out in the event of breach of the
contract, and these are called liquidated damages (Cheeseman, 2013, p. 272). Finally courts also
offer rescission, i.e. undo a contract, in cases of material breach, fraud, duress, undue influence,
or mistake, and restitution, i.e. the return of goods or property received from the other party, a
cash equivalent to the goods or property must be made if the goods or property are unavailable
(Cheeseman, 2013, p. 274). Equitable remedies are also available where breaches cannot be
adequately compensated through legal remedies, or if the court deems it necessary to stop unjust
enrichment including specific performance: forcing performance of the contract; reformation: the
court rewrites the contract; and injunction: the court prohibits a person from taking a certain
action (Cheeseman, 2013, p. 275-276). This exhausts the remedies available in case of breach of
contract, but it is a long list, so breaching contracts is not a good idea.

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References

Cheeseman, Henry R.. Business Law, VitalSource for DeVry University, 8th Edition.
Pearson Learning Solutions, 2013. VitalBook file.