Contracts and legal agreements overview

Contracts

Chapter 1 introduces the general notion of a contractual agreement by underlining the relationship between promise and consideration, in terms of making such a relation enforceable. According to the introduction to chapter 1, a promise becomes enforceable if there is such a consideration, namely a benefit received by the promisor or a detriment of the promisee.

While a bargain is an exchange of promises or acts, the second part of the chapter on consideration deals with the general approach to bargains (as a general rule, most bargains constitute considerations) and with the exceptional cases when bargains are not consideration.

Such exceptions include nominal consideration (a situation when the consideration does not really reflect the actual contractual situation: paying too little for a higher value, for example), promises to surrender or forbear from asserting a legal claim (which can be deemed consideration, but only if it is honest or reasonable. In some situations, depending on the authorities, a written release is sufficient, without the honesty clause) or illusory promises (in which one of the parties makes an illusory promise, while the other party makes a real promise. In this case, none of the parties is bound to the bargain). Chapter 1 also discusses the legal duty rule as another exception.

For a bilateral contract to exist and function, the parties involved in it need to exchange a promise for a promise, which means that the contract requires the mutuality of obligation (referred to as the mutuality rule). There are certain exceptions to that rule as well, which are detailed subsequently in the chapter: unilateral contracts, limited promises, voidable, conditional or alternative promises, requirement and output contracts or agreements to allow one party to supply a material term.

Chapter 1 continues to detail some of the relevant elements of contracts, including notion such as accord and satisfaction or the waiver (as always detailed, the chapter continues to explain the situations when the waiver is enforceable and when it can be retracted). The last parts of the chapter deal with unrelied and relied-upon donative promises and with moral and past consideration.

Chapter 2 presents the notion of mutual assent as the fundamental of a contractual relationship. According to this notion, the contract takes place and is formed by the mutual assent of the party. The writers propose the objective theory of contracts, by which the fact whether there is a mutual assent between parties can be decided through the judgment and understanding of a third reasonable person, when the case is presented to that contract. Some particular contracts are the express contracts, described as contract where the mutual assent is expressed in words of agreement, and implied contracts (both in fact and in law).

The chapter continues to discuss in detail the two actions that need to be concluded in order for a mutual assent to take place: offer and acceptance. As the book clearly mentions, the offer "creates a power of acceptance," which means that once the firm offer is made, the contract can be concluded through the acceptance of the offeree (binding the offeror). This part of the chapter explains the elements that make up an offer and points out to the rules that are used in special situations, such as advertisements or offering circulars. The power of acceptance is considered to be terminated in several different cases, including when the offer has expired, when it has been rejected by the offeree, when there is a counteroffer or when there is a conditional acceptance of the offer. All these situations are amply discussed and described in the chapter.

Following the part detailing particularities of the offer, chapter 2 moves on to analyze the perspective of the accepting side. The promise mandatory rule is introduced as the general rule, meaning that an offer can be accepted only by a promise (promissory acceptance). Chapter 2 explains the particularities of the acceptance offer in the case of a unilateral contract and the differences that appear between this type of contract and a bilateral one. The chapter also deals with certain cases when silence does denote the acceptance of the contract.

Once the acceptance is concluded, the chapter presents the conclusions as to when the contract can be considered to be effective and when the rights and obligations deriving henceforth start. As a general rule, the contract is considered to be effective on the dispatch of the acceptance. The last two parts of the chapter are concerned with the interpretation of the contract and the parol evidence rule.

Regarding the interpretation, the approach that the book takes is similar to other chapters: the general rule is presented and exceptions are addressed after that. This is also used in the paragraphs referring to the parol evidence and to the rules and exceptions that govern its application.

Chapter 3 discusses defenses, namely those situations and conditions in which an agreement may not be enforced by the authority. The general rule presents the terms that are required for that to occur: there are incomplete terms or the terms cannot be determined with reasonable certainty. The chapter notes, both in the introductory paragraphs and in a specific section dealing with the U.C.C. provisions, that a contract does not become invalid if some terms were omitted, if the parties clearly wanted to conclude a contract. In such cases, the court can fill these gaps by implication.

The chapter continues to detail some of the omissions that can occur and the ways that the court can fill these gaps by implication (according to a specific framework). Some of the most important ones include the omission of price or time for performance in a contract. In terms of the former, while many of the contracts in the present day lack this element (most likely due to confidentiality issues), a reasonable price can be estimated by the court and used as the implied price. Similarly, a reasonable time for performance can also be implied by the court.

Another situation where a defense is possible is in the case of a mistake. There are several types of mistakes described in this subchapter, the most important ones being the mutual mistake and the unilateral mistake. In the case of the mutual mistake, other than the fact that both parties entered the contract under a mistake, one should also mention the fact that the mistake needs to have a material effect on the contract for it to be voidable.

In the case of a unilateral mistake, one of the parties made a mechanical error when entering the contract. As usual, the book goes into minute details to describe the different categories that can appear in each case, depending on whether the other party was aware of the mistake (in the case of a unilateral mistake) etc. The subchapter is completed with several other types of mistakes that can be used as defenses, including mistranscription, misunderstanding or mistakes that were induced by communication problems when an intermediary was involved.

The chapter continues to detail situations where misrepresentation, nondisclosure, duress or undue influence can represent proper defenses in contractual relations. Each of these particular situations are detailed before the chapter moves on to uncoscionability, statute of frauds and lack of contractual capacity. The latter includes three different situations when a contract is voidable: if a minor, a person lacking full mental capacity or a person who has been drugged or drunken are parties to the contractual relation. Finally, the chapter ends with a final situation when the contract can be voidable: when the contract is illegal.

Chapter 4 deals with third-party rights and obligations. The general framework of this case is described in the very beginning of the chapter: one can discuss third-party rights and obligations when the contractual agreement between two parties benefits a third party. As a general rule, the respective third-party beneficiary cannot enforce the contract on the other two parties, but in modern practice, this is not often the case. Usually, it is in cases when the third-party beneficiary is a creditor or a donee that he or she can sue, and not when the beneficiary is incidental. The chapter continues detailing particular situations, such as government contracts or subcontractor vs. prime contractors contractual relations where one of the third-party beneficiaries could sue. At the same time, the chapter does a good job of mentioning what some of the defenses that the promisor can use against the beneficiary.

The second part of the chapter deals with the assignment of rights and delegation of duties. This is an ample subchapter that starts with the basic nature of an assignment and continues to discuss how rights are assigned and other issues regarding assignments of rights, including general requirements for effective assignment, effectiveness of assignments of future rights and wage assignments.

Chapter 5 refers to the performance and breach of contracts and what the parties can do in the respective situations. The bottom line, fundamental rule of contract performance is that each party has an obligation to perform the contract in good faith. All other issues are derived from this rule. Many of the modern contracts have express conditions, which are explicit contractual provisions that the parties need to abide by. The related elements that this incurs are detailed in the subchapter referring to express conditions. An interesting element of contract performances is those particular contracts that are divisible. In those cases, the parties' performance can be apportioned into pairs of matching or corresponding parts.

The part of this chapter discussing breaches of contracts starts with a classification of breaches into material and minor breaches, with each of the two being discussed in detail. Anticipatory breach is referred to and is defined and categorized in another part of the chapter.

Chapter 6 discusses general remedies for contracts and starts with basic measures that can be undertaken. The damage measures are described as being determined either based on the expectation of damages, or as restitutionary and reliance damages -- all three are instruments through which the courts can decide what the person who has suffered through the breach of contract can receive.

Logically, the chapter continues to detail the situations where the expectation damages are limited and to show what these limits are and how they are determined. The principle listed in Hadley vs. Baxendale is the basis for such limitations and mentions the conditions in which the damages can be recovered by the party injured by the breach of contract. The chapter further discusses how the expectation damages are reached in particular cases, such as the sale of goods (the book is as detailed as ever, determining what the damages are both in the case of a breach by the seller and in the situation when it is the buyer who breaches the contract), the sale of realty (again with the specificities of being on the buyer or the seller side) or employment contracts.

Much of the rest of chapter 6 refers to particular categories of damages, including nominal damages, liquidated damages, punitive and restitutionary damages or damages for emotional distress. The chapter is very detailed and includes all relevant information on the issue at hand, almost as if the writers are keen to cover all the particular elements of a situation and to ensure that nothing is left out.

Essay

The Gilbert Law Summaries on Contracts is much on the line of what the other books in the series have accustomed the readers with. This means a very well structured textbook, with an in-detail approach aimed at both discussing the most important elements in contracts (and in contractual agreements) and providing an analysis of the many exceptions that appear in particular situations.

Each chapter starts with a general chapter approach part in which the authors point out to some of the most important ideas that will be used in the chapter. The objective of this part is to provide the reader a presentation of the framework of the chapter. For the reader, this is useful, mainly because it is one of the competitive advantages of the Gilbert Law Summaries and, on the same lines, of the Contracts book as well: the capacity to synthesize information and to allow the reader to see almost an entire chapter through one glance.

In all worthiness, some of the chapter approach frameworks may be oversynthetic to remain useful, unless the reader has some previous knowledge of the respective notions. For example, the first chapter deals with the notion of consideration and, while the subchapters are clear enough in terms of meaning and application (bargain promises, accord and satisfaction and waiver), the last subchapters denote purely legal notions. This is in no way a potential problem: the reader can switch from one subchapter to the other and quickly jump to the section that requires further understanding, which is always useful.

Subsequently, some of the other chapters contain an introduction, which outlays the main elements of definition and consideration. The first chapter is again a useful one to exemplify this matter of fact. The topic of the chapter is consideration, so the chapter describes, in the beginning, the importance of consideration in the contractual relations (going through this first chapter, this becomes quite obvious) and subsequently moves on to define the notion of consideration through several different approaches, including the benefit/detriment approach and the bargain approach. As usual, each definition/approach in part is clearly defined, then commented and exemplified.

Despite the comment related to the oversynthetism of some of the chapters, most of the book is very solid in terms of the information that is offered. One of the things that is particularly useful are the numerous examples of the different situations, exceptions or simple legal observations mentioned throughout the book. For a student and a reader alike, it is usually much simpler to understand a particular legal issue if this is transposed into practice and everyday life. The examples abound, but one such case is on page 27 of the book, where some exceptions to the rules regarding the performance of preexisting contractual duty for increased payment are described. In term of the situation where there is promise of a different performance, the example comes to show how this occurs in the case of a builder vs. owner situation (another great thing about the examples is that they are so reflective of what is going on in our everyday lives). Then, each of the other exceptions is completed with great, reflective examples.