Roger Le Roy Miller BUSINESS LAW TODAY COMPREHENSIVE

Roger Le. Roy Miller BUSINESS LAW TODAY COMPREHENSIVE EDITION TEXT & CASES, 11 TH EDITION Copyright. Learning. © 2017 Cengage Copyright © 2017 Cengage All Rights. Learning. Reserved. All Rights Reserved.

Nature and Classification Chapter 10 Chapter Outline • 10 -1 An Overview of Contract Law • 10 -2 Elements of a Contract • 10 -3 Types of Contracts • 10 -4 Quasi Contracts • 10 -5 Interpretation of Contracts Copyright © 2017 Cengage Learning. All Rights Reserved.

Learning Objectives 1. What is a contract? What is the objective theory of contracts? 2. What are the four basic elements necessary to the formation of a valid contract? 3. What is the difference between express and implied contracts? 4. How does a void contract differ from a voidable contract? What is an unenforceable contract? 5. What rules guide the courts in Copyright © 2017 Cengage Learning. All Rights Reserved. interpreting contracts?

10 -1 An Overview of Contract Law � 10 -1 a Sources of Contract Law � 10 -1 b The Function of Contracts � 10 -1 c Definition of a Contract � 10 -1 d The Objective Theory of Contracts Copyright © 2017 Cengage Learning. All Rights Reserved.

Case 10. 1 � Pan Handle Realty, LLC v. Olins (2013) � How did

10 -2 Elements of a Contract � 10 -2 a Requirements of a Valid

10 -2 b Defenses to the Enforceability of a Contract 1. 2. Voluntary consent

10 -3 Types of Contracts � 10 -3 a Contract Formation – Bilateral versus Unilateral Contracts • Bilateral Contracts: promise given in exchange for return promise • Unilateral Contracts: offer can be accepted only by offeree’s performance • Revocation of Offers for Unilateral Contracts – Formal versus Informal Contracts – Express versus Implied Contracts • Requirements for Implied Contracts • Mixed Contracts with Express and Implied Terms – Case Example 10. 5 Uhrhahn Construction & Design, Inc. v. Hopkins (2008) Copyright © 2017 Cengage Learning. All Rights Reserved.

Case 10. 2 � Vukanovich v. Kine (2015) � What did the amount of

10 -3 b Contract Performance � Executed contract: A contract that has been fully performed by both parties. � Executory contract: A contract that has not yet been fully performed. Copyright © 2017 Cengage Learning. All Rights Reserved.

10 -3 c Contract Enforceability – Voidable Contracts: A contract that may be legally avoided at the option of one or both of the parties. – Unenforceable Contracts: A valid contract rendered unenforceable by some statute or law. – Void Contracts: A contract having no legal force or binding effect. Copyright © 2017 Cengage Learning. All Rights Reserved.

10 -4 Quasi Contracts � Case Example 10. 7 Seawest Services Association v. Copenhaver (2012) � 10 -4 a Limitations on Quasi. Contractual Recovery – Case Example 10. 8 Van Zanen v. Qwest Wireless, LLC (2008) � 10 -4 b Exists When an Actual Contract Copyright © 2017 Cengage Learning. All Rights Reserved.

10 -5 Interpretation of Contracts � 10 -5 a Plain Language Laws � 10 -5 b The Plain Meaning Rule – Ambiguity 1. Intent of parties cannot be determined 2. Lacks a provision on disputed issue 3. Term is susceptible to more than one interpretation 4. Uncertainty about a provision – Extrinsic Evidence: evidence not contained in the document itself Copyright © 2017 Cengage Learning. All Rights Reserved.

Spotlight on Columbia Pictures: Case 10. 3 � Wagner v. Columbia Pictures Industries, Inc. (2007) � How might the result in this case have been different if the court had allowed Wagner’s extrinsic evidence of the prior contract regarding Love Song to be used as evidence in this dispute? Copyright © 2017 Cengage Learning. All Rights Reserved.

10 -5 c Other Rules of Interpretation (slide 1 of 2) – Rules the Courts Use 1. 2. 3. 4. 5. 6. Insofar as possible, a reasonable, lawful, and effective meaning will be given to all of a contract’s terms. A contract will be interpreted as a whole. Individual, specific clauses will be considered subordinate to the contract’s general intent. All writings that are a part of the same transaction will be interpreted together. Terms that were the subject of separate negotiation will be given greater consideration than standardized terms and terms that were not negotiated separately. A word will be given its ordinary, commonly accepted meaning, and a technical word or term will be given its technical meaning, unless the parties clearly intended something else. Specific and exact wording will be given greater consideration than general language. Written or typewritten terms prevail over preprinted terms. Copyright © 2017 Cengage Learning. All Rights Reserved.

10 -5 c Other Rules of Interpretation (slide 2 of 2) 7. 8. Because a contract should be drafted in clear and unambiguous language, a party that uses ambiguous expressions is held to be responsible for the ambiguities. Thus, when the language has more than one meaning, it will be interpreted against the party that drafted the contract. Evidence of trade usage, prior dealing, and course of performance may be admitted to clarify the meaning of an ambiguously worded contract. – Express Terms Usually Given Most Weight • Case Example 10. 10 U. S. Bank, N. A. v. Tennessee Farmers Mutual Insurance Co. (2009) Copyright © 2017 Cengage Learning. All Rights Reserved.