Contracts: Applicable Law and Vocabulary
- The law of contracts is governed by the Common Law.
- Contracts for the Sale of Goods are governed by Article 2 of the Uniform Commercial Code.
- Goods = movable personal property
- Real property is not covered by Article 2
- Services contracts are not covered by Article 2
- Loans are governed by Common Law
- Watch out for a mixed contract:
- Martha Stewart buys “The Guide to Insider Trading.” The price includes a free class. Article 2 applies. Martha wants the guide—a good.
- House hires a painter to paint his house for $10,000. The contract price includes the paint. Common law applies. It’s a contract for services.
VOCABULARY TO KNOW - Contract – legally enforceable agreement
- Express contract – formed by words (either oral or written)
- Implied contract – formed by conduct
- Quasi-contract – equitable remedy that applies whenever contract law yields an unfair result. Not limited by contract rules, but governed by equitable principles. Designed to protect against unjust enrichment.
- Ben Affleck orally agreed to work for Sony Pictures for 5 years for $20 million per film. After Gigli bombed, Sony Pictures refused to pay Ben for the film. The Statute of Frauds Bars Ben from enforcing the contract. Ben can recover from Sony in quasi-contract because otherwise it would not have been fair. Sony would have gotten Ben’s services for free. Quasi-contract prevents unjust enrichment.
- In quasi-contract, Ben would have recovered reasonable value of the benefit conferred, not the contract price. (Usually less than contract price).
- Bilateral contract – an offer can be accepted in any reasonable way (flexible).
- On bar, every contract is bilateral unless offer says it can be accepted only by performing.
- Unilateral contract – offer accepted only by performing