CONTRACTS
6 ISSUES
1. Did the parties form an agreement?
a. Offer and Acceptance – no K unless actions/words of traders manifest mutual objective assent bound by terms of agreement. Ambiguity of language or mistake of traders preventing formation of agreement.
2. Is it a K?
a. K is a legal status and needs consideration (bargained for legal detriment on both sides of exchange) and absence of defenses that preclude formation (real defenses).
b. Defenses to enforcement, personal defenses, render obligations of one of the parties voidable
c. Substitute for valuable consideration – promissory estoppel
3. Do terms of K or subsequent actions of parties who formed it confer any rights or duties upon non-traders?
a. Third party beneficiaries – persons whose rights are defined by rights of original K
b. Assignees of rights and delegates of duties – persons who entered picture subsequent to formation of K in consequence of action taken by one of the parties who had formed it
c. Who are the non-traders? Intended, beneficiaries, assignees of rights, delegates of duties
4. Have performance/obligations created by their exchange of promises have become present duties of performance a peril of breach (has K obligations matured)?
a. Time and order promised at stage of forming agreement – use Law of Conditions
i. Express (created by terms used by traders in forming the bargain) ii. Implied in fact – arise by necessary physical inference from what the parties obviously assumed although unspoken iii. Implied at Law – construction condition last measure if parties have not settled matter using Express conditions.
b. Impact upon state of present liability – every condition modifies a promise. Impact on the promises they modify as:
i. Condition does one of 3 things:
1. Condition Precedent - inserts contingency which must be satisfied BEFORE liability on the modified promise will become absolute
2. Condition Concurrent – condition must satisfied simultaneously with maturing liability on the modified promise
3. Condition Subsequent – Express (never implied) insert contingency which will discharge and extinguish that was a present liability
5. Has performance been excused if K matured? Once you use Law of Conditions to fix a Time and Order for performance, check facts if traders performed on time and in order. If no performance, the performance obligations created by K has been excused. Excusable non-performance arise in 3 fact patterns:
a. Performance/obligations objectively impossible – nobody can carry out K
b. Performance/obligations commercially impracticable – cannot perform except by expenditure of funds grossly disproportionate to what parties assumed at formation stage