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					          Today’s Lecture:




                Contracts




Session


  12
                 Getting Perspective

1. We’ve just finished Part I of the course
      • contracts        (agreements)
2. Part II begins our next concern: “common legal transactions”
       • torts
   -- basic kinds of lawsuits and claims that lawyers file
                        (injuries)
   -- will learn the basic substantive rules for these lawsuits
      • what kind of (divorce, custody, etc.)
   and family law norms surround their filing and prosecution
   -- I •picked these “Black-letter law” upon two criteria: my
                      legal subjects & detection
          criminal law/ (deviance based
   own legal experience and the first-year law school
        procedure        of)
   curriculum that many schools utilize
3. Four basic first year subjects taught in law school:
                 Getting Perspective

4. Approximately 2 or 3 lectures per topic (usually 3)
5. Warning: don’t apply this in your life
   -- these are only “black letter” rules; actual legal problems
   involve more complication and variation within states
   -- not trying to give you a law school class; trying to show
   you a little bit of law so we can conceptualize the system
   and think about the type of behavior that exists
   -- always, my aims are philosophical
              Outline of the Contracts Lectures

1. The contracts presentation will take the following form:
   A. Intro    What is the subject all about
   B. Prerequisites What you need to be contract-eligible
   C. Formation      How to form a contract (“elements”)
   D. Defense    How to defeat formation
   E. Excuse How to excuse the obligation (performance)
   F. Contracts by “operation of law”
   G. The Primacy Court-imposed contracts (“fictitious K”)
                  of the Writing
   H. Remedies that make written terms superior to others
       Doctrines                  “Things you get for breach”
   I. “Political Significance of”    “The big picture”
               Introduction to Contracts

1. Some basic observations:
   -- you instinctively have some idea about contracts (e.g.,
   you know something about entering a rental lease)
   -- but you don’t realize how prevalent they really are. You
   frequently enter contractual relations and do not realize it
                                       Question:
2. Let’s consider a rather big question:
                              Is it immoral to breach a
                                      contract?
Everyone
 Votes!
           1.   Yes, of course it is, silly.   0
           2.   Hell no. Business is           0
                business.
immoral to
 breach?
             0
             0
             0
              Introduction to Contracts

3. According to the rules of contract law, the answer seems to
be that “contracts are about business, not morality”
   -- “remedy centric perspective”
   -- it is efficient to breach “bad” contracts so that true market
   rates can prevail
       • e.g., athlete holding out
       • e.g., Superbowl during the year of 9/11 (Superdome
       and the threat to be played in New York)
   -- keep in mind this is not me saying this as though it were a
   philosophy; it is what the rules of contract breach
   themselves say. (you will see this soon)
               Introduction to Contracts

4. American law has the following hierarchy of legality:
   (a) criminal laws (most severe in terms of breach)
                 Involves issues of important of breach)
   (b) injury (tort) laws (can be severe in termssocial
                       deviance and morality
   (c) property law (you break it, you buy it)
                       Also concern morality
   (d) contracts (breach is sometimes encouraged!)
                  Restitution sort of concept
        Seem mostly to concern efficiency and optimality
               Introduction to Contracts

5. Function of contracts
                       • goods
    (a) exchange
                       • services
    (b) association        • partnership
                       • real estate
6. Kinds of formation      • marriage
                       • insurance
    (a) express       Verbal or written assent
                          etc
                       •Assent comes through behavior,
    (b) implied            “Fictitious contract.” Court imposes a
                                    not “talking”
                               contract on parties in order to
                                     Quasi-contracts
    (c) operation of law     prevent unfairness. These are not
                                   Equitable contractsall.
                                    really “contracts” at
               Introduction to Contracts

5. Basic structure for formation
   -- you need to pass all the “hurdles”
                  Contract Hurdles




Prerequisites   Assent       No Defense       No Excuse

                                  Something
     You have to pass all of the hurdles to haveSomething
                                                 a
     Things you “meeting
     need to be of     obligation that
     contractual legalthe                       that excuses
                                  negates
     eligible to   minds”                       performance
                                  assent
     form Ks                                        Time
                        Prerequisites

1. Things that are needed for someone to be eligible to enter a
contract
 Capacity
   -- 18 years old [or emancipated – explain]
   -- not intoxicated
   -- exception: “necessities”      David Cassidy and the
                                      Partridge Family
                    Prerequisites


Subject Matter
   -- you have to have legally permissible terms
   (you are not allowed to form contract about anything you
   like)

                                     Question:
                             Can anyone give me an
                                example of this?
immoral to
 breach?
             0
             0
             0
                    Prerequisites


Subject Matter
   -- you have to have legally permissible terms
   (you are not allowed to form contract about anything you
   like)
   -- three kinds of impermissible terms:
      (a) violates “the law” (e.g., gambling)
      (b) violates “strong public policy” (child support contract)
      (c) is not “unconscionable”
                                    Steppenwolf example
    1. oppressive and unfair after the fact!
              Does not mean
                   [explain formation
    2. since the date of thecapitalism] of the contract
                   Prerequisites                  Time



In Writing?
 -- The statute of frauds
                    Examples:
 -- certain kinds of contracts require writings (meaning they
                1.
 cannot be oral): buying a computer
     (a) real estate “verbal lease” be in writing
                  2.          K must
                                and signed
     (b) marriage
            3. pre-nuptial agreement
     (c) sale of goods greater than $500
      4. Giving the “rock” to your girlfriend
     (d) where the duration must last longer than a year
                                          • payment?
 Exception: “part-performance”           • possession?
 -- something that shows that contract performance is
                                         • improvements?
 underway (which obviates the concern for fraud)
                         Assent

1. In order to have a contract, you have to have a “meeting of
the minds” (or at least that is the theory)
2. Will consist of three basic things:

  Offer
   -- any communication that reasonably gives the power of
   acceptance                      Advertising?
   (explain “power of acceptance”)
   -- note: counteroffers destroy the offer (power of
   acceptance)
                      Assent


Acceptance
  -- objective manifestation of assent communicated the right
  way
  (can’t be a counteroffer)

     Non-audible behavior
                                    Question:
                               Let’s play a language
                               game: Is a contract a
                                        gift?
is a contract a
      gift?
                  0
                  0
                  0
                       Assent


Consideration
   (a) mutual exchange of detriment
   (b) bargained for
   (c) creating mutual (reciprocal) obligations
   -- simply means the K cannot be a gift
   -- idea: I promise to give you something; you promise to
   give me something
   (doesn’t mean you can’t create a legal gift; it means they
   are their own legal subject – gratuitous transfers)
                                                     Time
                    Capacity
• Prerequisites
                    Subject Matter
                    Statute of Frauds

• “Assent”        Offer
                  Acceptance
                  Consideration
• No defense



• No excuse

                                        Time
                         Defenses

1. Things that, if true, will negate or nullify the contractual
formation
2. These things will be listed in a linear progression, so that
each one gets progressively worse (one exception)
3. Let’s take a look …
Mutual Mistake
                 Example:
                 “Fugazi” (Louie selling “diamels”)

                 (1) both parties are mistaken
                 (2) about a material assumption
Mutual Mistake   in the K
                     Example:
                     Used car was a wrecked police
                     car
                     (must be a       fact   not   an
                     assumption!)


                     (1) one party is mistaken about a
                     fact in the K
Unilateral Mistake   (2) which the other party knows
                     about and keeps quiet

Mutual Mistake
                     (1) reasonable reliance
                     (2) upon a material fact
Misrepresentation
                     (3) which has been innocently
                     misrepresented
Unilateral Mistake   Example:
                     Same facts as before, only the
Mutual Mistake       secretary explicitly says it has
                     never been wrecked
                     (1) any reliance
                     (2) upon a fact
                     (3) that is fraudulently
  Fraud in the       misrepresented
  Inducement
                     Example:

Misrepresentation    Running the odometer
                     backward.

Unilateral Mistake


Mutual Mistake
                     -- “switched document” fraud
 Fraud in factum
                     Example:
  Fraud in the
                     Tricking someone into signing
  Inducement
                     a document so they don’t
                     realize what it really is
Misrepresentation


Unilateral Mistake


Mutual Mistake
Personal Duress
                       … e.g., gun to the head
                     Note:
 Fraud in factum
                      Example:
                     difference between a K defense
                      Sign or I’ll break (torts, crimes)
                     and other causes your knuckles
  Fraud in the
  Inducement
                     Note:
                     Each defense becomes
Misrepresentation
                     progressively worse.

                     Note:
Unilateral Mistake
                     There is one defense left which
                     does not fit into this orderly
Mutual Mistake       progression …
Personal Duress      Example:
                     A landlord who employs you
 Fraud in factum


  Fraud in the               Economic Duress
  Inducement


Misrepresentation
                     -- extremely rare
                     1. a party takes advantage of
Unilateral Mistake   an economic situation
                     2. which he/she caused to
                     exist!
Mutual Mistake                           Time
                            Excuses

1. These are different from defenses
   -- Defenses negate assent (nullify assent)
   -- Excuses do not do this; they merely excuse performance
   even though valid assent still exists!
2. They also have an orderly structure to them
   -- let’s take a look …
Modification
               The parties agree to excuse the
               K performance

Modification   (another K takes away       the
               previous responsibility!)
                Example:
                -- prohibition
                -- painting the inside walls of the
                twin towers on 9/12


Impossibility   -- performance cannot literally
                occur


Modification
                   Example:
                   -- Painting the curb yellow or
                   installing a new traffic light at the
                   intersection of the World Trade
                   Centers after 9/11.

                   (1) an event that is unassumed,
Impracticability   severe and unforeseen
                   (2) makes it unreasonable for the
                   parties to perform
 Impossibility



 Modification
                   (1) an unforeseen event destroys
                   or eliminates the purpose of the
                   K
 Frustration
                   (2) both parties knew of the
                   purpose at the time of K

Impracticability
                   Example:
                   -- Planting trees to beautify the
 Impossibility     Trade Center entrances after
                   9/11.


 Modification
Putting it all together               Capacity
                                      Subject Matter
• Prerequisites
                                      Statute of Frauds

                          Offer
 • “Assent”               Acceptance             Mutual mistake

                          Consideration          Unilateral mistake
                                                 Misrepresentation
• No defense
                                                 Fraud (I) & (II)

                           Modification          Duress (I) & (II)

• No excuse                Impossibility
                           Impracticability                    Time
                           Frustration
             Contracts by Operation of Law

1. These are not real Ks; they are a fictitious contractual
arrangement imposed by courts to avoid unfairness
2. whenever a contract fails for some technical reason –-
excuses, defenses, prerequisites, etc., -- and you are “injured”
                         Example: a landlord’s oral promise
by the failure, you can ask the Court to impose a fictitious
                         to hold a lease for you. You
contractual relationship to repair the injury
                        terminate your other lease and put
                        two situations
3. generally imposed in money down on your U Haul. The
 Tricky Utterance       next day she changes her mind.
   -- Reasonably foreseeable reliance
   -- upon an utterance to your detriment
           Contracts by Operation of Law


Lost Money
  -- You lose money under the auspices of a K relationship,
  but find out that no enforceable K exists
  -- The Court will impose a fictitious K in order to award you
  restitution ONLY

 Example: prohibition.
  -- Also, there is something called “quantum meruit”
  -- The reasonable value of the services rendered when a
  contract is cancelled
 Example: firing an attorney the day before settlement
 or trial
extent), etc.
 -- In this sense, rules serve the same function ideologically that
 tradition did during the classical/agrarian period.
 -- it is much easier to believe in “neutral judging” when rules
 already support your viewpoint
                                        Several views about this

Viewpoint #2:      Positivism Lies
 -- Positivism doesn’t eliminate ideology, it just hides it
 -- The reason is that the judges who want to let legality rule do
 so because the interest clientele that they favor tend to
 dominate those institutions:
                                              Question:
     (e.g., realists liked legislatures because they liked
     progressivism and FDR-type politics) do you make of
                                    What
     Conservatives like rules because it this argument?
                                         locks out certain
     constituencies – gays, African Americans, women (to some
     extent), etc.
 -- In this sense, rules serve the same function ideologically that
 tradition did during the classical/agrarian period.
 -- it is much easier to believe in “neutral judging” when rules
 already support your viewpoint
What’s wrong
    with
positivism, if   0
 anything?       0
                 0
                                            Several views about this

Viewpoint #3:       Positivism commits a fallacy
 -- In making the case for judging as reading, positivism
 commits a fallacy
 -- It is called “The fallacy of repair:”
 -- If the rule is fundamentally wrong, illogical or nonsensical, it
 makes no sense to argue that only the legislature can fix it.
 Why?
 Because the same labor it takes to fix the rule can be
 undertaken to fix a bad judicial decision if the Court happens to
 get it wrong.
 It’s the same labor either way!
                                    Several views about this

Viewpoint #3:    Positivism commits a fallacy

                                     Legislature either has no
      Option 1
                                     labor to perform whatsoever
         Fix a bad rule              or has to fix a rule (the
                                     Court’s rule)


      Option 2                       Legislature has to fix a bad
                                     rule
        Don’t fix a bad rule

   (Notice that this only works so long as we all agree
   the rule is problematic. E.g., Riggs and Neal?)
        Basic Idea


       Purpose, Context


              Rule




       Then it is derogates the Judge, because
       If the rule the duty of from its purpose or
       context is judge, to reformulate it, so that it
       he/she because of neglect, changed
       is intelligent and purposeful again
       circumstances, etc. …

Time
Cultural Background and
      Perspective
             Why Positivism Developed


Getting Perspective

  positivism and the administrative state
 -- It is important to understand positivism in its appropriate
 cultural/historical context
 -- people who study philosophy in a way that is
 unconnected to history do not properly understand it
 -- positivism is nothing more than the re-invention of early
 versions of formalism, only in a post-agrarian world that
 developed vigorous institutions. (let me explain)
             Why Positivism Developed


Getting Perspective

  positivism and the administrative state

   “Penn and Quill” Government
 -- America through much of the 1800s did not have
 vigorous governing institutions
 -- For many years, legislators met part time
 -- there were not endless volumes and volumes of statutory
 law; large programmatic government programs, etc.
 -- for a while, courts played a larger role in the regulation of
 society than legislatures via the common law.
             Why Positivism Developed


Getting Perspective

  positivism and the administrative state

   “Penn and Quill” Government

                                    Common have
 -- America through much of the 1800s did not Law:
 vigorous governing institutions    • Crimes
                                      • time
 -- For many years, legislators met partProcedure
                                    • Divorce
 -- there were not endless volumes and volumes of statutory
 law; large programmatic government programs, etc.
                                    • Torts (injuries)
                                        • Property
 -- for a while, courts played a larger role in the regulation of
 society than legislatures via the common law.
                                        • Contracts
             Why Positivism Developed


Getting Perspective

  positivism and the administrative state

   The arrival of the administrative state
 -- Over time, legislatures began to take over the regulation
 of common law subjects (and of everything else)
 -- full time legislatures develop. Committee systems
 develop. Positive law becomes more voluminous
 -- then, bureaucratization arrives.
 -- all of these government entities producing laws and
 regulations. All of this positive law is growing & growing.
              On the Proliferation of Positive law:


       Executive                                      Courts
                           Legislature
        Branch



                                     Administrative
executive orders                         Agencies

                   statutes                              precedent
                                      rules

Four entities that birth some form of legality (positive law)
   New                  “Statutification”     “hyperlexis”
   Terminology:
                         My favorite: LEGALISM
             Why Positivism Developed


Getting Perspective

  positivism and the administrative state

   The arrival of the administrative state
 -- Here is the basic point (extremely important):
 -- When America’s legal regime was agrarian, and Courts
 were doing more of the job of societal regulation, it was
 natural for the regime ideology to be in the classical form.
 (compare: divine right of kings)
 -- courts as social organizations had to legitimize their
 orthodoxy.
             Why Positivism Developed


Getting Perspective

  positivism and the administrative state

   The arrival of the administrative state
 -- In the new world with the arrival of modern, active
 government, a new regime ideology had to develop about
 who was the regulatory boss
 -- Hence, as state building and positive law grows, you see
 a culture that changes the explanation of its legal
 orthodoxy.
 -- law is no longer an a prior craft, or a craft that invents
 rules, it is a craft for IMPLEMENTING them
 Early American History               Modern American History


 Predominately agrarian society     Industrial, post-industrial

                                    Vigorous administrative state
 No real administrative state

Courts play a larger role in rule   Legislatures and bureaucracies
creation                            write the rules



 Regime that rationalizes the       Regime that rationalizes the
 Court’s ability to INVENT          Court’s role as an
 solutions                          ADMINISTRATOR of rules
                                    (doing some else’s bidding)
 Classical Orthodoxy
                                     Hence, Positivism
              Why Positivism Developed


Getting Perspective

 Positivistic culture (i.e.,legalism)
 -- one of the questions that must be asked is whether the
 active, administrative state has any (or should have)
 limitations in what it does to culture
 … for example
              On the Proliferation of Positive law:
   The Domination of Legality in American Society:
   1. What is a fumble in football?
       -- Do you need a Legislatureto tell you?Courts
        Executive       specialist
        Branch
   2. How do we pick a college football champ?
       -- A formula? A rule? A machine?
                               Administrative
   3. The federal sentencing “guidelines”
                                  Agencies
           -- Calculating punishment is like doing your
executive orders
          taxes? (explained later)
                 statutes                             precedent
   4. Codes for making war           rules

   New -- Is war no longer a circumstantial activity?
                    “Statutification”  “hyperlexis”
   Terminology:
                      My favorite: LEGALISM
               On the Proliferation of Positive law:

    The Domination of Legality in American Society:
    1. What is a fumble in football?
        Executive                              Courts
                        Legislature to tell you?
        -- Do you need a specialist
          Branch
    2. How do we pick a college football champ?
           American Legal Culture:
        -- A formula? A rule? A machine?
                                   Administrative
          We live in a world where law is rules and politics is
                                  “guidelines”
    3. The federal sentencing way we think of it. That if a
          discretion. This is the    Agencies
          ruleCalculating is law and if is like it is politics.
            -- is
executive orders obeyed, itpunishment it is not doing your
                                               Question:
            taxes? (explained later)
                                      that this is only the precedent
                                                            product
         I want to suggest to you Is it possible to have too much
                     statutes            rules
         of the times in which        live. also want to suggest
    4. Codes for making war we law? IIs it possible to have too
                  that it is nothing but a
   New to youwar no “Statutification” cultural fad. Discretion
                                                 many rules?
                                                “hyperlexis”
                            longer a circumstantial activity?
           -- Is not be “outside of law” if it is principled.
         need
   Terminology:
                             My
         (Dworkinian idea). favorite: LEGALISM
Language Determinacy
          Issues Regarding Legal Language


Important Point
Positivism is trying to tell us to just follow the words of law. Just
read. Don’t think.
but consider this …
        The new advertisement for judging

• Gods will?
       • Sacred Traditions, Customs?

          • Reason/Nature
                    • Logic?

                       • Science?


                     Law = words
                  Judging = reading
              The New Humpty



                                 Question:
                                Question:
                                 Question:
                                Question:
                            How Question: to
                                 is this going
                             What is cruel and
                              Are campaign
                           work is does the 9th
                                     reasonable
                          What foraconstitutional
                             What punishment?”
                          unusual
                           donations “speech?”
                                   and seizure?
                           search words?
                            Amendment provide
                                  to you?



I can read and follow
      directions               Time
END SESSION

				
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