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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
