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[Student Name] 1L [student email address] Contracts [date] Midterm Mini Thesis Paper

The words contracts and jurisprudence are very strange words to the layman.

I am of the opinion, the word contract and jurisprudence means something totally different in the eyes of the learned man and the court, as it does in the eyes of the laymen and general society.1

Before I give examples and elaborate as to my opinion of the learned and the layperson holding these different meanings pertaining contracts and jurisprudence, I think it is important to define jurisprudence and contracts. I will also look at the sources of contract law.

Jurisprudence; and Sources of the Law of Contracts

Jurisprudence - 1. in the United States is the study of the general legal system and or the fundamental elements of such legal system as distinguished from such legal systems practical and unmistakable details. 2. Original view (18th century), the philosophy or science of law; jurisprudence is the analytical tool of which positive law is dependent.2

When discussing contracts and its many dependent rules, that distinguish a contract from an agreement; stating the elements necessary to contracts such as offer, acceptance and consideration; stating defenses related to the legal principles of formation; stating excuses as a defense related to the legal principles of performance; addressing third party rights; that layout the remedies available to a plaintiff, one must take in to consideration the sources of the law of contracts.

The sources of the laws of contract are many and vast. It is important to have a basic understanding of the many sources of contract law and to have a general understanding on the weight that should be given each source as you apply the law to any given scenario involving contracts or the elements thereof.

The Constitution of the United States is the foundation of law in the United States no other laws can be in conflict with the Constitution. Federal statutes and treaties fall under the Constitution. No state can enact or pass effective state legislation that is in direct conflict with federal law. In-fact state law is subordinate to federal law including federal agencies. The United

1 Layman. a person who is not a member of a profession or an expert on a particular subject. Black’s Law Dictionary, Seventh Edition, Bryan A. Gardner.

2 See Black’s Law Dictionary, Seventh Edition, Bryan A. Gardner - Jurisprudence.

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States Constitution puts forth a Supremacy Clause to this effect.3

The Constitution of Individual States are the next layer of source, we should look to as each state has a state constitution as a foundation. Under each state’s constitutional foundation are laws passed by its state legislative body including state regulatory agencies. The rules and regulations of local municipalities make up an additional layer of law.

That covers the legislation that governs certain rule of law, we must now move to the courts that govern certain rule of law.

Common Law is a body of law built up in the courts over time through a process where one decision sets a precedent for subsequent ones. Sometimes referred to as stare decisis, this common law is judicially created and then followed by other courts. This judicially created common law system is not viewed lightly. The previous decisions of cases of old and the new decisions of today are balanced and blended by the jurisprudence chef into a bowl of justice. The jurisdictional ruling of each common law body plays a larger role in the jurisdiction of original ruling. There are additional treatises and legal type of bodies the courts will also look to that deserve mentioning.

Treatises and other legal type bodies of law — There are certain state uniform laws that pertain to contract law, such as The Uniform States Act and The Uniform Negotiable Instrument Act that were enacted in the late 1800’s and the early 1900’s. These acts played a role in the eventual creation of the Uniform Commercial Code, which is a body of code divided into articles that distinguish legal subject matter. A great deal of contract law as it pertains to “The Sale of Goods”4 derives its guidance from Article 2 of the Uniform Commercial Code. Other sources worth mentioning are The United Nations Convention on Contracts for International Sale of Goods, an international body; The Restatement, a type of treatise and guide in reducing the rules is non-binding put together by the American Institute; Treatises by well learned individuals and bodies in an attempt to move jurisprudence forward. Having an understanding of the overall body of rules of law of in and of themselves doesn’t equip one with analytical means to effectively apply the law of contracts.

Other themes of law such as legal theory, legal process, historical opinion and public policy must be in one’s mind set to properly analyze the legal meaning of a contract.

Fundamental Policies and Values of Contract Law; What is A Contract?

A contract may be defined in many different ways. Its definition can be based on an emphasis in elements necessary to contract, such as offer, acceptance, and consideration; or an emphasis in

3 The Supremacy Clause of Article VI of The United States Constitution.

4 Uniform Commercial Code, Section 2-107.

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breaking down a single legal rule, such as what defines mutual assent: the mutual manifestation of an agreement to enter into a contractual relationship. Contract may differ in its definition depending on the background of the individual sourcing the definition. For an example, we can look to the definition of a lay person that would probably be distinctively different from a well learned person of law. The layperson’s definition would almost assuredly be lacking the legal elements necessary to contract. On the other hand the learned persons definition would almost assuredly contain a legal-element-necessary-to-contract based definition.

I will try to define a contract based on both points of view:

A contract is derived from an agreement between two are more people (parties) that the courts will enforce according to and based on body of law.

There are certain underlying fundamental polices and values that assist in determining a thorough meaning and a complete definition of a contract at any given time and or place. These policies and values often steer juristic bodies as to the full application of law to a contract. Some of those policies and values are worth mentioning: Freedom of Contract; The Morality of Promise; Accountability of Conduct and Reliance; Social Justice; Fairness; and the Economics of Contract Law. I will not go in depth on these policies and values; however, the good of the public interest related to the economic aspects of a contract is worth further mentioning.

The very nature of a contract involves the dealing and the exchange of two parties in commerce. One definition of commerce is the interchanging of ideas and thoughts. Dealings in commerce, in general are of pecuniary value; therefore, for the most part, contractual relationships are economic-based and driven. The legal theory driving “Compensatory Damages” is most definitely based on economics.5 Such compensatory legal theory states that the general purpose of compensatory damages is to put the non-breaching party in as good of a position as they would have been in had the contract been performed. It further states that if money can accomplish the purpose of compensatory damages, then so be it. Therefore one of the overall goals of contracts is to facilitate and support the dealings of the people of a capitalistic society. The very nature of a capitalistic free market society is dependent on the contract and its body of law, including policies effecting freedom of contract and aspects of economics. In fact, in the contract clause of the United States Constitution, the framers of the Constitution speak, in part, of the importance of the contract, as they prevented states from enacting law that retroactively impaired the ability to contract.6

The degree at which certain market forces are able to influence juristic outcome may be debated at another time. The fact that fundamental values and policies are constantly influencing the outcome of judicial process to contract may not be an argument at all.

5 Restatement (Second) of Contracts §347.

6 The Contract Clause, United States Constitution, Article I, Section 10, Clause 1.

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A Layman’s Understanding of a Contracting

In the 1980’s, as a black teenage boy, I grew up in a neighborhood (ghetto) called the Islands, in Pomona, California, where hip hop was gaining prominence. The United States city-based murder rate per capita in Pomona at the time was only second to Miami.

I am told by legal commentators that the everyday man is a party to the formation of a contracts on a regular ongoing basis. As a product of Pomona, I must disagree.

In the Islands of Pomona I learned to wheel, deal, and contract with the best of them. However, as I later started studying law, I realized that, in the eyes of the court as compared to the eyes of a layman, an enforceable contract and an agreement are two distinctively different things.7

In actuality, as a teenager in Pomona, I was a party to many unenforceable agreements, NOT contracts of law.

I can think of several instances while growing up in Pomona where I thought I had an engaged in negotiations creating an enforceable contract, but in reality the negotiations lacked several elements needed to contract, violated several legal principles of formation, and included several legal circumstances preventing voidable formation or formation at all.

Offeror or Offeree

In fact, one such time, I thought I was the offeror in an agreement when in actuality I was the offeree. I went to a guy named Rob and told him I would paint his bike red for $20.00 as it would match the color of my bike. Rob told me he would pay me $15.00 if I would paint his bike blue, a color kindly looked upon in his neighborhood, and fix his broken seat. I agreed. In the above-mentioned fact pattern, a counter offer as a rejection arises when the original offeree makes a new offer to the original offeror of the same subject matter with different terms, resulting in the original offeror now being the offeree.8

Consideration, or not

Another such time, I (obligor) thought I negotiated an enforceable contract with my brother (obligee), and in fact the agreement lacked consideration to my brother, as the consideration bargained for was already obligated by me to my brother. While my brother Tom and I were eating milk and cookies, I made a deal with Tom to clean his room in the morning after we awoke from sleeping, if Tom would give me one of his cookies. Tom agreed. In the morning I told tom I would only clean his room if he gave me a piece of his turkey sausage at breakfast.

7 See Black’s Law Dictionary, Seventh Edition, Bryan A. Gardner - Agreement.

8 Restatement (Second) of Contracts §39.

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Tom agreed. This additional agreement lacks consideration resulting in an unenforceable agreement. As the rule of “Past Consideration” states, consideration previously bargained for does not satisfy the bargain requirement.9

On another occasion as a young teenager, I can remember my friend buying old cable boxes, opening the outer casing and using a soldering gun to doctor the electrical transmitters and other components as to bypass blockage signals, resulting in free cable. I eventually entered an agreement with my friend to purchase one of those doctored cable boxes. However, I assumed the agreement was enforceable because I used my hard-earned money from a legitimate source. I believed if there was a problem with the transaction, like a breach on my friends part that I would be able to enforce my agreement and sue for damages. Through the study of law, I realized that due to the illegal subject matter related to the illegal conversion of the box, my belief that the agreement was enforceable was incorrect.

Contracts that have illegal subject matter, or consideration that is illegal, meet the illegality defense to the enforcement of such contract. Illegality of a contract may come into effect when a contract is inconsistent with the Constitution, inconsistent with a statute, or inconsistent with public policy. Contracts containing illegal subject matter or illegal consideration are generally void.10

One may ask why public policy is an issue as to the enforceability of contract law. As previously stated, fundamental policy and values of our society play a role in the jurisprudence of contract law, and contracts play a significant role in our capitalist society. Any contract that is illegal may be considered not to be in the best interest of society, and therefore be against public policy as held by the courts.

Lack of Capacity – Defense to Enforcement

On one summer day when I was 18 years of age, a friend and I went down to the local junior high school, as we would normally do to play some pick-up basketball. Upon arriving at the school we went through our normal routine of choosing three players each which would result in a four-on- four basketball game. To our surprise there were not enough players on the court to choose from — we only had a total of seven players. I happened to look down at the other end of the playground and I saw a younger kid, 15 years of age, name Tommy. I regrettably put young Tommy on my team so we could start the game. To my surprise, Tommy was the best player on the court, he would slam-dunk the ball fifty percent of the time the ball was in his possession.

9 The traditional rule is that a promise based on moral or past consideration is simply a donative promise and is therefore unenforceable. Mills v. Wyman, 20 Mass. 207 (1825). As quoted in Gilbert Law Summaries, Contracts, Melvin A. Eisenberg.

10 Restatement (1st) of Contracts §598.

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I later entered into an agreement with “Slam-dunk Tommy” to travel to certain cities and play basketball for prize money in a pick-up style basketball league. The agreement terms stated Slam-dunk Tommy was to be paid 25 percent of all prize money. In return, Slam-dunk Tommy would play all twelve regular season games from start to finish, and three playoff games. As it turned out, Slam-dunk Tommy played great. We were undefeated in our first 12 games. However when it was time to play our first of three playoff games, Slam-dunk Tommy never showed up to the game. Because Slam-dunk Tommy never showed up to the game, we had to play shorthanded. To our surprise we still won the game. I did not pay Slam-dunk Tommy 25 percent of the prize money. Slam-dunk Tommy told me he deserved his portion of prize money because he was a part of the team and he had contributed to winning 12 regular season games, which allowed our team to qualify for the playoffs. I disagreed. Slam-dunk Tommy said he would sue me in court. I told him that, based on him being a minor, the contract was unenforceable in a court of law.

After studying contract law, I stand corrected.

There are certain protected classes of individuals who are incapable of entering into a binding contractual obligation. Within a reasonable time, and at his election, a promisor in a protected class may claim lack of capacity as grounds for a defense resulting in a voidable contract. Some of the classes included in the protected classes category are minors, those with mental incapacity, intoxicated persons, and those under duress and undue influence.

The question of who is considered a minor for contract purposes is generally governed by jurisdiction. In most jurisdictions the age of majority is 18 years of age. There are some states, under special circumstances, that will consider persons under 18 to be the age of majority. One such circumstance is married persons. An adult may enter into a contract with a minor; in fact, the minor may enforce the contract against the adult, although the adult may not enforce the contract against the minor. Minors, also referred to as infants under contract law, lack the capacity to incur a obligation that is binding on themselves, therefore they lack capacity to enter into a binding contract that may be enforced against them. Exceptions exist in certain circumstances such as when an adult enters a contract with a minor and the contract provides that the adult provide certain necessaries for the minor like food, medicine, shelter, clothing or education. In most states a minor may still disaffirm a contract involving necessaries; however, the court will generally look to assert liability on the minor for benefits that they have received; in restitution. In certain states, only if a minors parents are not able to provide for them or they are emancipated will they be liable.11

A Word on The Statutes of Frauds

In my above-mentioned childhood stories of wheeling and dealing, the fact patterns may or may not have given a learned person the facts necessary to determine if the statute requirement that

11 California Civil Code, Section 36.

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certain agreements must be evidence in writing with a signature by the person who is bound by the contract, applies. In my story about Slam-dunk Tommy I never stated a time period of when the service contract was to be performed. Service contracts that are to be performed for a time period in excess of a year from the initial agreement, fall within the Statute of Frauds and must be in writing and signed by the defendant. If Slam-dunk Tommy’s agreement was to be performed for a time period in excess of a year it probably should have been in writing in order to be legally enforceable.

Agreements that fall within the Statute of Frauds include promises by an executor to personally pay estate debts; suretyship promises; a promise where the consideration is marriage; a promise transferring an interest in land (including leases for more than 1 year); a promise where performance will not be performed with in 1 year (from the agreement date); and contracts for goods of $500 or more.

Oral agreements are valid in certain circumstances; however, there are several situations in which an oral agreement, may not be enforceable. The Statute of Frauds requires certain types of agreements to be in writing and signed by the bound parties. The Statute of Frauds does not require that a contract be in any formal manner. In-fact an agreement under the Statute of Frauds can be as informal as a writing on a napkin or a torn piece of paper from a notebook. The Statute of Frauds requires that at least one writing be signed by the defendant.12

A Word on Remedies

Once a determination has been made that a contract is valid and enforceable; and an inexcusable breach has occurred, one should look to the available remedies to him. In certain circumstances, even if a contract is found to be unenforceable, but a benefit was conferred to the defendant, a plaintiff may be compensated. In general, there are three methods for measuring damages. These three measures are expectation damages, reliance damages and restitution damages.

Expectation damages are generally used as a measure in compensating the plaintiff in cases involving a breached bargain. Expectation damages try and put a person in the same position they would have been in if the contract had been fully performed. The plaintiff is said to be entitled to the benefit of the bargain. There are certain limitations to expectation damages, such as only reasonable foreseeable damages may be awarded. A plaintiff claiming expectation damages has a duty to mitigate damages.

Reliance damages are generally used as a measure to compensate the plaintiff because he relied on the promise of the defendant. Similar to the rules of relied-upon donative promise, reliance damages seeks to put the plaintiff back into the position he would have been in without relying on the defendants promise.

12 Restatement (Second) of Contracts §131.

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Quasi contractual damages may be used when the plaintiff has conferred a benefit to a defendant but the defendant is not contractually liable to the plaintiff for the benefit conferred.

Specific performance is general only used when there is no remedy at law available.

A Final Word; and a Brief Mention of Other Necessary Principles of Law

There are several principles of contracts necessary to the discussion of contract law not touched upon here, but worth brief mention. A bilateral contract is where a promise is offered and can be accepted by a promise; a unilateral contract is where an offered promise can only be accepted by performance. A condition is some type of triggering event and or act that affects a duty to perform. Under the defense of frustration of purpose, a party may be discharged from a duty to perform when an unanticipated event frustrates the main purpose of the contract resulting in a destroyed benefit to a party. Under the Parol Evidence Rule, when parties intend for their agreement that is in writing to be the complete and final writing, the agreement may not be altered by prior or contemporaneous evidence, whether oral or written. Third party rights may exist in the form of assignment of rights, although certain questions arise as to the nature of the beneficiary being an intended beneficiary with standing to sue or being an incidental beneficiary without standing to sue.

The law on contracts is deep and vast. Jjurisprudence continues to alter and adjust the rules of law as we know them today. The ability to contract may be not just one of the most basic rights of a United States citizen, but may also be one of the most necessary rights affecting and supporting our capitalistic society.

As a laymen contracts are strange!

As a learned man contracts contain the amazing!

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