Illinois Law School 1L Study Guide for Contracts
I. Introduction to Contracts
A contract is a legally enforceable agreement between two or more parties with mutual obligations. In Illinois, as in other jurisdictions, the essential elements of a contract are offer, acceptance, consideration, and the intention to create legal relations.
II. Offer and Acceptance
An offer is a proposal by one party to another indicating a willingness to enter into a contract on certain terms without further negotiations. Acceptance is the unqualified agreement to the terms of the offer.
- Illinois follows the objective theory of contracts, which means the intent to contract is judged by outward, objective facts as interpreted by a reasonable person, rather than the party’s subjective intentions.
Consideration is something of value that is given by both parties to a contract that induces them to enter into the agreement. In Illinois, a promise to do something that one is already legally obligated to do is not valid consideration.
- Illinois case: Bailey v. West (1960) illustrates the requirement of consideration where West’s promise to pay a debt barred by the statute of limitations was not enforceable without new consideration.
IV. Defenses to Formation
Even if a contract has all the basic elements, there can be defenses that prevent the formation of a contract, such as incapacity, duress, undue influence, misrepresentation, and mistake.
- Illinois recognizes that minors (under 18) typically lack the capacity to enter into contracts, with certain exceptions for necessities.
V. Statute of Frauds
In Illinois, the Statute of Frauds requires certain types of contracts to be in writing to be enforceable. These include contracts for the sale of land, contracts that cannot be performed within one year, and suretyship agreements, among others.
- Illinois case: Crabtree v. Elizabeth Arden Sales Corp. (1953) emphasized that the Statute of Frauds requires certain key elements to be in writing to satisfy the statute.
VI. Performance and Breach
Performance is the fulfillment of a contractual duty, as promised in the contract. Breach occurs when a party fails to fulfill their obligations under the contract.
- Illinois follows the substantial performance doctrine, where if a party in good faith performs substantially all of the terms can enforce the contract against the other party.
When a breach of contract occurs, the non-breaching party is entitled to seek remedies. Remedies include compensatory damages, specific performance, and restitution. Illinois courts can also award punitive damages in cases of fraud or where the breach is wanton.
- Illinois case: Kehoe v. Wildman, Harrold, Allen & Dixon (2007) is an example where the court denied punitive damages in a breach of contract case because punitive damages are not generally recoverable for breach of contract in Illinois.
VIII. Third-Party Beneficiary Contracts
A third-party beneficiary is someone who was not a party to the contract but stands to benefit from the contract’s performance. Illinois recognizes the rights of intended beneficiaries but not incidental beneficiaries.
IX. Assignment and Delegation
Contractual rights and duties can be transferred to third parties through assignment (of rights) and delegation (of duties), subject to certain limitations. Illinois law prohibits assignment if it would materially change the duty of the obligor, increase the obligor’s burden or risk, or impair the chance of obtaining return performance.
X. Parol Evidence Rule
The Parol Evidence Rule in Illinois prohibits the introduction of evidence of prior or contemporaneous oral agreements to alter, contradict, or add to the terms of a written contract, assuming the written contract is intended as a complete and final expression of the parties’ agreement.
- Illinois case: Air Safety, Inc. v. Teachers Realty Corp. (2004) clarified the application of the Parol Evidence Rule where the court held that prior oral agreements could not be used to modify a written contract.
A condition is an event that must occur before a party is obligated to perform a contractual duty. Illinois recognizes conditions precedent, conditions concurrent, and conditions subsequent. Failure of a condition can excuse performance of the contract.
XII. Impossibility and Frustration of Purpose
When an unforeseen event makes performance impossible or destroys the purpose of the contract, the parties may be excused from performance. Illinois follows the Restatement (Second) of Contracts in recognizing these doctrines.
- Illinois case: Krell v. Henry (1903) is a famous English case often discussed in American law schools, illustrating frustration of purpose when the coronation parade of King Edward VII was canceled, and the defendant was excused from paying for a room rented to view the parade.
XIII. Uniform Commercial Code (UCC)
Illinois has adopted the UCC, which governs contracts for the sale of goods. It introduces concepts like the perfect tender rule, warranty of merchantability, and the right to cure defects in performance.
- Illinois case: Szajna v. General Motors Corp. (1985) is relevant where the court dealt with implied warranties under the UCC in the context of a sale of goods.
This study guide is intended to provide an overview of contract law principles as applied in Illinois. Students should use this guide in conjunction with their casebook, class notes, and other study materials to prepare for their final semester exam.