Nebraska Law School 1L Study Guide for Contracts

Nebraska Law School 1L Study Guide for Contracts

I. Introduction to Contracts
A. Definitions
1. Contract: A legally enforceable agreement between two or more parties with mutual obligations.
2. Offer: A proposal by one party to another manifesting a willingness to enter into a contract.
3. Acceptance: An offeree’s expression of assent to the terms of an offer.
4. Consideration: Something of value promised to another when making a contract.

II. Sources of Contract Law
A. Common Law: Governs most contracts (services, real estate, employment, etc.).
B. Uniform Commercial Code (UCC): Article 2 specifically deals with the sale of goods.

III. Formation of Contracts
A. Offer
1. Requirements: Definite terms, communicated to offeree, intent to be bound.
2. Termination: Offers can be terminated by revocation, rejection, expiration, or operation of law.
B. Acceptance
1. Mirror Image Rule (Common Law): Acceptance must be on exact terms of offer.
2. UCC § 2-207: A definite expression of acceptance or written confirmation operates as acceptance even though it states terms additional to or different from the offer or confirmation.
C. Consideration
1. Requirement of a bargained-for exchange.
2. Past consideration is not sufficient.
D. Promissory Estoppel: A promise may be enforceable without consideration if the promisor should reasonably expect it to induce action or forbearance of a definite and substantial character by the promisee.

IV. Defenses to Formation
A. Incapacity: Minors, intoxicated individuals, and mentally incapacitated individuals may not be held to a contract.
B. Duress: A contract is voidable if one party enters under threat of harm.
C. Undue Influence: Improper persuasion over someone who is under the domination of the person exercising the persuasion.
D. Misrepresentation and Fraud: Contracts based on intentional or negligent false statements of material fact are voidable.
E. Mistake: Mutual mistake allows for voiding a contract if both parties were mistaken about a basic assumption on which the contract was made.

V. Interpretation
A. Parol Evidence Rule: Extrinsic evidence is inadmissible to contradict, vary, or add to the terms of a written agreement.
B. Rules of Construction: Courts interpret ambiguous contract terms according to specific canons of construction (e.g., against the drafter).

VI. Performance and Breach
A. Obligation to Perform: Duty of a party to fulfill the terms of a contract.
B. Conditions Precedent: Certain conditions that must occur before a party is required to perform.
C. Breach of Contract: Failure to perform as required by the contract.
1. Material Breach: Significant failure that excuses the non-breaching party from further performance.

VII. Remedies for Breach of Contract
A. Damages
1. Compensatory Damages: Put the injured party in the position they would have been in if the contract were performed.
2. Consequential Damages: Foreseeable damages that result from a party’s breach.
3. Liquidated Damages: Pre-determined damages agreed upon at the time of contract formation.
B. Specific Performance: A court order requiring the breaching party to fulfill the terms of the contract, particularly in cases involving unique goods or property.
C. Rescission: The contract is canceled and both sides are excused from further performance.
D. Reformation: The court may rewrite the contract to reflect the parties’ true intentions.

VIII. Third Party Rights
A. Assignment: Transfer of contractual rights to a third party.
B. Delegation: Transfer of contractual duties to a third party.
C. Third Party Beneficiary: A non-party that the contract intends to benefit.

IX. Case Law

Hawkins v. McGee (1929)
Issue: Is the plaintiff entitled to damages for breach of contract when the defendant, a surgeon, promised a certain result from an operation that was not achieved?
Rule: The measure of damages is the difference between the value of what was promised and the value of what was received.
Application: The court held that McGee breached the contract by not delivering the promised result of a "100 percent good hand," and thus Hawkins was entitled to damages based on the "expectation interest."
Conclusion: Hawkins was awarded damages for breach of contract.

Hamer v. Sidway (1891)
Issue: Does refraining from a legal right constitute adequate consideration for a contract?
Rule: Forbearance from a legal right at the request of another party is sufficient to sustain a promise.
Application: The court found that the nephew's forbearance from drinking, smoking, and gambling until the age of 21 was a sufficient consideration for the uncle's promise to pay him $5,000.
Conclusion: The nephew was entitled to the promised $5,000.

Carlill v. Carbolic Smoke Ball Co. (1893)
Issue: Is a unilateral contract formed when a party performs an act in reliance on an advertisement that promises a reward?
Rule: An advertisement that specifies the action required for acceptance creates a binding unilateral contract when the specified action is performed.
Application: The court determined that the use of the smoke ball in accordance with the instructions constituted acceptance of the offer made in the advertisement.
Conclusion: Carlill was entitled to the promised reward.

Please note that the above cases are based on general common law and not specific to Nebraska. However, they are seminal cases in contract law and are generally taught in 1L contracts courses throughout the United States, including Nebraska.

X. Conclusion

This guide has provided a broad overview of key concepts and case law relevant to a foundational understanding of contract law, tailored for a 1L law school class in Nebraska. It is critical to remember that while some contract principles are universal, local state law may have specific variations or statutes that should be studied in conjunction to this guide. Always check the latest Nebraska statutes and jurisprudence for the most current law applicable to your studies.

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