New Hampshire Law School 1L Study Guide for Contracts

New Hampshire Law School 1L Study Guide for Contracts

I. Introduction to Contracts

A. Definition

A contract is a legally enforceable agreement between two or more parties that creates mutual obligations. The elements required for the formation of a legally enforceable contract are offer, acceptance, consideration, and the intent to create legal relations.

B. Types of Contracts

  1. Express Contracts – Clearly stated terms, written or oral.
  2. Implied Contracts – Arise from actions, conduct, or circumstances.
  3. Unilateral Contracts – A promise for an act.
  4. Bilateral Contracts – Exchange of promises.

II. Offer

A. Definition

An offer is a promise that is, in essence, conditional on an act, return promise, or forbearance.

B. Elements

  1. Intent to be bound.
  2. Definite and certain terms.
  3. Communication to the offeree.

C. Termination of Offer

  1. Revocation
  2. Rejection
  3. Counteroffer
  4. Lapse of Time
  5. Death or Incapacity
  6. Illegality

D. Relevant Case Law

Lonergan v. Scolnick (1954) – Example of preliminary negotiations, not constituting an offer.

IRAC for Lonergan v. Scolnick:
Issue: Whether the correspondence between the parties constituted a legally enforceable offer.
Rule: An advertisement or general invitation to negotiate is not an offer.
Analysis: Scolnick’s communications were found to be mere invitations to negotiate rather than a definitive offer to sell property.
Conclusion: No offer was made; therefore, no contract was formed.

III. Acceptance

A. Definition

Acceptance is an unequivocal assent to the terms of an offer.

B. Elements

  1. Must be made by the person or entity to whom the offer was made.
  2. Must match the terms of the offer (mirror image rule).
  3. Must be communicated to the offeror.

C. Modes of Acceptance

  1. By Promise (Bilateral Contract)
  2. By Performance (Unilateral Contract)
  3. By Mailbox Rule (Acceptance is effective when sent)

D. Relevant Case Law

Akers v. J.B. Sedberry, Inc. (1955) – Acceptance by performance; a unilateral contract is formed.

IRAC for Akers v. J.B. Sedberry, Inc.:
Issue: Whether an employee’s continued employment constitutes acceptance of a unilateral contract offer.
Rule: An offer for a unilateral contract may be accepted by performance.
Analysis: The employee continued to work under new employment terms, which was deemed acceptance by performance.
Conclusion: The employee’s act of continued employment constituted acceptance of the offer; thus, a contract was formed.

IV. Consideration

A. Definition

Consideration is the value given in return for a promise or performance. It must be something of legally sufficient value, and there must be a bargained-for exchange.

B. Elements

  1. Legal Value
  2. Bargained-for Exchange

C. Adequacy of Consideration

The law is generally not concerned with the adequacy of consideration unless there is evidence of fraud, duress, or unconscionability.

D. Relevant Case Law

Hamer v. Sidway (1891) – Forbearance as consideration.

IRAC for Hamer v. Sidway:
Issue: Whether forbearance from lawful activities can constitute valid consideration.
Rule: Forbearance from legal rights at the request of another party can be valid consideration.
Analysis: The nephew’s forbearance from drinking, using tobacco, and playing cards, as requested by the uncle, was held to be valid consideration.
Conclusion: There was a valid contract because the nephew provided consideration through his forbearance.

V. The Pre-Existing Duty Rule

A. Definition

Under the pre-existing duty rule, a promise to do something that one is already legally obligated to do is not valid consideration.

B. Exceptions

  1. New or different consideration is promised.
  2. Unforeseen difficulties justify the modification of a contract.
  3. Third-party promises to pay.

C. Relevant Case Law

Alaska Packers’ Association v. Domenico (1902) – Modification of contract under duress.

IRAC for Alaska Packers’ Association v. Domenico:
Issue: Whether fishermen could demand higher wages for pre-existing duties based on unforeseen difficulties.
Rule: A modification must meet the criteria of new consideration; duress makes a modification unenforceable.
Analysis: The court found that the fishermen had a pre-existing duty to perform and used improper pressure to obtain higher wages.
Conclusion: The modification was invalid due to duress, and the original contract remained enforceable.

VI. Defenses to Contract Enforceability

A. Incapacity

  1. Minors: Contracts are generally voidable by the minor.
  2. Mental Incapacity: Contracts are voidable if one lacks the ability to understand the nature and consequences of the transaction.

B. Duress

A contract is voidable if entered into under duress, where one is forced to enter the contract through wrongful threats.

C. Undue Influence

Contracts are voidable when one party is unfairly persuaded by another party who has a dominant influence over them.

D. Misrepresentation

If one party enters into a contract based on the other’s misrepresentation of a material fact, the contract is voidable.

E. Unconscionability

A contract is unenforceable if it is so one-sided or unfair that it shocks the conscience.

F. Public Policy

Contracts that violate public policy or law are not enforceable.

G. Statute of Frauds

Certain types of contracts must be in writing to be enforceable, including contracts for the sale of land, contracts that cannot be performed within a year, and suretyship agreements.

H. Mistake

  1. Mutual Mistake: Both parties have an incorrect belief about an essential fact; the contract is voidable.
  2. Unilateral Mistake: One party is mistaken about a material fact; generally, the contract is enforceable unless the non-mistaken party knew or should have known of the error.

VII. Remedies for Breach of Contract

A. Legal Remedies (Damages)

  1. Compensatory Damages: To put the injured party in the position they would have been if the contract had been performed.
  2. Consequential Damages: Foreseeable damages that result from the breach.
  3. Liquidated Damages: Agreed-upon damages stated in the contract.
  4. Punitive Damages: Rarely awarded in contract cases; intended to punish and deter.

B. Equitable Remedies

  1. Specific Performance: Ordering the breaching party to perform the contract, typically in unique goods or property transactions.
  2. Injunction: Prohibiting a party from doing something.
  3. Rescission: Termination of the contract.
  4. Reformation: Modification of the contract to reflect the true intent of the parties.

VIII. Third-Party Rights and Obligations

A. Assignment of Rights

The transfer of contractual rights to a third party.

B. Delegation of Duties

The transfer of contractual obligations to a third party.

C. Third-Party Beneficiary

A person who is not a party to the contract but is intended to benefit from the contract as a donee, creditor, or incidental beneficiary.

D. Relevant Case Law

Lawrence v. Fox (1859) – Rights of a third-party beneficiary.

IRAC for Lawrence v. Fox:
Issue: Whether a third party not in privity with the contracting parties can sue to enforce the contract.
Rule: A third-party beneficiary may enforce a contract if the contracting parties intended to benefit that third party.
Analysis: The court found that the contract between Fox and Holly was intended to benefit Lawrence, and therefore he had the right to enforce the agreement.
Conclusion: Lawrence, as a third-party beneficiary, could sue for the performance of the contract.

IX. New Hampshire Specific Considerations

A. Contract Interpretation in New Hampshire

New Hampshire law adheres to the objective theory of contracts, focusing on the parties’ outward manifestations rather than their subjective intent.

B. New Hampshire’s UCC Article 2

The Uniform Commercial Code (UCC) Article 2 applies to the sale of goods and may have specific provisions that modify or override general contract principles in commercial transactions. New Hampshire has adopted the UCC, and students should be familiar with its key sections, such as the Statute of Frauds (UCC 2-201) and remedies for breach (UCC 2-701 to 2-725).

C. Consumer Protection

New Hampshire’s Consumer Protection Act (RSA 358-A) may also impact contracts by prohibiting unfair or deceptive acts or practices.

This study guide serves as a broad overview of contract law principles, including those that are specifically relevant to New Hampshire. It is essential to complement this guide with detailed class notes, case briefs, and statutory texts for thorough examination preparation.

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