North Dakota Law School 1L Study Guide for Contracts

North Dakota Law School 1L Study Guide for Contracts

1. Nature and Definition of a Contract
   • Contract: A legally enforceable agreement between two or more parties that creates mutual obligations.
   • Offer and Acceptance: An offer is a promise to act or refrain from acting, which is made in exchange for a return promise or performance by another party. Acceptance is the agreement by the other party to the offer.
   • Consideration: Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.
   • Capacity: Legal ability to enter into a contract. Certain parties, such as minors or mentally incapacitated individuals, may have limited capacity to contract.
2. Formation of Contracts
   • Elements of a Contract:
     1. Offer
     2. Acceptance
     3. Consideration
     4. Mutual Assent
     5. Legality
     6. Capacity
   • Objective Theory of Contracts: The belief that a contract’s existence and terms are determined by the outward expressions of the parties and not by their unspoken intentions.
   • Bilateral and Unilateral Contracts: A bilateral contract involves two promises and two performances, whereas a unilateral contract involves one promise followed by one performance.
3. The Offer
   • Requirements for a Valid Offer:
     1. Intent to be bound by the offer
     2. Definiteness and certainty of terms
     3. Communication to the offeree
   • Termination of Offer: Offers can be terminated by revocation, rejection, expiration, or through operation of law.
4. Acceptance
   • Mirror Image Rule: Acceptance must be an unequivocal assent to the terms of the offer.
   • Mailbox Rule (Deposited Acceptance Rule): Acceptance is generally effective upon dispatch, when the offeree sends it, as long as the acceptance is properly addressed and stamped.
5. Consideration
   • Adequacy and Sufficiency of Consideration: Consideration must be something of legal value, but courts typically do not question the adequacy of the consideration unless there is evidence of fraud, duress, or unconscionability.
6. Defenses to Formation
   • Lack of Capacity: If one party lacks the capacity to contract, the contract may be voidable.
   • Duress: When one party is forced into the contract through fear or threats, the contract may be voidable.
   • Undue Influence: Improper persuasion by one party over another may give rise to a defense against the formation of the contract.
   • Misrepresentation and Fraud: False statements that induce another to enter into a contract may lead to the contract being voidable.
   • Unconscionability: A contract that is so one-sided that it shocks the conscience may be found unconscionable and unenforceable.
7. Performance and Breach
   • Substantial Performance: Performance by a contracting party that deviates only slightly from complete performance.
   • Anticipatory Repudiation: When one party indicates in advance that they will not be performing as agreed, the other party may treat this as a breach of contract.
   • Discharge by Mutual Agreement: Parties may agree to discharge one another from the contract.
8. Remedies for Breach of Contract
   • Damages: Monetary compensation for breach of contract, including compensatory, consequential, punitive, and nominal damages.
   • Specific Performance: A court-ordered performance of the contract, typically in cases where the subject matter is unique and damages would not be adequate.
   • Rescission and Restitution: Rescission is the cancellation of the contract, while restitution is the return of any benefit conferred under the contract.
9. Third-Party Rights
   • Assignment and Delegation: Assignment involves the transfer of rights under the contract, while delegation involves the transfer of duties.
   • Third-Party Beneficiary: A person who is not a party to the contract but stands to benefit from it.
10. The Statute of Frauds
    • Written Contract Requirement: Certain types of contracts must be in writing to be enforceable, including contracts for the sale of land, contracts that cannot be performed within one year, and suretyship agreements.
11. The Uniform Commercial Code (UCC)
    • Article 2: Governs the sale of goods and modifies some general contract principles for transactions involving goods.
    • Good Faith Requirement: UCC requires that parties act in good faith in the performance and enforcement of contracts.
12. North Dakota Specifics
    • Uniform Commercial Code – North Dakota: North Dakota has adopted the UCC, including Article 2 which pertains to the sale of goods.
    • North Dakota Century Code: Contains state-specific laws and statutes that may affect contract law, such as those relating to real estate transactions and consumer protection.

Key Case Law (IRAC Reviews)

• Harvey v. Dow (ND 2012):
  • Issue: Whether a parent’s promise to transfer land to a child in exchange for the child’s work on the farm created a binding contract.
  • Rule: Under North Dakota law, a contract must have consideration to be enforceable.
  • Application: The court found that the child’s work on the farm constituted sufficient consideration for the parent’s promise.
  • Conclusion: The court enforced the parent’s promise as a binding contract.
• Bakke v. D&A Landscaping Co (ND 2008):
  • Issue: Whether an oral agreement for landscaping services was enforceable under the Statute of Frauds.
  • Rule: The Statute of Frauds in North Dakota requires certain contracts to be in writing.
  • Application: Because the contract could not be performed within one year, it fell within the Statute of Frauds’ writing requirement.
  • Conclusion: The oral agreement was not enforceable due to the lack of a written contract.

This study guide provides a foundational overview of contract law principles pertinent to a 1L course, including North Dakota specifics. For comprehensive preparation, students should supplement this guide with in-depth reading of the North Dakota Century Code, relevant case law, and UCC provisions, and engage in practical application exercises such as case briefs and hypotheticals.