Studying contract law involves understanding the basic principles that govern agreements in every facet of society. This study guide will focus on key areas of contract law as relevant to an Ohio Law School 1L class.
II. Contract Basics
A contract is a legally binding agreement between two or more parties, enforceable by law. It consists of an offer, acceptance, and consideration.
A. Offer: An offer is a proposal to enter into an agreement with another. It must be clear, definite, and explicit, and leave nothing open for negotiation.
Case Example: Lucy v. Zehmer (1954): The court held that if a reasonable person would construe a person’s words and actions as an offer, it is legally valid, regardless of the person’s subjective intent.
B. Acceptance: Acceptance is the unqualified agreement to the terms of an offer. The acceptance must match the terms of the offer exactly, this is known as the mirror image rule.
Case Example: Adams v. Lindsell (1818): This case established the rule that acceptance is effective when sent, not when received.
C. Consideration: Consideration is what each party gives up to the other in the contract. It can be anything of value.
Case Example: Hamer v. Sidway (1891): The court held that forbearance (giving up something you have a right to) can be valid consideration.
III. Contract Formation
For a contract to be formed, there needs to be mutual assent (comprised of an offer and acceptance) and consideration.
A. Mutual Assent: Both parties must agree and understand the terms of the contract.
Case Example: Raffles v Wichelhaus (1864): There was no mutual assent because both parties had different understandings of the contract.
B. Consideration: The agreement must involve both sides receiving something of value.
Case Example: Stilk v. Myrick (1809): A contract cannot be modified without fresh consideration.
IV. Defenses to Enforcement
Even if a contract has been formed, there are defenses to enforcement that can render it unenforceable.
A. Capacity: A person must have the ability to fully understand the terms and implications of the contract.
Case Example: Odorizzi v. Bloomfield School District (1966): A contract can be voided for undue influence that exploits a person’s mental, emotional, or physical weakness.
B. Duress: A contract is voidable if one party’s assent is induced by an improper threat leaving the victim no reasonable alternative.
Case Example: Totem Marine Tug & Barge, Inc. v. Alyeska Pipeline Service Co. (1983): Economic duress can void a contract if one party threatens to breach a contract unless the other party agrees to a modification.
V. Common Contract Provisions
Typical contract provisions include indemnity, warranty, and limitation of liability clauses.
Case Example: Hadley v. Baxendale (1854): Under the foreseeability rule, damages are only recoverable if they were reasonably foreseeable at the time of contracting.
When a contract is breached, the non-breaching party is entitled to certain remedies, including damages, specific performance, or rescission.
Case Example: Sullivan v. O’Connor (1973): When a party breaches a contract, the non-breaching party is entitled to damages that will put them in the position they would have been in if the contract had been performed.
VII. Ohio Specific Laws
In Ohio, elements of contracts are similar to other states, with some additional specific laws, such as the Ohio Statute of Frauds (Ohio Rev. Code § 1335.05), which requires some types of contracts to be in writing to be enforceable.
Case Example: Collins v. Click Camera & Video, Inc. (1993): For a contract to be enforceable in Ohio, it must be clear, definite, and certain, with all essential terms set forth and agreed upon.
This guide covers the basic principles of contract law. Always refer back to your class notes and textbooks to ensure you understand the concepts and can apply them to different scenarios. Good luck with your exam preparation!