Washington Law School 1L Study Guide for Contracts

I. Overview of Contract Law

A contract is a legally binding agreement between two or more parties. In order for a contract to be binding, there must be an offer, acceptance, consideration, and a mutual intention to create a legal relationship.

  1. Offer and Acceptance: The offer is an indication of willingness to enter into a contract, while acceptance is an unqualified agreement to the terms of the offer.
    Case: Lucy v. Zehmer (1954) – IRAC
    Issue: Whether a contract was formed when an offer was made in jest?
    Rule: A contract is formed if the parties have apparent intention to form a contract, despite actual intention.
    Analysis: The fact that Zehmer was jesting when he offered to sell his farm does not negate the contract, as Lucy had an apparent intention to purchase.
    Conclusion: A contract was formed.

  2. Consideration: This is the value that each party gives and receives in the contract.
    Case: Hamer v. Sidway (1891) – IRAC
    Issue: Whether forbearance can be a valid consideration?
    Rule: Forbearance is a valid consideration if it is part of a bargain in which both parties get something.
    Analysis: The uncle’s promise to pay the nephew if he abstained from drinking, smoking, etc. was a valid consideration.
    Conclusion: Forbearance is a valid consideration.

II. Breach of Contract

A breach of contract occurs when one party does not fulfill their contractual obligations.

  1. Material Breach: This is when a party does not perform their contractual duties to such an extent that it deprives the other party of the expected benefits under the contract.
    Case: Jacob & Youngs v. Kent (1921) – IRAC
    Issue: When is a breach of contract material?
    Rule: A breach is material when it goes to the heart of the contract.
    Analysis: The use of a different brand of pipes than specified in the contract did not deny the homeowner the expected benefits from the contract.
    Conclusion: This was not a material breach.

  2. Anticipatory Breach: This is when one party indicates that they will not fulfill their contractual obligations.
    Case: Hochster v. De La Tour (1853) – IRAC
    Issue: Can one sue for breach of contract before the performance is due?
    Rule: Yes, one can sue for breach of contract before the performance is due if the other party has expressed their intention not to perform their obligations.
    Analysis: De La Tour informed Hochster that he would not be requiring his services as a courier before the start of the agreed tour, hence anticipatory breach.
    Conclusion: Anticipatory breach is a valid form of breach.

III. Remedies

The purpose of remedies is to place the aggrieved party in the position they would have been if the contract had been properly performed.

  1. Damages: This is the most common form of remedies paid out as compensation to the aggrieved party.
    Case: Hadley v. Baxendale (1854) – IRAC
    Issue: What types of damages are recoverable in a breach of contract case?
    Rule: Damages are recoverable if they were foreseeable at the time the contract was formed.
    Analysis: Hadley’s lost profits were not foreseeable by Baxendale at the time the contract was formed, hence not recoverable.
    Conclusion: Only foreseeable damages are recoverable.

  2. Specific Performance: This is an order by the court to the breaching party to perform their contractual obligations.
    Case: Laclede Gas Co. v. Amoco Oil Co. (1981) – IRAC
    Issue: When may specific performance be granted?
    Rule: Specific performance may be granted when damages would be inadequate.
    Analysis: Laclede Gas Co. would be unable to replace the lost fuel supplies, hence damages would be inadequate.
    Conclusion: Specific performance was granted.

Study well, and remember that understanding the principles is more important than memorizing cases. Good luck on your finals!

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