Wyoming Law School 1L Study Guide for Contracts
I. Offer and acceptance:
This is the first stage in the formation of a contract. An offer is a proposal from one party to another, indicating a willingness to enter into a contract. Acceptance is the agreement by the offeree to the terms of the offer.
Case study: Lucy v. Zehmer (1954) – In this case, the court concluded that a contract exists if an objective observer could perceive the parties’ conduct to indicate an intention to agree, even if one or both parties had a secret, subjective intention not to agree.
This is what each party gives to the other as the agreed price for the other’s promises. It can be anything of value (money, goods, services, a promise not to do something).
Case study: Hamer v. Sidway (1891) – The court held that forbearance or refraining from an action can be a valid consideration. The uncle’s promise to pay the nephew $5,000 if he refrained from drinking, smoking, swearing, and gambling until he turned 21 was enforceable as a contract.
III. Capacity to contract:
A person must have the legal ability to form a binding contract. Minors, intoxicated persons, and those under a mental disability may lack capacity to contract.
Case study: Moore v. Elmer (1946) – The court held that an agreement made by a person without the mental capacity is voidable.
The contract must be for a legal purpose. It is not enforceable if it involves doing something illegal or against public policy.
Case study: Bovard v. American Horse Enterprises (1988) – The court held a contract for an illegal act is not enforceable.
V. Writing requirement (Statute of Frauds):
Certain kinds of contracts must be in writing to be enforceable, such as contracts involving interests in land, contracts that cannot be performed within one year, and contracts for the sale of goods over a certain value.
Case study: Crabtree v. Elizabeth Arden Sales Corp. (1953) – The court concluded that when an oral contract is partially performed, it may be enforced, even if it falls within the statute of frauds.
VI. Parol evidence rule:
This rule prevents a party to a written contract from presenting extrinsic evidence that contradicts or adds to the written terms of the contract that appears to be whole.
Case study: Mitchell v. Lath (1917) – The court held that the parol evidence rule prevents parties from changing the meaning of a written contract with oral or implied agreements.
VII. Impossibility of performance:
This occurs when unforeseen events render a party’s performance impossible, thus excusing him from fulfilling the contractual obligation.
Case study: Taylor v. Caldwell (1863) – The court held that if performance becomes impossible due to unforeseen events, the parties can be excused from performance.
VIII. Breach of contract:
This occurs when one party fails to fulfill his obligation under the contract.
Case study: Hadley v. Baxendale (1854) – The court held that a breaching party is liable for all losses that the contracting parties should have foreseen when the contract was made.
Remedies aim to put the injured party in the position he would have been in if the contract had been fulfilled. Common remedies include damages, specific performance, and cancellation and restitution.
Case study: Ruxley Electronics v. Forsyth (1995) – The court held that damages can be awarded for loss of enjoyment where the monetary loss is difficult to quantify.
X. Third-party rights:
A third party beneficiary may have rights under a contract, even though he did not sign it.
Case study: Lawrence v. Fox (1859) – The court held that a third party can enforce a promise made for his benefit, even though he did not give consideration.