Contract Law For Dummies E-Book

Scott J. Burnham

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 633

Veröffentlichungsjahr: 2011

Beschreibung

Take the mumbo jumbo out of contract law and ace your contracts course Contract law deals with the promises and agreements that law will enforce. Understanding contract law is vital for all aspiring lawyers and paralegals, and contracts courses are foundational courses within all law schools. Contract Law For Dummies tracks to a typical contracts course and assists you in understanding the foundational legal rules controlling voluntary agreements people enter into while conducting their personal and business affairs. Suitable as a supplement to introductory and advanced courses in contract law, Contract Law For Dummies gives you plain-English explanations of confusing terminology and aids in the reading and analysis of cases and statutes. Contract Law For Dummies gives you coverage of everything you need to know to score your highest in a typical contracts course. You'll get coverage of contract formation; contract defenses; contract theory and legality; agreement, consideration, restitution, and promissory estoppel; fraud and remedies; performance and breach; electronic contracts and signatures; and much more. * Tracks to a typical contracts course * Plain-English explanations demystify intimidating information * Clear, practical information helps you interpret and understand cases and statutes If you're enrolled in a contracts course or work in a profession that requires you to be up-to-speed on the subject, Contract Law For Dummies has you covered.

Leseprobe

Contract Law For Dummies®

Visit www.dummies.com/cheatsheet/contractlaw to view this book's cheat sheet.

Table of Contents

Introduction

About This Book

Conventions Used in This Book

What You’re Not to Read

Foolish Assumptions

How This Book Is Organized

Part I: Introducing Contract Law and Contract Formation

Part II: Determining Whether a Contract Is Void, Voidable, or Unenforceable

Part III: Analyzing Contract Terms and Their Meaning

Part IV: Performing the Contract or Breaching It

Part V: Exploring Remedies for Breach of Contract

Part VI: Bringing Third Parties into the Picture

Part VII: The Part of Tens

Icons Used in This Book

Where to Go From Here

Part I: Introducing Contract Law and Contract Formation

Chapter 1: Getting the Lowdown on Contract Law

Grasping the Concept of Contract Law

Defining contract

Comparing different schools of thought on contract rules

Tracing contract law’s roots

Meeting the Key Players: Common Law, the Restatement, and the UCC

Exploring the common law: Tradition and precedent

Capturing general rules in the Restatement

Statutes: Supplanting common law with codes

Brushing up on the Uniform Commercial Code (UCC)

Applying state law in federal court

Applying different sources of contract law

Forming, Defending, and Interpreting Contracts: The Basics

Understanding contract formation

Checking out attack and defense maneuvers

Finding the terms of the contract and building contract-interpretation skills

Examining Contract Performance, Breach, and Remedies

Recognizing breach of contract

Formulating remedies and establishing losses

Exploring the role of third parties in contract law

Practicing in the Real World of Contracts

Chapter 2: Let’s Make a Deal: Offer and Acceptance

Contract Formation: Getting a Handle on the Essentials

Forming a Contract: Promises, Offers, and Mutual Assent

Making a commitment by making a promise

Turning a promise into an offer by asking for something in return

Giving acceptance by giving or agreeing to give what was requested in return

Assenting in action or thought: Objective manifestation versus subjective intent

Forming contracts without words: The implied-in-fact contract

Determining Whether Language Constitutes an Offer

Distinguishing a preliminary inquiry from an offer

Ads, catalogs, and circulars: Distinguishing advertisements from offers

Deciding How Long an Offer Remains Open

Determining Whether the Offeror Can Back Out: Revoking the Offer

Making an option contract

Recognizing statutes that create an option

Relying on the offer

Deciding Whether the Offer Has Been Accepted

Acceptance must match the offer: The mirror-image rule

Acceptance is effective on dispatch: The mailbox rule

Looking at various forms of acceptance

Making Sense of the “Battle of the Forms” and UCC § 2-207

Deciding whether acceptance is conditional

Dealing with additional or different terms

Chapter 3: Sealing the Deal: The Doctrine of Consideration

Checking an Agreement for Consideration

Using a simple Q and A

Making a diagram

Making Distinctions about Consideration

Deciding whether it’s a bargain or a gift promise

Distinguishing between sufficient and adequate consideration

Detecting an Absence of Consideration

Spotting a phony: Nominal consideration

Applying the pre-existing duty rule

Finding past consideration

Tracking Down Illusory Promises

Dealing with satisfaction clauses

Analyzing output and requirements contracts

Spotting illusory promises in settlements

Too Many Blanks: Distinguishing Contracts from Agreements to Agree

Looking for Consideration Substitutes: Enforcing without Consideration

Evaluating the Recital of Consideration in a Contract Term

Chapter 4: Noting Exceptions: Promises Enforceable without a Contract

Examining Exceptions: When Contracts Aren’t Necessary

The Doctrine of Reliance: Looking for a Promise That Induced Action

Determining whether reliance applies

Limiting the remedy for breach of the promise

Deciding Cases That Test the Limits of Reliance: Promissory Estoppel

Deciding whether a charitable pledge is enforceable

Deciding whether a sophisticated party can claim reliance

Remembering that reliance doesn’t usually qualify as acceptance

The Doctrine of Restitution: Creating an Obligation to Prevent Unjust Enrichment

Battling unjust enrichment with the implied-in-law contract

Determining when a court is likely to find unjust enrichment

Sorting out restitution in a material breach

Part II: Determining Whether a Contract Is Void, Voidable, or Unenforceable

Chapter 5: Introducing Contract Defenses

Leveraging the Power of Policies

Freedom of contract

Efficiency

Fairness

Predictability

Making the Most of Statutes

Protecting consumers with state and federal statutes

Tapping the power of statutes to bring a contract claim

Examining the Courts’ Role in Policing Contracts

Checking into Affirmative Defenses

Distinguishing valid, void, and voidable contracts

Separating matters of law and matters of fact

Chapter 6: Considering Whether an Agreement Is Unenforceable Due to Illegality or Unfairness

Determining Enforceability When the Legislature Has Spoken

Recognizing illegal agreements that are unenforceable

Noting exceptions: Illegal but enforceable agreements

Making a Public Policy Argument

Examining enforceability in agreements that restrain trade

Examining enforceability in agreements that interfere with family relationships

Examining enforceability in agreements that encourage torts

Testing an Agreement against the Doctrine of Unconscionability

Applying the doctrine of unconscionability in the UCC

Distinguishing procedural and substantive unconscionability

Challenging Enforceability with the Doctrine of Reasonable Expectations

Chapter 7: Evaluating the Parties’ Ability to Make the Contract

Recognizing Who Can Legally Make a Contract

Passing the mental capacity check

Child’s play? Making contracts with minors

Basing a Contract Defense on One Party’s Bad Actions

Saying things that aren’t true: The fraud defense

Making an offer they can’t refuse: The duress defense

Taking unfair advantage: The undue influence defense

Whoops! The Mistake Defense

Evaluating a mutual mistake defense

Using the mutual mistake defense to escape a release

Finding relief when the mistake is unilateral

Chapter 8: Assessing the Enforceability of Oral Agreements

Asking Whether the Parties Intended to Orally Form a Contract

Challenging Oral Agreements with the Statute of Frauds

Determining whether a transaction is within the statute of frauds

Distinguishing between voidable and unenforceable agreements

Finding a Writing That Satisfies the Statute

Does it describe the contract?

Is it signed by the party against whom enforcement is sought?

Finding Exceptions to the Statute

Revisiting reliance

Finding an exception in the main purpose rule

Examining part performance and restitution

Finding exceptions in UCC § 2-201

Finding a big exception in international contracts

Part III: Analyzing Contract Terms and Their Meaning

Chapter 9: Evaluating Unwritten Terms with the Parol Evidence Rule

Introducing the Parol Evidence Rule

Identifying Parol Evidence: The Stuff outside the Writing

Asking Why the Evidence Is Being Offered

To prove a modification

To prove a defense to formation

To prove an unfulfilled condition

To prove the meaning of a term

To add a term to the agreement

Deciding Whether the Agreement Is Final and Complete

Recognizing the difference between subjective and objective intent

Figuring out whether the agreement is final

Checking whether the agreement is complete

Dealing with a merger clause that says the contract is final and complete

Considering Evidence That Supplements or Contradicts the Agreement

Contrasting the Common Law with the UCC Parol Evidence Rule

Getting Terms in Writing to Avoid the Parol Evidence Rule Quagmire

Chapter 10: Finding Unwritten Terms That Complete the Contract

Finding the Terms of an Incomplete Contract

Using contract rules to fill the gaps

Understanding types of gap-filling rules

Reading In the Duty of Good Faith

Being honest: The subjective duty of good faith

Being reasonable: The objective duty of good faith

Using freedom of contract to refine the definition of good faith

Working with and around the Default Rules

Recognizing default rules when you see them

Using freedom of contract to change the rules and shift the risk

Protecting Buyers through Warranties

Making express warranties

Looking for an implied warranty of title or warranty against infringement

Checking for an implied warranty of merchantability

Seeking out an implied warranty of fitness for a particular purpose

Shifting the Risk by Disclaiming or Limiting Warranties

Making warranty disclaimers specific and conspicuous

Limiting the remedy for breach

Drafting a disclaimer of warranty

Recognizing the statutory regulation of disclaimers

Chapter 11: Interpreting Contracts

Grasping the Basics of Ambiguity

Doing the Interpretation Two-Step

Understanding How Courts Decide What’s Ambiguous

Applying the rules of interpretation

Examining the baggage the parties bring to the contract

Bringing in objective meaning from outside the contract

Considering subjective evidence: Context and testimony

Deciding What Something Means

Dealing with Misunderstanding

Part IV: Performing the Contract or Breaching It

Chapter 12: Evaluating Whether Contract Modifications Are Enforceable

Considering Modifications Made during Performance

Determining whether consideration is required

Written requirements: Seeing whether the modification is within the statute of frauds

Dealing with “no oral modification” clauses

Agreeing to future, unilateral modifications

Making Changes after One Party Fully Performed: Accord and Satisfaction

Determining whether the parties formed an accord: Offer and acceptance

Finding consideration: Doing something additional or different

Finding consideration in unliquidated debts and debt-dispute settlements

Figuring out what happens when the accord has been satisfied . . . or not

Distinguishing accord and satisfaction from substituted contract

Applying the rule of UCC § 3-311 to settlements by check

Doing away with consideration by statute or case law

Chapter 13: Deciding Whether Unforeseen Events Excuse Performance

Deciding Whether a Nonperforming Party Is in Breach

Did the event occur after contract formation?

Did performance become impracticable?

Was nonoccurrence of the event a basic assumption?

Did the party seeking to be discharged carry the risk?

Determining Whether a Buyer’s Purpose Was Frustrated

Figuring Out What Happens When a Party’s Performance Is Excused

Using our old friends reliance and restitution

Allocating the loss when a performance is partially excused

Using Freedom of Contract to Allocate Risk

Drafting a “force majeure” clause to identify events excusing nonperformance

No excuses: Drafting a “hell or high water” clause

Chapter 14: Checking for Conditional Language

Defining Condition in Legal Terms

Telling the difference between a promise and a condition

Determining whether a condition is express or implied

Tapping the Power of Express Conditions

Determining Whether Courts Will Find an Implied Condition

Sorting Out Conditions Precedent, Concurrent, and Subsequent

Deciding Who Must Go First

Checking out the default order of performance

Making agreements about the order of performance

Determining Whether a Party Has Substantially Performed

Considering how the type of breach affects the outcome

Running tests to find substantial performance

Deciding whether a breach with respect to time is material

Solving the problem by drafting express conditions

Looking at Conditions in the UCC

Rule § 2-601: Making a “perfect tender”

Rule § 2-612: Dealing with installment contracts

Excusing Conditions

Finding promise: Interpreting your way out of a condition

Using restitution when a condition bars recovery

Finding a divisible contract

Claiming waiver to excuse a condition

Throwing yourself on the mercy of the court to excuse a condition

Chapter 15: Breaching the Contract by Anticipatory Repudiation

Recognizing the Two Types of Anticipatory Repudiation

Determining Whether a Party Has Repudiated

Insecurity and assurances: Using UCC § 2-609 to identify repudiation

Applying the rule to the common law

Figuring Out What Happens after Repudiation

Deciding whether the breaching party can retract the repudiation

Seeking remedies for the breach when the injured party accepts the repudiation

Ignoring the repudiation: Not the best option

Part V: Exploring Remedies for Breach of Contract

Chapter 16: Examining How Courts Handle Breach of Contract

Mastering the Rule of the Expectancy

Seeing the expectancy in context

Accounting for expenses

Justifying breach: The economist’s notion of the efficient breach

Recognizing How Contract Law Limits the Damages for Breach

Concluding whether the breach caused the loss

Determining whether the loss is established with certainty

Limiting damages with the rule of foreseeability

Asking whether the non-breaching party mitigated the loss

Using Reliance and Restitution as Remedies

Chapter 17: Exploring Remedies in Article 2 of the UCC

Comparing Common-Law and UCC Remedies

Recognizing the key difference

Understanding just how similar they really are

Giving the Buyer a Remedy When the Seller Is in Breach

Seeking specific performance: Getting the promised goods

Buying substitute goods and calculating cover damages

Making the buyer whole by calculating market damages

Adding consequential damages for losses caused by the breach

Including incidental damages and subtracting savings

Keeping the goods and claiming damages

Providing the Seller a Remedy When the Buyer’s in Breach

Seeking the contract price as damages

Selling to someone else and calculating resale damages

Deciding whether to complete the manufacture of the goods

Making the seller whole by calculating market damages

Solving the mystery of lost profits

Chapter 18: Checking for Additional Remedies

Deciding Whether Equitable Remedies Should Be Granted

Awarding specific performance . . . or not

Stopping a party with an injunction

Undoing or Revising the Contract

Unwinding the contract through rescission

Rewriting the contract through reformation

Letting the Parties Determine the Remedies for Breach

Calculating liquidated damages

Providing for limited remedies

Awarding Transaction Costs on Top of Damages

Getting attorney’s fees

Recovering transaction costs

Punitive damages? Fuhgeddaboudit!

Finding the Law that Governs the Contract

Selecting the governing law through a choice-of-law clause

Selecting the place of trial through a choice-of-forum clause

Resolving a Dispute through Alternative Dispute Resolution

Resolving disputes through arbitration

Trying mediation

Part VI: Bringing Third Parties into the Picture

Chapter 19: Deciding Whether a Third Party Can Enforce or Interfere with a Contract

Determining Whether a Party Is a Third-Party Beneficiary

Creating a creditor beneficiary by telling someone to pay your debt

Creating a donor beneficiary by making a gift

Creating an incidental beneficiary: Another name for loser

Asking three key questions to identify third-party beneficiaries

Changing a third-party beneficiary’s rights

Interfering with Someone Else’s Contract: A Big No-No

Finding the tort of tortious interference with contract

Considering claims that the interference is improper

Chapter 20: Acknowledging the Rights and Duties of Third Parties

Breaking Down a Contract into Rights and Duties

Determining Whether Rights May Be Assigned

Applying the general rule: Freely assigning rights

Spotting exceptions to the assignment of rights

Determining Whether Duties May Be Delegated

Applying the general rule: Freely delegating duties

Back to the source: Spotting exceptions to the delegation of duties

Using UCC § 2-609 to get assurances

Prohibiting Assignment and Delegation

Drafting an effective prohibition

Recognizing key limitations on prohibition

Substitutions: Making a New Contract through Novation

Part VII: The Part of Tens

Chapter 21: Ten Questions to Ask When Analyzing a Contracts Problem

Was a Contract Formed?

Is a Promise Enforceable without a Contract?

Does a Party Have a Defense to the Contract That Was Formed?

Where Do You Find the Terms of the Contract?

Do the Parties’ Interpretations of the Contract’s Language Differ?

Is a Party in Breach?

Did a Condition Have to Occur Before a Performance Was Due?

Did a Breach Occur Before Performance Was Due?

What Are the Remedies for Breach?

How Does the Contract Affect Third Parties?

Chapter 22: Ten Notable People (And Philosophies) in Contract Law

Lord Mansfield

Christopher Columbus Langdell

Samuel Williston

Arthur Corbin

Benjamin N. Cardozo

Karl N. Llewellyn

E. Allan Farnsworth

Ian Macneil

Richard Posner

Stewart Macaulay

Appendix: Glossary

Cheat Sheet

Contract Law For Dummies®

by Scott J. Burnham with Joe Kraynak

Contract Law For Dummies®

Published byJohn Wiley & Sons, Inc.111 River St.Hoboken, NJ 07030-5774

www.wiley.com

Copyright © 2012 by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Trademarks: Wiley, the Wiley logo, For Dummies, the Dummies Man logo, A Reference for the Rest of Us!, The Dummies Way, Dummies Daily, The Fun and Easy Way, Dummies.com, Making Everything Easier, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc., and/or its affiliates in the United States and other countries, and may not be used without written permission. All other trademarks are the property of their respective owners. John Wiley & Sons, Inc., is not associated with any product or vendor mentioned in this book.

LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE PUBLISHER AND THE AUTHOR MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUT LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES OR PROMOTIONAL MATERIALS. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR EVERY SITUATION. THIS WORK IS SOLD WITH THE UNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL SERVICES. IF PROFESSIONAL ASSISTANCE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL PERSON SHOULD BE SOUGHT. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM. THE FACT THAT AN ORGANIZATION OR WEBSITE IS REFERRED TO IN THIS WORK AS A CITATION AND/OR A POTENTIAL SOURCE OF FURTHER INFORMATION DOES NOT MEAN THAT THE AUTHOR OR THE PUBLISHER ENDORSES THE INFORMATION THE ORGANIZATION OR WEBSITE MAY PROVIDE OR RECOMMENDATIONS IT MAY MAKE. FURTHER, READERS SHOULD BE AWARE THAT INTERNET WEBSITES LISTED IN THIS WORK MAY HAVE CHANGED OR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRITTEN AND WHEN IT IS READ.

For general information on our other products and services, please contact our Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or fax [phone].

For technical support, please visit www.wiley.com/techsupport.

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Library of Congress Control Number: 2011941728

ISBN 978-1-118-09273-6 (pbk); ISBN 978-1-118-19555-0 (ebk); ISBN 978-1-118-19544-4 (ebk); ISBN 978-1-118-19547-5 (ebk)

Manufactured in the United States of America

10 9 8 7 6 5 4 3 2 1

About the Author

Scott J. Burnham, a graduate of New York University School of Law, is the Curley Professor of Commercial Law at Gonzaga University School of Law in Spokane, Washington. For 30 years, he has taught Contracts at law schools throughout the U.S. and internationally. As a practicing lawyer and consultant on contract matters, he has a good sense of the practical application of contracts principles, and as a prolific writer on legal topics, he has the ability to convey those principles with clarity.

Dedication

To everyone who studies contract law — may you grow to love her as much as I do!

Author’s Acknowledgments

Thanks to acquisitions editors Michael Lewis and David Lutton, who chose me to author this book and ironed out all the preliminary details to make it possible, and to Larry Garvin, who recommended me for the gig.

Elizabeth Rea, my project editor, deserves a loud cheer for serving as a gifted and patient collaborator and editor — shuffling chapters back and forth, shepherding the text and graphics through production, making sure any technical issues were properly resolved, and serving as the unofficial quality control manager. Copy editor Danielle Voirol earns the editor of the year award for ferreting out my typos, misspellings, grammatical errors, and other language foe paws (or is it faux pas?), in addition to assisting Elizabeth as reader advocate. I also tip my hat to the Composition crew for doing such an outstanding job of transforming my text and graphics into such an attractive book. My deepest thanks go to wordsmith Joe Kraynak, who was able to successfully blend my knowledge of Contracts with his knowledge of writing.

Publisher’s Acknowledgments

We’re proud of this book; please send us your comments at http://dummies.custhelp.com. For other comments, please contact our Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or fax [phone].

Some of the people who helped bring this book to market include the following:

Acquisitions, Editorial, and Vertical Websites

Project Editor: Elizabeth Rea

Acquisitions Editor: Michael Lewis

Senior Copy Editor: Danielle Voirol

Development Editor: Joe Kraynak

Assistant Editor: David Lutton

Editorial Program Coordinator: Joe Niesen

Technical Editors: James P. Nehf, Jeremy Telman

Editorial Manager: Michelle Hacker

Editorial Assistant: Alexa Koschier

Cover Photo: © iStockphoto.com/Pali Rao

Cartoons: Rich Tennant (www.the5thwave.com)

Composition Services

Project Coordinator: Nikki Gee

Layout and Graphics: Joyce Haughey, Christin Swinford, Laura Westhuis

Proofreaders: Melissa Cossell, Bonnie Mikkelson

Indexer: Valerie Haynes Perry

Publishing and Editorial for Consumer Dummies

Kathleen Nebenhaus, Vice President and Executive Publisher

Kristin Ferguson-Wagstaffe, Product Development Director

Ensley Eikenburg, Associate Publisher, Travel

Kelly Regan, Editorial Director, Travel

Publishing for Technology Dummies

Andy Cummings, Vice President and Publisher

Composition Services

Debbie Stailey, Director of Composition Services

Introduction

In The Paper Chase, a TV series based on a 1973 movie about the adventures of first-year law students at Harvard, Professor Kingsfield, the Contracts professor, tells his students the following:

The study of law is something new and unfamiliar to most of you, unlike any other schooling you have ever known before. You teach yourselves the law, but I train your minds. You come in here with a skull full of mush, and, if you survive, you leave thinking like a lawyer.

Getting you to think like a lawyer is the goal of law school, but reaching that goal can seem more arduous than it has to be. When you take the course called Contracts, for example, you’ll probably find that you’re mostly reading cases, and you never see a contract.

One reason for this disconnect is that the course in Contracts is traditionally designed to teach you “legal method” — skills such as reading cases, analysis, and synthesis — and not the substance of contract law, which is often sort of incidental. The only problem is that you have to know the rules and principles of contract law in order to have some grist for the analytical mill.

Because your casebook may not present the material in an easily accessible and understandable format, Contract Law For Dummies is designed to plug that gap. It can help you wrap your brain around the most fundamental concepts and help you see the forest, not just the trees. Consider this book your stepstool up to the higher-complexity coverage you’ll encounter in your classes.

About This Book

Contract law isn’t exactly a science or an art; it’s a little of each. As a science, contract law is governed by certain principles and rules. As an art, contract law often requires creativity as courts apply the rules and interpret the language of contracts. Because of this, Contract Law For Dummies contains a little of both. It presents the rules that govern contracts and provides numerous examples to help you apply those rules to different fact situations. This presentation enables you, as a budding contract lawyer, to do the following:

More accurately predict a court’s ruling on any given contract dispute.

Know when you have to follow a rule and when you can change it.

Draft contracts that more effectively protect your clients’ interests.

Pass your law school and bar exams.

This book is organized so you can read it from cover to cover or skip around to only those parts, chapters, or sections that capture your current fancy or serve your present needs. I’ve been teaching contract law for 30 years and practiced it for 7 years before that, and I’ve developed a unique approach that has been very successful for my students. This book follows that approach, presenting what you need to know in the order that tends to be most effective.

As you’ll soon discover, however, developing the skills required for understanding and practicing contract law — and doing it well — isn’t always a linear path. While discovering new concepts and ways to interpret the language of contracts, you often must skip back to review what you thought you already knew and understood. This book is optimized for skipping around to find exactly what you need whenever you happen to need it.

Conventions Used in This Book

I use several conventions in this book to call your attention to certain items. For example:

Italic highlights new, somewhat technical terms (such as objective manifestation and parol evidence), which I follow up with straight- forward, easy-to-understand definitions.

Boldface text indicates keywords and phrases in bulleted and numbered lists.

Monofont highlights web addresses.

A widget is a hypothetical good bought and sold in Contracts classes.

Contracts with a capital C refers to the study of the subject, and contracts with a small c refers to agreements.

I generally cite the North Carolina version of the Uniform Commercial Code (UCC), because the Uniform version is under copyright, whereas an enacted statute is in the public domain.

When I refer to “the Code,” I mean the UCC. And when you see “the Restatement,” I’m referring to the Second Restatement of Contracts.

What You’re Not to Read

You can safely skip anything you see in a gray shaded box. We stuck this material in a box (called a sidebar) for the same reason that most people stick stuff in boxes: to get it out of the way so you don’t trip over it. However, you may find the brief asides in the sidebars engaging, entertaining, and perhaps even mildly informative.

Foolish Assumptions

In writing this book, I made a few foolish assumptions, mostly about your motivation and how you’re going to use this book:

You’re planning to master U.S. contract law. This book mentions English law, international law, and the contract law of other countries only in passing.

You’re eager to tackle contract law.

You’re probably going to supplement this text with more formal study, including coursework, additional reading, assignments, and briefing the cases.

You understand that my approach to teaching contract law is only one of many effective ways.

In class, you won’t say, “But Burnham says. . . .”

I make no assumptions concerning how much you already know about contract law — you needn’t know anything to get started.

How This Book Is Organized

To assist you in navigating this book’s contents, I divvied up the chapters that comprise this book into seven distinct parts. This section provides a quick overview of what I cover in each part.

Part I: Introducing Contract Law and Contract Formation

In a contract law case, one of the first things the court has to determine is whether the parties even have a contract. The chapters in this part introduce and explain the essential elements of contract formation (offer, acceptance, and consideration) along with notable exceptions — promises that are enforceable without a contract.

As a bonus, Chapter 1 provides an overview of contract law and introduces you to the two sources of governing rules: the Restatement of Contracts and the Uniform Commercial Code (UCC).

Part II: Determining Whether a Contract Is Void, Voidable, or Unenforceable

To challenge the formation of a contract in the court of law, a party may present a contract defense — proof claiming that certain additional facts undermine the contract’s formation and destroy its enforceability. This part explains different contract defenses, including whether a party did anything illegal or unfair and whether the parties had the ability to make a contract, as well as the factors that determine whether an oral agreement is enforceable.

Part III: Analyzing Contract Terms and Their Meaning

Contract disputes arise when the parties don’t concur on which terms they agreed to or what the terms mean. One party may claim that the parties agreed to a term that doesn’t appear in the written contract. A contract may have gaps that fail to address unforeseen circumstances. Or the language in a contract may be ambiguous. The chapters in this part discuss several strategies that the courts use to plug the gaps in a contract and interpret what the language really means . . . or at least what it would mean to reasonable people standing in the parties’ shoes.

Part IV: Performing the Contract or Breaching It

Whether the parties formed a contract is only half the story. The other half deals with the performance of that contract. The chapters in this part tackle nonperformance issues. Here you find out whether changes made to a contract after formation are enforceable, whether the occurrence of unforeseen events or the nonoccurrence of certain conditions excuses performance, and how one party may breach a contract even before performance is due.

Part V: Exploring Remedies for Breach of Contract

If a party breaches the contract, the courts must decide how to remedy the breach in a way that’s fair for both parties. This isn’t tort law, where the courts try to punish the wrongdoer. In contract law, the goal is to give the non-breaching party what she expected from the performance of the contract but no more than that. The non-breaching party shouldn’t get a windfall at the expense of the breaching party.

The chapters in this part introduce and explain the various methods available to the courts to remedy a breach.

Part VI: Bringing Third Parties into the Picture

A contract often affects more than the parties who made it. A contract is like a piece of property that can be carved up and bought and sold. When parts are transferred, third parties can get involved in performance and enforcement of the contract. The chapters in this part help you recognize the rights and duties of those third parties and decide under which circumstances third parties are allowed to enforce contracts and may have duties to perform under a contract.

Part VII: The Part of Tens

Every For Dummies book includes a Part of Tens — chapters containing ten bite-sized, easily digestible tips, tricks, or insights. Here I offer ten key questions to ask when analyzing a contract problem and ten famous people and philosophies in contract law.

Icons Used in This Book

Throughout this book, icons appear in the margins to call your attention to different types of information. Here are the icons and a brief description of each.

Everything in this book is important (except for the stuff in the shaded boxes), but some information is even more important. When you see this icon, read the text next to it not once but two or three times to tattoo it on your gray matter.

Tips provide insider insight from behind the scenes. When you’re looking for a better, faster way to do something, check out these tips.

This icon appears when you need to be extra vigilant or seek additional guidance before moving forward. Don’t skip this important information — I’m warning you!

Certain cases have strongly influenced contract law and how the courts interpret the law and language of contracts. To spot these key cases, look for the Key Case icon.

Contract law makes a lot more sense when you see how it applies to fact situations, so I use hypothetical situations liberally throughout the book to illustrate and simplify the explanation of certain concepts. The Example icon flags these hypotheticals so you can easily spot them.

Where to Go From Here

Contract Law For Dummies is designed to take you from ground zero to a fundamental understanding of contract law. If you’re interested in the big-picture view of contract law in theory and practice, check out Chapter 1. Otherwise, read the book from cover to cover, skip around by using the table of contents as your guide, or head to the index if you need guidance on a more specific topic.

Part I

Introducing Contract Law and Contract Formation

In this part . . .

Chapter 1 begins by exploring the fundamentals of contract law — what it is, how it came into being, and which sources provide the rules and principles that govern contracts. Here, you discover the basics of contract formation, contract defenses, and contract interpretation, and you find out what generally happens when parties don’t fulfill their contractual obligations.

The remaining chapters in this part focus on contract formation. You encounter the three essential elements of contract formation — offer, acceptance, and consideration — and find out when promises are enforceable even if parties haven’t met the requirements to form a contract.

Chapter 1

Getting the Lowdown on Contract Law

In This Chapter

Wrapping your brain around the concept of contract law

Grasping the fundamental rules and principles that govern contracts