You are the manager ofa local bagel shop in your community.During the day while you are working at the shop,a man wearing white overalls who has a bucket and a window cleaner tool in his hand,taps on the front glass windowof the store.He gets your attention and motions to the windows and to his tool and gives you a thumbs up sign.You ignore him-you don't smile or gesture in any way.However,you see him begin the process of cleaning the windows to the shop and you still do nothing to stop him.He finishes washing the windows and comes in and indicates that the store owes him$95for the service he rendered.You decline to pay,saying you did not authorize the work.Isthere an implied in fact contract?What additionalinformation may be helpful to know in determining the outcome of this dispute?What is your expectation of the outcome and why?Is there any difference between this situation and the guy who washes your car window while you are stopped at a red light without your okay and asks for money?

MS-CHAPTER 10 Mini-Lecture THE NATURE & CLASSIFICATION OF TRADITIONAL CONTRACTS Contracts, Contracts, Contracts! What's the big deal? The big deal is that there are virtually no aspects of your personal life or involvement in business or employment that is not substantially affected by contracts. They are there, and they exist in the simplest every day transactions, yet we often times do not envision that signicant history is associated with the development of the trade practice in use to complete many of these routine business agreements. These trade practices came about as a result ofa need to be as certain as possible that the agreement or transaction is enforceable, and that it owed at a speed that made mass commerce possible. By denition, a contract is an agreement that can be enforced in court formed by two or more competent parties for consideration to perform a legal act. Contracts provide essentially a legal framework for the orderly flow of transactions in a market economy. If deals reached in business were not enforceable in the courts with signicant legal consequences for the breaching party, the entire nature of doing business in society would be in chaos. Just to provide some examples, leases, real estate transactions, utility service, cell phones, vehicle purchase and lease, credit card transactions, buying gasoline, food, clothing, buying insurance, marriage, legal separation, and use of the internet all involve contracts. Note that many types of contracts DO NOT have to be in writing in order to be fully enforceable. Think of ordering a coffee at Dunkin' Donuts-this is a bilateral contract. You offer to purchase and they agree to sell you the coffee-no writing needed, just the verbal agreement to the terms. Be certain to study with care the denitions in the margins of the text in this chapter as they will be used often in the following chapters and modules. They are set forth succinctly again in the chapter summary. Relative to some of the terms and denitions I will try to clarify the more difcult concepts. Your text outlines four(t_1) major elements for a contract to be formed: 1. agreement, 2. consideration, 3. capacity, and 4. legality: These elements are described briey in this chapter. Agreement is covered in greater detail in Chapter 1 'l, and Consideration, Capacity and Legality are covered in greater detail in Chapter 12. Sometimes there is a fth element required for there to be a valid contract and that is that the contract must be in a specic written form. A deed transferring title to property, a separation agreement in divorce proceedings, a letter of credit, and a power of attorney form arejust some examples of such contracts. That implies thus that certain contracts are required to be in writing to be valid and enforceable. Contracts that are required to be in writing or to be in a specific form are covered in detail in Chapter 13in Module VI. But understand that contracts that require obligations or performance for one or more years must be in writing and that under the Uniform Commercial Code(UCC), contracts for the sale of goods of $500 or more in value require a writing, but not necessarily in a particular form. Formal verses Informal Contracts: Don't be fooled on this one. A formal contract is one that requires a particular form in order to be binding, informal contracts are all contracts that do not require a specic form. But, that does not mean that a contract must be in writing to be binding and valid. Many, many contracts are verbal and are enforceable, they do not need to be in writing, such as employment contracts. Did you sign a contract the last time you got hired? Maybe, but most likely not. You were hired and you got paid because you performed work, labor, or services. That is a contract. It does not need to be in writing to be enforceable in most instances. Another fallacy is often that the signatures on a written contract need to be acknowledged by a notary to be valid and binding. Again, in most instances that is not the case. There are in some instances requirements by statute where the signature must be acknowledged in front of a notary to be legally binding(a separation agreement between spouses). But your standard real estate contract and lease do not. Bilateral contract: A promise for a promise. Most contracts are bilateral. I promise to sell my car to you for $5,000. You promise to give me $5,000 for it in return. No deposit is needed at that time to bind the deal. The mutual promises are adequate consideration. Unilateral Contract: A promise in exchange for an action. I offer to pay you $50 if you mow my lawn by Saturday. No commitment is made by you at the time the offer is made. If you perform the service before I revoke the offer there is a unilateral contract. Performance of the service is the acceptance. Typically, I cannot sue you if you do not perform the service by Saturday for breach of contract, because you did not accept my offer in any manner. There is no contract unless you accept the offer by performing the service. The "old school" rule of unilateral contracts said that you were not entitled to be paid for your performance until and unless you nished the action; today, mostjurisdictions recognize "quantum meruit", an equitable remedy that entitles the performer to receive payment for the value of the action that was performed. (Think of a house painter who begins painting someone's house and when the job is 95% completed, the painter is red by the promisor. Old School=painter gets nothing in payment because he did not nish the job. New school ru|e=pay him for the value of the work he completed. Executory vs. executed contracts: A contract is in "executory" status so long as one or both parties have not yet performed their contractual duties. Once both parties have completed their performance, the contract's status is "executed", which means that the parties no longer have any further responsibility to each other. Express Contracts verses Implied Contracts: An express contract is one where all of its terms are explicitly stated in words, oral or written. An implied contract involves a situation where the terms and provisions are not set forth in words spoken or written, but rather is based upon the conduct, behavior, and actions of the parties. Note, however, that in many instances there are some terms written or spoken, and the balance is implied from the actions of the parties. For there to be an implied contract there needs to be a plaintiff who performed some service or provided some property, the plaintiff expected to be paid for the service or property furnished and the defendant knew or should have known that payment was expected, and the defendant had a reasonable opportunity to reject the service or property. I stop by H & R Block and ask how much it would cost for my tax return to be completed. I am told the price and advised that ifl want my return done to drop off my tax information. I drop it off and speak to no one. If they complete the return the court is typically going to imply a contract was formed. O_bjective Theory of Contracts: This is the theory under which the intent to form a contract will be examined. Was there a meeting of the minds that an agreement was reached is looked at from the standard of not what the parties thought they agreed to in their respective minds(subjective), but rather from their behaviors, conduct, words spoken, how they appeared, and the circumstances surrounding the transactions as viewed by a reasonable person. (Did the parties behave as if there was a contract between them?) This objective theory is applied often where someone believes there was a "misunderstanding" that occurred, "I did not agree to do that". Valid v. Voidable and Unenforceable: In some instances we have a valid contract, that is that it meets all the elements to form a contract as set forth above. But when we go to enforce it in court we run into a problem. What can happen? The valid contract can be subject to a "defense", that we will examine in detail in Chapter 13 contained in Module VI. Some ofthe defenses that are available are: intoxication, minority, insanity, duress, fraud, and undue inuence. These contracts are considered "voidable" in that they are valid contracts, but because of one of these defenses, one or more of the elements of the contract are corrupted and affected to a point where the court will not enforce them against the person with the defense. It is important to note, that because we start with the premise that they are valid contracts they can be enforced against the person who made the contract with the party who has the defense available. Example: you sign a contract to sell a car to a 16 year old boy. After it is signed, you the adult believe you made a bad deal and want to cancel it. You cannot use the defense that you contracted with an infant(being a minor), that is only available to the minor, thus the contract is voidable at his option not yours! Some contracts that are valid contracts are not enforceable because there is a statute or law that prohibits their enforcement. A contract that is required to be in writing or in a particular form(forma| contract) are two examples. There is no dispute that that all four elements have been met, but because the statute(law) requires it to be in writing or in a special form, when you go to court you won't get the help you need because of this issue. Another category of unenforceable contracts would be where the statute of limitations has expired to enforce the contract. All states establish a timetable they allow you to sue someone for a breach of contract. Your failure to do it within that timetable can result in a preclusion of your ability to get enforcement in court. That is what a statute of limitations is. Void Contracts: They are neither valid, voidable, or enforceable. These are instances where there is no contract at all. Where the purpose of the contract is illegal or the person has been prior to execution determined to be insane are two examples. You cannot sue a person for a gambling debt due to you from a poker game at your house. You can't sue your drug dealer for return of your money if your marijuana turns out to be parsley. Quasi-Contracts: They are not contracts but are an equitable remedy by the courts to prevent an injustice of some type. In some circumstances the courts will imply in law that a contractual relationship exists between parties to prevent unjust enrichment from occurring. There is in many of these situations a lack of compliance with or inability to have all four of the contractual elements in place. It could also be that based upon a lack of compliance with the technical requirements of formal contracts, that the court cannot enforce the contract itself so it implies that there is an implied contract so that the party receiving the property or service is not unjustly enriched. However, the court will normally not apply this concept to a situation where there is mistake in the performance of the service, or it was the product of negligence, or misconduct. Keep your eye on equitable principals when you consider a circumstance where this might be applicable. Has someone unfairly reaped a benefit as a result of a lack of compliance with required elements for an actual contract to exist? This is the type of circumstance where the court might try to do "equity" and impose a contract on the unfairly benetted party. NOTE: if the parties have a contract, quasi-contract cannot be used because all contracts have a legal remedy available if breached. It is only used where there was no contract but someone had a benet conferred on them by another party, who ordinarily would be paid for performing that benet. Plain MeaningRu_les: Contracts are now looked at rst from the perspective of "plain language laws" that have developed in recent times requiring that certain types of contracts and court documents must be written in a clear and coherent manner, using words with common and every day meanings, and have appropriate headings and captions. These laws want the "legalese" removed. Thus if a document or agreement is written in this preferred manner the court will consider its plain meaning only, that is, the court will only look at the four corners of the document and not allow or consider any extrinsic evidence(outside evidence) including any testimony on what was meant by the words in the document. This is generally true even if there is not a specific statute or law requiring that type of contract to have "plain language" content. Where however there is ambiguity in the terms of the contract the court will apply some well established equitable " rules of interpretation". These rules are outlined on (p. 269) of the text