Part 3- Contracts, Chapter 9: Intellectual Property and Unfair Competition, Doc 2

Summary of Contract Law Concepts and Key Cases 1. Contract Basics   A contract is a legally enforceable promise or set of promises, with essential elements: an offer, acceptance, consideration, and the intention to create legal relations. Contracts can exist in written or oral form and must be differentiated from mere promises to be enforceable. They allow individuals and businesses to plan for the future with an understanding that agreements will be honored by law. 2. Contract Classifications    Bilateral vs. Unilateral Contracts: Bilateral contracts involve an exchange of promises between parties, creating mutual obligations immediately. In unilateral contracts, only one party makes a promise, which becomes enforceable once the other party performs a specific act. Express vs. Implied Contracts: Express contracts explicitly state the terms either in writing or orally. Implied contracts arise from the conduct of the parties, where mutual agreement is assumed based on behavior. Void, Voidable, and Unenforceable Contracts: Void contracts are illegal and have no legal effect. Voidable contracts can be canceled by one party, often due to issues like fraud or duress. Unenforceable contracts meet basic requirements but may be barred by specific rules, such as the statute of frauds. 3. Sources of Contract Law   Common Law: Governs contracts involving services, real estate, and intangibles. Uniform Commercial Code (UCC): Primarily Article 2, it applies to contracts for the sale of goods, which are defined as tangible, movable property. The UCC promotes clarity and modern commercial standards across jurisdictions. 4. Hybrid Contracts  For contracts with both goods and service elements, courts use the “predominant purpose” test to determine if the UCC applies, focusing on whether the primary purpose is the sale of goods or the provision of services. Key Case Summaries Lambert v. Barron (2008)    Facts: Lambert claimed a contract for consulting services based on an oral conversation and the exchange of documents with Barron, a friend. Barron disputed the contract, claiming he never formally accepted. Holding: The court found no binding contract, ruling that Lambert’s consulting assistance was given as a friend without any clear agreement on terms or payment. Lambert’s assumption of a contract based on friendship and informal exchange of documents was unreasonable. Significance: This case illustrates that in contract formation, especially among friends, courts require clear agreement and objective evidence of mutual assent. Tacit acceptance without definitive actions supporting a business agreement is insufficient. Olé Mexican Foods, Inc. v. Hanson Staple Company (2009)    Facts: Hanson and Olé entered a settlement agreement involving the purchase of packaging materials, a mix of sales and settlement provisions. The lower court applied UCC Article 2, including implied warranties, to enforce the agreement. Holding: The appellate court reversed, finding the primary purpose of the agreement was settlement, not the sale of goods, so UCC Article 2 did not apply. The focus was on the purpose behind the agreement rather than the sale element alone. Significance: The case underscores the "predominant purpose" test in hybrid contracts, where UCC Article 2 applies only if the agreement's main purpose is the sale of goods, not if goods are merely part of a broader transaction, such as a settlement. Cyberlaw and Online Contracts  Clickwrap and Shrinkwrap Contracts: These are standardized contracts in digital transactions. Clickwrap contracts require users to click to agree, while shrinkwrap contracts indicate that opening packaging implies consent. Their enforceability hinges on clear, visible terms and the user’s assent, which courts analyze case-by-case. 5. Ethical and Practical Considerations   Ethical Obligations: Contracts often carry an ethical duty beyond legal enforcement. For example, a school changing scholarship terms postacceptance may be legally defensible but ethically questionable if students relied on the initial terms. Reasonable Expectations: In assessing contract enforceability, courts consider whether parties acted reasonably in expecting an agreement to hold, particularly when informal agreements or changing terms are involved. This guide provides an overview of contract concepts, classifications, legal standards (UCC vs. common law), and hybrid contract applications. The landmark cases discussed illustrate how courts interpret contract formation, enforceability, and predominant purpose, especially in mixed transactions and personal agreements.