Massachusetts Law School 1L Study Guide for Contracts

Massachusetts Law School 1L Study Guide for Contracts

I. Introduction to Contract Law

A. Definition of a Contract

A contract is a legally enforceable agreement between two or more parties that creates mutual obligations. The elements of a contract include offer, acceptance, consideration, capacity, and legality.

B. The Objective Theory of Contracts

Under the objective theory of contracts, the existence and interpretation of a contract are determined by the outward expressions of the parties and not by their unexpressed intentions.

II. The Formation of Contracts

A. Offer

An offer is a promise to act or refrain from acting, which is made in exchange for a return promise. It must be communicated to the offeree, manifest an intent to be bound by the acceptance, and be sufficiently definite and certain.

• Lucy v. Zehmer (1954)
  • Issue: Whether the parties had a serious intention to be bound by their agreement.
  • Rule: Contracts are to be judged by the outward expression of a person as manifesting his intention rather than by his secret and unexpressed intention.
  • Analysis: The court found that Zehmer’s outward expression was that of serious intent, despite claims of jest.
  • Conclusion: The parties had a binding contract.

B. Acceptance

Acceptance is the assent to the terms of the offer. It must be unequivocal and communicated to the offeror.

• Acceptance can be by performance or by a return promise.
• The Mirror Image Rule states that acceptance must be an unequivocal assent to the terms of the offer.
• Massachusetts follows the modern trend of allowing acceptance by any reasonable means unless the offer specifically dictates the mode of acceptance.

C. Consideration

Consideration is the value given in return for a promise. It may consist of a performance, forbearance, or a promise to do either.

• Hamer v. Sidway (1891)
  • Issue: Whether forbearance can constitute valid consideration.
  • Rule: Forbearance of a legal right can be sufficient consideration for a promise.
  • Analysis: The court concluded that the nephew’s forbearance was valuable consideration.
  • Conclusion: The uncle’s promise was enforceable.

D. Defenses to Formation

Certain defenses can preclude the formation of a contract:
– Lack of Capacity: Parties must have the legal ability to enter into a contract.
– Duress, Undue Influence, Misrepresentation, and Fraud: These factors can invalidate apparent consent.
– Mistake: A mutual or unilateral mistake may prevent contract formation if it goes to the essence of the agreement.
– Illegality: A contract is void if it involves illegal subject matter or violates public policy.

III. The Statute of Frauds

Massachusetts adheres to the Statute of Frauds, which requires certain types of contracts to be in writing to be enforceable, including contracts for the sale of land, contracts that cannot be performed within one year, and promises to answer for the debt of another.

IV. Interpretation of Contracts

The interpretation of contract terms is generally a matter of law. Courts will look to the plain meaning of the words, the context of the agreement, and the parties’ intent.

V. Performance and Breach

A. Performance

Performance is the fulfillment of a contractual duty. It may be complete, substantial, or material.

B. Breach

A breach is a failure to perform the contract as promised. A material breach is one that goes to the essence of the contract, while a minor breach allows for the contract to still be substantially performed.

C. Remedies for Breach

The primary remedies for breach are damages, specific performance, and rescission.

• Expectation Damages: Compensate the non-breaching party for what they expected to receive from the contract.
• Reliance Damages: Put the non-breaching party in the position they would have been in had the contract never been formed.
• Restitution: Prevent unjust enrichment by requiring the breaching party to return any benefit conferred.

VI. Third-Party Issues

A. Third-Party Beneficiary

A third-party beneficiary is a person who may have the right to sue on a contract, despite not being a party to the original agreement.

B. Assignment and Delegation

An assignment is a transfer of rights under a contract, while a delegation is a transfer of duties. Certain rights and duties cannot be transferred if it would significantly change the obligee’s expectations or if the contract prohibits it.

VII. Contractual Excuses

A. Impossibility and Impracticability

If performance becomes impossible or impracticable through no fault of the parties, they may be excused from performance.

B. Frustration of Purpose

When an unforeseen event undermines a contract’s principal purpose, the affected party may be excused from performance.

C. Anticipatory Repudiation

If one party indicates that they will not perform their contractual duties, the other party may treat the contract as breached and seek remedies.

VIII. Special Topics in Massachusetts Contract Law

Massachusetts may have specific precedents or statutes that affect contract law in practice. These might include issues related to consumer protection, real estate transactions, and employment contracts. Students should familiarize themselves with the Massachusetts General Laws (MGL) and relevant case law that may impact these and other specialized areas of contract law.

In conclusion, this study guide presents an overview of key concepts, legal principles, and case law that are fundamental to understanding contract law in Massachusetts. Students should delve deeper into each topic, reviewing case briefs, statutory text, and academic commentary to prepare comprehensively for their final exams.