You’ve Got a Deal, Now What?
Episode #10 of the course Contract basics: Let’s make a deal! by James Wong
Welcome back!
Yesterday, we finished the tour of contracts by looking at how the UCC simplifies contracting, but only for the sale of goods between merchants. Today, after a brief summary of the course, you’ll get a few ideas of how to live with contracts in real life.
Summary
Here are key takeaways from the course:
• An exchange of promises can become enforceable contracts if they fulfill the conditions of a certain offer, mirror image acceptance, and valid consideration, and if the parties have the capacity to enter into the contract for legal purposes.
• If you can find either (a) a bargained-for exchange, (b) promissory estoppel (that is, somebody changed their position in reliance of some promise), or (c) somebody got the benefit from another when it was not a gift—then there’s going to be a contract.
• Oral contracts are valid unless the bargain falls within the Statute of Frauds.
• The UCC can fill in missing terms if the contract concerns a sale of goods between merchants.
• Courts will assess conditions, certainty, and performance to see if there’s been a breach. Then it will consider excuses and defenses that may release the breaching party. If there are none, it will impose either damages or order specific performance.
• Finally, courts recognize that agreements are living things. Long-term contracts like leases and supply agreements can change over time. They can also change to reflect changes in relationships. So, it imposes a duty of good faith and fair dealing over the parties. This basically requires parties to be nice to each other. Bad behavior is considered in the damages phase.
Contracts in Real Life
At this point, you should have the tools to figure out if you have a contract. In real life, it’s obviously preferable to negotiate and draft every agreement we enter, but in today’s hyper-fast commercial world, we usually just end up signing forms. Did you read your mobile phone service provider form before you signed it? Or the disclaimer and terms of service before you signed up for Facebook?
While certain laws protect consumers when the other guys writes the contract, it behooves you to know what you’re getting into. Those form contracts are lists of agreements. Even if you can’t change terms you don’t like, it helps to know that they’re there and you won’t be surprised.
If you own your own business, draft contracts in your own words. These are better than the form templates that you find online. If you insist on using one of those, run it by a lawyer first—but they may insist on drafting a customized one for you. Negotiate for a low fee, they’ll end up cleaning up the form for you instead of drafting a new one. And they’re on the hook if there’s a mistake.
If you’re stuck in a deal that you don’t like, talk to a lawyer to see if you can get out or negotiate your way out before you breach. More than 98% of contract disputes are settled out of court. Many are settled with the help of mediation or arbitration—that is, third-party help outside of the court system. You can find a good lawyer in a database of legal professionals, such as Martindale.com. I recommend the A-rated ones. And they’re much more affordable than you might expect.
Finally, it’s been an honor sharing your time. Send me an email at dhandforth@gmail.com if you have questions, and I’ll try to get back to you. I can’t give you legal advice, but I’ll be happy to answer any questions about the course that you may have.
Any advice given in this course is for educational purposes only and is not legal advice.
Recommended book
Examples and Explanations: Contracts, Sixth Edition by Brian A. Blum
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