Important Things to Consider -By Area of Law
Contract
Contract Law
Contract law is a fundamental aspect of commercial and personal transactions, governing agreements between parties. This overview will cover key aspects, including the formation of contracts, essential elements, types of contracts, problems that can arise, and legal consequences.
1. Formation of Contracts:
a. Offer and Acceptance: The process begins with one party making an offer to enter into a contract and the other party accepting that offer. The offer must be clear, definite, and communicated to the offeree.
b. Consideration: A contract must involve something of value (consideration) exchanged between the parties. Consideration can be money, goods, services, or a promise to do or not do something.
c. Legal Capacity: Both parties must have the legal capacity to enter into a contract. This means they must be of sound mind, of legal age, and not under the influence of duress or undue influence.
d. Legal Purpose: The purpose of the contract must be legal. Contracts that involve illegal activities or go against public policy may be unenforceable.
2. Essential Elements of a Binding Agreement:
a. Mutual Assent: Both parties must agree to the terms of the contract voluntarily and with a clear understanding of those terms.
b. Offer and Acceptance: There must be a valid offer and an unequivocal acceptance of that offer.
c. Consideration: Each party must provide something of value in exchange for the promise of the other party.
d. Legal Capacity: Both parties must have the capacity to understand the contract’s terms and implications.
e. Legal Purpose: The contract’s purpose must be legal and not against public policy.
3. Types of Contracts:
a. Express Contracts: Parties explicitly state the terms of the contract, either verbally or in writing.
b. Implied Contracts: Contracts inferred from the parties’ conduct or actions, rather than explicit statements.
c. Unilateral Contracts: One party promises to do something in exchange for a specific action or performance by the other party.
d. Bilateral Contracts: Both parties make promises to each other, forming a mutual exchange of promises.
4. Problems in Contracts and Contract Law:
a. Breach of Contract: One party fails to fulfill their contractual obligations, leading to a breach of contract. Legal consequences may include damages or specific performance.
b. Misrepresentation: False statements or fraudulent actions by one party can lead to a contract being voidable or unenforceable.
c. Duress and Undue Influence: Contracts entered into under duress or undue influence may be voidable.
d. Ambiguity: Contracts with unclear or ambiguous terms can lead to disputes over their interpretation.
5. Legal Consequences:
a. Remedies for Breach: When one party breaches a contract, the non-breaching party may seek remedies such as damages (compensation for losses), specific performance (enforcement of the contract), or rescission (cancellation of the contract).
b. Statute of Frauds: Some contracts must be in writing to be enforceable, as required by the Statute of Frauds. Examples include contracts for the sale of real estate and contracts that cannot be completed within one year.
c. Third-Party Rights: Some contracts confer rights or obligations on third parties, known as third-party beneficiaries.
6. Examples:
a. Example 1 (Sale of Goods): Party A offers to sell Party B a specific car for $10,000, and Party B accepts the offer. Both parties provide consideration, and the contract is formed. If either party fails to fulfill their obligations, it may constitute a breach.
b. Example 2 (Employment Contract): An employer offers an employee a written contract specifying salary, job responsibilities, and benefits. The employee accepts the offer, creating an express contract. If the employer later fails to pay the agreed-upon salary, it may be a breach of contract.
c. Example 3 (Real Estate Purchase): Party X offers to sell a house to Party Y for $200,000, and Party Y accepts the offer. The contract must be in writing due to the Statute of Frauds. If Party X refuses to sell the house, Party Y may seek specific performance or damages.
In summary, contract law governs agreements between parties, providing a framework for the formation, performance, and enforcement of contracts. Contracts must meet specific elements, including offer and acceptance, consideration, legal capacity, and legal purpose, to be legally binding. Problems can arise due to breaches, misrepresentation, duress, or ambiguity, leading to various legal consequences. Understanding contract law is essential for individuals and businesses engaged in contractual relationships to protect their rights and interests.
Contract
Acceptance
Acceptance is a critical element in the formation of a contract, as it represents the other party’s agreement to the terms of an offer.
1. Concept of Acceptance:
a. Definition: Acceptance is the act of agreeing to the terms of an offer made by another party. It is one of the essential elements required to form a binding contract.
b. Mirror Image Rule: In common law jurisdictions like the United States, the general rule is that acceptance must mirror the offer. This means that the acceptance must match the terms of the offer precisely without introducing new conditions or altering the terms.
2. Essential Elements of Acceptance:
a. Clear and Unequivocal: Acceptance must be clear and unequivocal, leaving no room for misunderstanding or ambiguity.
b. Communication: Acceptance typically needs to be communicated to the offeror, unless an exception applies (e.g., unilateral contracts, mailbox rule).
c. Timeliness: Acceptance must be made within the time frame specified in the offer or within a reasonable time if no specific time is mentioned.
3. Problems that Could Arise with Acceptance:
a. Delayed or Untimely Acceptance: If an acceptance is not made within the stipulated time or within a reasonable time, the offer may lapse, and the contract may not be formed.
b. Conditional Acceptance: If an acceptance introduces new conditions or changes the terms of the original offer, it is not a valid acceptance and may be treated as a counteroffer, which can lead to a negotiation process.
c. Ambiguous Acceptance: An ambiguous or vague acceptance may render the contract unenforceable due to uncertainty about the parties’ intentions.
4. Examples:
a. Example 1 (Simple Acceptance): Party A offers to sell Party B a laptop for $500, and Party B responds by saying, “I accept your offer to purchase the laptop for $500.” Party B’s clear and unambiguous communication of acceptance forms a valid contract.
b. Example 2 (Conditional Acceptance): Party X offers to sell Party Y a car for $10,000, and Party Y responds, “I accept your offer, but only if you include new tires.” This response constitutes a conditional acceptance, which may be treated as a rejection of the original offer.
c. Example 3 (Ambiguous Acceptance): Party M offers to provide catering services to Party N for an event, and Party N responds with a message that is unclear about whether they accept the offer. If the acceptance is ambiguous, it may not form a valid contract until clarified.
5. Legal Consequences of Acceptance:
a. Formation of a Contract: When a valid and clear acceptance is communicated, it creates a legally binding contract. Both parties are obligated to fulfill their respective contractual obligations.
b. Breach of Contract: If a party fails to perform its obligations under the contract after valid acceptance, it may constitute a breach of contract, leading to legal remedies such as damages or specific performance.
c. Modification: Acceptance of an offer with modifications typically becomes a counteroffer, requiring the original offeror’s acceptance of the modified terms for a contract to be formed.
In summary, acceptance is a critical element in contract law, representing a party’s agreement to the terms of an offer. Acceptance must be clear, communicated, and timely to create a legally binding contract. Problems can arise with delayed, conditional, or ambiguous acceptances, potentially affecting the formation of a contract. Understanding the principles of acceptance is essential for parties entering into contractual agreements to ensure the enforceability of their contracts and the protection of their rights and interests.
Ambiguity
Ambiguity in a contract can lead to misunderstandings and disputes between parties, making it an important issue to address.
1. Concept of Ambiguity:
a. Definition: Ambiguity in contract law refers to situations where the terms or provisions of a contract are unclear, vague, or capable of multiple interpretations.
b. Types of Ambiguity: – Latent Ambiguity: Occurs when the contract language itself appears clear but becomes ambiguous due to extrinsic factors or information not available to both parties at the time of contract formation. – Patent Ambiguity: Arises when the contract language is inherently unclear or vague on its face.
2. Problems that Could Arise with Ambiguity:
a. Interpretation Disputes: Ambiguous contract language can lead to disputes between the parties over the intended meaning of specific terms or provisions.
b. Enforceability Issues: Courts may refuse to enforce contracts that contain ambiguous terms, as they violate the principle that contracts should be clear and unambiguous.
c. Unforeseen Consequences: Ambiguity can result in unforeseen legal consequences or obligations that the parties did not anticipate when entering into the contract.
3. Examples:
a. Example 1 (Latent Ambiguity): Party A contracts with Party B to purchase “100 units of Product X” for $1,000. After the contract is signed, Party A discovers that there are two different versions of Product X, and the contract does not specify which version is to be delivered. This is a latent ambiguity because the ambiguity arises from external information not known to both parties.
b. Example 2 (Patent Ambiguity): A contract states that Party X will deliver “large bags of rice” to Party Y. However, it does not define what constitutes a “large” bag of rice. This is a patent ambiguity because the ambiguity is evident within the contract language itself.
4. Legal Consequences of Ambiguity:
a. Contract Voidability: If a contract contains an ambiguous term that cannot be resolved through interpretation, it may be voidable by one or both parties.
b. Extrinsic Evidence: Courts may consider extrinsic evidence, such as prior negotiations or industry standards, to interpret ambiguous contract terms and ascertain the parties’ intent.
c. Parol Evidence Rule: In some jurisdictions, the parol evidence rule restricts the use of extrinsic evidence to contradict or add terms to a fully integrated written contract. However, it may allow evidence to clarify ambiguity.
5. Resolution of Ambiguity:
a. Court Interpretation: In cases of ambiguity, courts strive to interpret contracts in a manner that gives effect to the parties’ intentions, considering all relevant evidence.
b. Contractual Amendment: The parties can amend the contract to clarify ambiguous terms, preferably in writing, to avoid future disputes.
c. Contract Rescission: If the ambiguity is severe and unresolvable, the parties may choose to rescind (cancel) the contract altogether.
6. Prevention:
a. Clear and Precise Language: Parties should draft contracts using clear and precise language, defining terms and provisions explicitly.
b. Legal Counsel: Seeking legal advice and review of contracts can help identify and address potential ambiguities.
In summary, ambiguity in contract law refers to unclear or vague terms or provisions within a contract. Ambiguity can lead to interpretation disputes, enforceability issues, and unforeseen consequences. Courts aim to interpret contracts to ascertain the parties’ intent when ambiguity arises. To avoid ambiguity, parties should use clear and precise language and consider legal counsel for contract drafting and review to ensure the enforceability and effectiveness of their agreements.
Contract
Assent
Assent, also known as mutual assent or meeting of the minds, is a fundamental element in the formation of a legally binding contract.
1. Concept of Assent:
a. Definition: Assent refers to the agreement or mutual consent of both parties involved in a contract. It signifies that both parties must willingly and knowingly agree to the terms and conditions of the contract.
b. Meeting of the Minds: Assent embodies the concept of a “meeting of the minds,” indicating that both parties must share a common understanding and intention regarding the contract’s terms.
2. Problems that Could Arise with Assent:
a. Lack of Genuine Consent: If one party in a contract is found to have lacked genuine consent due to fraud, duress, undue influence, or misrepresentation, the assent may be deemed invalid, and the contract could be voidable.
b. Mistake: Mutual assent can be affected by a mistake made by one or both parties regarding a material aspect of the contract, which can lead to disputes or contract rescission.
3. Examples:
a. Example 1 (Lack of Genuine Consent): Party A enters into a contract to sell their antique watch to Party B. Unbeknownst to Party A, Party B fraudulently misrepresents the watch’s value, and Party A agrees to sell it at a significantly lower price than its actual worth. Party A lacks genuine consent due to fraud, and the contract may be voidable.
b. Example 2 (Mistake): Party X agrees to buy a painting from Party Y, believing it to be the work of a famous artist. However, both parties later discover that the painting is a forgery. The mistake regarding the painting’s authenticity can lead to a dispute over mutual assent and the contract’s validity.
4. Legal Consequences of Assent:
a. Valid Contract Formation: When genuine assent is present, it leads to the formation of a legally binding contract. Both parties are obligated to fulfill their respective contractual duties.
b. Voidability: If assent is impaired by factors such as fraud, duress, undue influence, or mistake, the contract may be voidable at the option of the aggrieved party. They can choose to affirm the contract or void it, depending on the circumstances.
c. Rescission: In cases where assent is invalidated due to mistake or lack of genuine consent, the contract can be rescinded, restoring the parties to their pre-contractual positions.
5. Prevention:
a. Transparency and Honesty: Parties should engage in open and honest communication when negotiating contracts to ensure a clear understanding of each other’s intentions and obligations.
b. Written Contracts: Putting the terms of the agreement in writing can help prevent misunderstandings and provide clear evidence of the parties’ mutual assent.
c. Legal Counsel: Seeking legal advice during contract negotiation and drafting can help identify and address issues that may affect mutual assent.
In summary, assent is a crucial element in contract law, representing the mutual consent of both parties to the contract’s terms. Problems with assent can arise when one party lacks genuine consent or when there is a mutual mistake. When genuine assent is present, it leads to a legally binding contract, but issues of fraud, duress, undue influence, or mistake can lead to the contract’s voidability or rescission. Parties should prioritize transparency, written agreements, and legal counsel to ensure valid and enforceable contracts.
Breach of Contract
A breach of contract occurs when one party fails to perform its obligations under a valid contract.
1. Concept of Breach of Contract:
a. Definition: A breach of contract occurs when one party to a contract fails to perform its contractual obligations, whether in part or in full, without a valid excuse or legal justification.
b. Material vs. Minor Breach: Breaches can be categorized as material (substantial) or minor (immaterial) based on the significance of the breach to the contract’s overall purpose.
2. Problems that Could Arise with Breach of Contract:
a. Damages: A breach of contract can lead to various types of damages, including compensatory, consequential, and punitive damages, depending on the circumstances and applicable laws.
b. Specific Performance: In some cases, the non-breaching party may seek a court order for specific performance, compelling the breaching party to fulfill their contractual obligations.
c. Mitigation: Parties have a duty to mitigate their damages after a breach, which means taking reasonable steps to minimize their losses.
d. Anticipatory Breach: An anticipatory breach occurs when one party expresses an intention to not fulfill their contractual obligations before the performance is due. This can lead to immediate legal action by the non-breaching party.
3. Examples:
a. Example 1 (Material Breach): Party A contracts with Party B to deliver a shipment of 1,000 computers by a specific date. Party A only delivers 200 computers by the deadline, causing Party B significant financial losses. This is a material breach as it goes to the core of the contract’s purpose.
b. Example 2 (Minor Breach): Party X contracts with Party Y to paint their house, specifying that the color should be light blue. Party Y paints the house a slightly lighter shade of blue than requested. This may be considered a minor breach as the overall purpose of the contract is still fulfilled.
4. Legal Consequences of Breach of Contract:
a. Damages: The non-breaching party is typically entitled to recover damages to compensate for their losses resulting from the breach.
b. Specific Performance: In certain cases, courts may order specific performance to ensure that the breaching party fulfills their contractual obligations, especially when monetary damages are inadequate.
c. Rescission: The non-breaching party can seek to rescind (cancel) the contract if the breach is significant, restoring both parties to their pre-contractual positions.
5. Prevention and Mitigation:
a. Clear and Precise Contracts: Parties should draft clear and precise contracts to minimize potential misunderstandings and disputes.
b. Performance Guarantees: Including performance guarantees, warranties, or penalty clauses can encourage compliance with contractual obligations.
c. Legal Counsel: Legal advice during contract negotiation and drafting can help parties identify potential issues and take preventive measures.
In summary, breach of contract is a fundamental concept in contract law that occurs when one party fails to fulfill its contractual obligations. Breach can result in various legal consequences, including damages, specific performance, or contract rescission. Parties should take steps to prevent breaches by drafting clear contracts, including performance guarantees, and seeking legal counsel when necessary to ensure the enforceability and effectiveness of their contracts.
Capacity
Capacity refers to a party’s mental and legal ability to enter into a contract. It is an essential element in contract law to ensure that the parties entering into a contract are competent and capable of understanding and fulfilling their contractual obligations.
1. Concept of Capacity:
a. Definition: Capacity in contract law refers to a party’s ability to understand the nature and consequences of the contract they are entering into and to appreciate its legal significance.
b. Presumption of Capacity: Generally, adults are presumed to have the capacity to contract, while certain groups, such as minors and individuals with mental impairments, may have limited capacity or lack capacity altogether.
2. Problems that Could Arise with Capacity:
a. Voidable Contracts: Contracts entered into by individuals lacking capacity are often voidable, meaning they can be affirmed or voided at the option of the incapacitated party.
b. Ratification: An incapacitated party may ratify a contract once they regain capacity, making it legally binding.
c. Third-Party Liability: If a contract with an incapacitated party is voided, third parties who knew or should have known about the incapacity may still be held liable for damages.
3. Examples:
a. Example 1 (Minor’s Lack of Capacity): A 16-year-old enters into a contract to purchase a car. Because the individual is a minor, they lack capacity, and the contract is voidable by the minor. If the minor chooses to void the contract, the car seller cannot enforce it.
b. Example 2 (Mental Incapacity): Party A enters into a contract with Party B to sell their property. Later, it is discovered that Party A was suffering from a severe mental illness that impaired their capacity to understand the contract’s terms. In this case, the contract may be voidable due to Party A’s lack of capacity.
4. Legal Consequences of Capacity:
a. Voidable Contracts: Contracts entered into by parties lacking capacity are typically voidable at the option of the incapacitated party. They can choose to affirm or void the contract once their capacity is restored or when they reach the age of majority (in the case of minors).
b. Restitution: In cases of contract voiding, the parties are generally required to return any benefits received under the contract, such as money or property.
c. Third-Party Liability: Third parties who knowingly enter into contracts with incapacitated individuals may still be held liable for damages if the contract is voided.
5. Prevention and Protection:
a. Contractual Clarity: Parties should ensure that contracts are clear and comprehensible, especially when dealing with individuals who may have limited capacity.
b. Legal Guardianship: In cases involving individuals with mental impairments, legal guardians may be appointed to make decisions on their behalf.
c. Minor’s Contracts: In the case of minors, certain contracts (e.g., contracts for necessaries) may be enforceable even if the minor lacks capacity.
In summary, capacity is a crucial concept in contract law, ensuring that parties entering into contracts are capable of understanding and fulfilling their obligations. Problems with capacity can lead to voidable contracts and potential restitution of benefits received. Parties should take measures to prevent capacity-related issues and protect vulnerable individuals, such as minors or those with mental impairments, in contract transactions.
Consideration
Consideration is a fundamental element of a valid contract, representing something of value exchanged between the parties. It is a key component in contract formation to ensure that the contract is based on mutual assent and fairness.
1. Concept of Consideration:
a. Definition: Consideration refers to something of legal value given by one party to another in exchange for a promise, performance, or forbearance of a right.
b. Essential Element: Consideration is an essential element for the formation of a valid and enforceable contract.
2. Problems that Could Arise with Consideration:
a. Lack of Consideration: Contracts without valid consideration are typically unenforceable. If one party does not provide anything of value in exchange for the other party’s promise or performance, there may be no valid consideration.
b. Past Consideration: Consideration must be present at the time of contract formation. Past consideration, where one party’s act or promise occurred before the contract, is generally not valid.
3. Examples:
a. Example 1 (Valid Consideration): Party A promises to pay Party B $500 in exchange for Party B’s promise to deliver a computer by a certain date. Party A’s promise of payment and Party B’s promise of delivery represent valid consideration, forming a binding contract.
b. Example 2 (Lack of Consideration): Party X tells Party Y that they will give them a gift of $1,000 next week. Party Y does not promise or provide anything in return. This promise lacks consideration, and Party X is not legally obligated to make the gift.
4. Legal Consequences of Consideration:
a. Enforceable Contracts: Contracts with valid consideration are generally enforceable in court.
b. Unenforceable Contracts: Contracts without valid consideration may be deemed unenforceable, and the courts will not compel parties to perform their promises.
c. Past Consideration Exception: In some cases, past consideration may be valid if it is explicitly acknowledged and agreed upon by both parties.
5. Prevention and Protection:
a. Mutual Exchange: Ensure that there is a mutual exchange of promises or performances between the parties to establish valid consideration.
b. Clear and Express Terms: Contracts should clearly outline the promises, performances, or forbearances being exchanged to avoid misunderstandings regarding consideration.
c. Legal Advice: Seeking legal counsel during contract drafting and negotiation can help ensure that the contract contains valid consideration and complies with contract law principles.
In summary, consideration is a crucial concept in contract law, representing something of legal value exchanged between parties. Problems with consideration can lead to unenforceable contracts. Parties should ensure that their contracts include valid consideration and adhere to contract law principles to create legally binding and enforceable agreements.
Duress
Duress is a legal doctrine that pertains to situations where one party uses improper pressure or threats to force another party into entering a contract against their will.
1. Concept of Duress:
a. Definition: Duress in contract law occurs when one party intentionally applies undue and wrongful pressure on the other party, compelling them to enter into a contract that they would not have otherwise agreed to voluntarily.
b. Types of Duress: There are two main types of duress: – Physical Duress: Involves threats of physical harm or violence. – Economic Duress: Involves threats to a party’s economic well-being, such as threats to their business or financial stability.
2. Problems that Could Arise with Duress:
a. Invalidation of Contracts: Contracts entered into under duress are generally voidable at the option of the victimized party.
b. Proof and Subjectivity: Proving duress can be challenging, as it often involves subjective assessments of whether the pressure applied was sufficient to invalidate the contract.
3. Examples:
a. Example 1 (Physical Duress): Party A threatens to physically harm Party B unless Party B signs a contract to sell their property at an extremely low price. Party B, fearing for their safety, signs the contract. In this case, the contract may be voidable due to physical duress.
b. Example 2 (Economic Duress): Party X, a supplier, threatens to stop delivering essential materials to Party Y’s factory unless Party Y agrees to a significant price increase that was not part of the original contract. Party Y, facing the risk of a shutdown, reluctantly agrees. This contract may be voidable due to economic duress.
4. Legal Consequences of Duress:
a. Voidable Contracts: Contracts entered into under duress are generally voidable, meaning the victimized party has the option to affirm or void the contract once the duress is removed.
b. Restitution: In cases of contract voiding, the parties are typically required to return any benefits received under the contract, such as money or property.
c. Criminal Liability: In some jurisdictions, the party exerting duress may face criminal charges, especially in cases of physical duress.
5. Prevention and Protection:
a. Clear and Voluntary Consent: Contracts should be based on clear and voluntary consent from all parties, with no element of coercion, threats, or improper pressure.
b. Legal Advice: Seeking legal counsel during contract negotiations can help parties identify and address duress issues and ensure compliance with contract law.
c. Document Evidence: Parties should keep records of all contract-related communications and negotiations to provide evidence in case of duress allegations.
In summary, duress is a significant concept in contract law, representing situations where one party is forced into a contract against their will due to threats or improper pressure. Contracts entered into under duress are generally voidable, and parties should strive for clear and voluntary consent to prevent issues related to duress and protect their legal rights.
Contract
Misrepresentation
Misrepresentation refers to a false statement or assertion made by one party to another during contract negotiations. Misrepresentation can have legal consequences, as it may lead to a contract being voidable or result in legal remedies for the aggrieved party.
1. Concept of Misrepresentation:
a. Definition: Misrepresentation occurs when one party makes a false statement of fact, whether intentionally or negligently, to induce the other party to enter into a contract.
b. Types of Misrepresentation: Misrepresentation can be categorized into three main types: – Fraudulent Misrepresentation: A false statement made knowingly, with intent to deceive. – Negligent Misrepresentation: A false statement made without reasonable care to ensure its accuracy. – Innocent Misrepresentation: A false statement made without any knowledge of its falsity, typically due to a genuine belief in its accuracy.
2. Problems that Could Arise with Misrepresentation:
a. Voidability: A contract entered into based on misrepresentation is typically voidable by the innocent party, allowing them to choose whether to affirm or void the contract.
b. Proving Misrepresentation: Proving misrepresentation can be challenging, as it often requires demonstrating that a false statement was made, that it was material to the contract, and that the relying party suffered harm as a result.
3. Examples:
a. Example 1 (Fraudulent Misrepresentation): Party A sells a used car to Party B and falsely represents that the car has only 50,000 miles on it, when in reality, it has 150,000 miles. Party B relies on this false statement and purchases the car. Party A’s fraudulent misrepresentation may render the contract voidable by Party B.
b. Example 2 (Negligent Misrepresentation): Party X, a real estate agent, tells Party Y that a property has no history of flooding, when in fact, it had experienced severe flooding in the past. Party Y relies on this false statement and purchases the property. Party X’s negligent misrepresentation may lead to the contract being voidable by Party Y.
4. Legal Consequences of Misrepresentation:
a. Voidable Contracts: Contracts entered into based on misrepresentation are generally voidable by the innocent party.
b. Rescission: The innocent party may seek rescission, which means undoing the contract and returning both parties to their pre-contractual positions.
c. Damages: In some cases, the innocent party may seek damages to compensate for losses suffered as a result of the misrepresentation.
5. Prevention and Protection:
a. Full and Accurate Disclosure: Parties should make full and accurate disclosures during contract negotiations, avoiding false statements.
b. Due Diligence: Conducting due diligence and verifying information provided by the other party can help prevent reliance on false statements.
c. Legal Counsel: Legal advice during contract negotiations can help parties identify and address potential misrepresentation issues and ensure compliance with contract law.
In summary, misrepresentation is a significant concept in contract law, involving false statements made during contract negotiations. Contracts based on misrepresentation are generally voidable, and the innocent party may seek remedies such as rescission or damages. To prevent misrepresentation issues, parties should strive for full and accurate disclosures and seek legal counsel when necessary to protect their rights and interests.
Offer
An offer is a fundamental element of contract formation, representing a clear and unequivocal expression of willingness to enter into a contract under specific terms.
1. Concept of an Offer:
a. Definition: An offer is a promise or proposal made by one party (the offeror) to another party (the offeree) that, if accepted, will result in the formation of a legally binding contract.
b. Essential Element: An offer is an essential element in contract formation, as it provides the basis for the offeree’s acceptance.
2. Problems that Could Arise with Offers:
a. Revocation: An offeror may revoke the offer at any time before the offeree accepts it, unless the offer is irrevocable or part of an option contract.
b. Termination: Offers can be terminated by various means, such as rejection by the offeree, expiration of the offer’s stated timeframe, or death or incapacity of either party.
c. Ambiguity: An offer should be clear and unambiguous to avoid misunderstandings and disputes.
3. Examples:
a. Example 1 (Clear Offer): Party A offers to sell their car to Party B for $10,000 and provides a written document specifying the terms of the sale, including the price and delivery date. This constitutes a clear offer.
b. Example 2 (Revocation): Party X offers to sell their house to Party Y for $300,000. However, before Party Y can accept, Party X revokes the offer by notifying Party Y of their decision to sell to someone else.
4. Legal Consequences of Offers:
a. Formation of Contract: If an offer is accepted by the offeree without any modifications, it results in the formation of a legally binding contract.
b. Revocation: Offers can be revoked by the offeror at any time before acceptance, and the offer becomes void.
c. Counteroffers: If the offeree proposes any changes to the original offer, it is considered a counteroffer and may lead to further negotiations or the formation of a new contract.
5. Prevention and Protection:
a. Clear and Precise Language: Offerors should use clear and precise language when making offers to avoid misunderstandings.
b. Acceptance Deadline: Specify a reasonable deadline for acceptance to avoid disputes about the offer’s validity.
c. Consideration for Option Contracts: If an offeror wants to keep an offer open for a specified period, they can require consideration from the offeree in an option contract to make the offer irrevocable.
In summary, an offer is a critical element in contract law, representing a clear promise or proposal to enter into a contract under specific terms. Problems with offers can arise from revocation, termination, or ambiguity. To protect their interests, parties should use clear language in their offers, set clear acceptance deadlines, and understand the legal consequences of different types of offers and responses.
Remedies
Remedies in contract law refer to the solutions or relief available to parties when one party breaches a contract. These remedies aim to compensate the innocent party for any losses suffered due to the breach.
1. Concept of Remedies in Contract Law:
a. Definition: Remedies in contract law are the legal solutions or actions available to parties to address a breach of contract. They are designed to place the innocent party in the position they would have been in if the contract had been performed as agreed.
b. Types of Remedies: There are three primary types of remedies: – Damages: Monetary compensation awarded to the innocent party. – Specific Performance: A court order requiring the breaching party to perform their contractual obligations. – Rescission: The contract is canceled, and both parties are returned to their pre-contractual positions.
2. Problems that Could Arise with Remedies:
a. Calculating Damages: Determining the appropriate amount of damages can be complex and may lead to disputes.
b. Specific Performance: Specific performance may not be available for contracts involving personal services or unique items.
c. Availability of Rescission: Rescission may not always be a practical remedy, especially if performance has already occurred.
3. Examples:
a. Example 1 (Damages): Party A contracts to sell a rare painting to Party B for $100,000, but Party A breaches the contract by selling the painting to a third party. Party B may seek monetary damages equal to the painting’s market value.
b. Example 2 (Specific Performance): Party X contracts to sell a historic landmark property to Party Y, but Party X refuses to perform. Party Y may seek a court order requiring Party X to transfer the property as originally agreed.
4. Legal Principles for Remedies:
a. Expectation Damages: The innocent party is generally entitled to damages that would put them in the position they would have been in if the contract had been fully performed.
b. Mitigation: The innocent party has a duty to mitigate (minimize) their losses after a breach of contract. Failure to do so may reduce the damages awarded.
c. Specific Performance: Specific performance is typically available when monetary damages are inadequate, such as in contracts involving unique items or real property.
d. Equitable Remedies: Rescission and specific performance are considered equitable remedies, typically granted at the discretion of the court.
5. Prevention and Protection:
a. Clear Contracts: Drafting clear and detailed contracts can help prevent disputes and provide a basis for remedies in case of a breach.
b. Documented Evidence: Parties should maintain records of all contract-related communications, performance, and breaches to support their claims for remedies.
c. Legal Counsel: Seeking legal advice when a breach occurs or is anticipated can help parties understand their rights and options for remedies.
In summary, remedies in contract law are essential to address breaches and compensate the innocent party. Problems can arise in calculating damages or determining the availability of specific performance or rescission. Parties should understand their rights and seek legal counsel when needed to protect their interests and ensure they receive the appropriate remedy in case of a breach.
Statute of Frauds
The statute of frauds is a legal doctrine that requires certain types of contracts to be in writing to be enforceable in court.
1. Concept of the Statute of Frauds:
a. Definition: The statute of frauds is a legal requirement that certain contracts must be in writing to be legally enforceable. It is designed to prevent fraudulent claims and ensure the clarity and validity of significant contractual agreements.
b. Types of Contracts Covered: The statute typically covers contracts falling into one or more of the following categories: – Contracts for the sale of real property. – Contracts that cannot be performed within one year. – Contracts for the sale of goods above a certain monetary threshold (under the Uniform Commercial Code). – Contracts in consideration of marriage. – Contracts where one party agrees to pay the debt of another. – Contracts for the sale of securities.
2. Problems that Could Arise with the Statute of Frauds:
a. Enforceability: Contracts falling within the statute’s requirements are unenforceable unless they are in writing, signed by the party to be charged (the party against whom enforcement is sought).
b. Ambiguity: The statute may lead to disputes regarding whether a contract falls within its scope, especially in cases where oral agreements are involved.
3. Examples:
a. Example 1 (Sale of Real Property): Party A orally agrees to sell a piece of land to Party B for $100,000. Without a written contract, Party B may not be able to enforce the agreement under the statute of frauds.
b. Example 2 (One-Year Rule): Party X orally agrees to work for Party Y for two years. Since the contract cannot be performed within one year, it must be in writing to be enforceable under the statute.
4. Legal Principles for the Statute of Frauds:
a. Writing Requirement: To satisfy the statute of frauds, the contract or a memorandum of the contract must be in writing and signed by the party to be charged.
b. Exceptions: Some jurisdictions recognize exceptions, such as partial performance or promissory estoppel, which may make an oral contract enforceable in certain situations.
5. Prevention and Protection:
a. Written Contracts: To ensure enforceability, parties should always put significant agreements in writing.
b. Clear and Detailed Contracts: Written contracts should be clear and detailed to avoid disputes about the contract’s terms and intentions.
c. Legal Advice: Seeking legal counsel can help parties understand the statute’s requirements and exceptions, ensuring compliance and protection of their rights.
In summary, the statute of frauds is a critical concept in contract law, requiring certain contracts to be in writing to be legally enforceable. Problems can arise if parties fail to meet these requirements, leading to unenforceable agreements. Parties should understand the statute’s scope, create written contracts when necessary, and seek legal advice to ensure compliance with the law and protect their contractual rights.
Third Party Rights
Third-party rights in contract law pertain to situations where a person or entity who is not a party to the contract can benefit from, enforce, or be adversely affected by the terms of the contract.
1. Concept of Third-Party Rights:
a. Definition: Third-party rights in contract law refer to situations where someone who is not a party to a contract can either enforce the contract’s terms (third-party beneficiary) or be adversely affected by the contract (third-party detriment).
b. Types of Third-Party Rights: – Third-Party Beneficiary: A third party is intended to benefit from the contract. There are two main types of third-party beneficiaries: intended beneficiaries and incidental beneficiaries. – Third-Party Detriment: A third party is adversely affected by the contract, typically because it restricts the rights of that third party in some way.
2. Problems that Could Arise with Third-Party Rights:
a. Intended vs. Incidental Beneficiaries: Determining whether a third party is an intended beneficiary with the right to enforce a contract can be challenging and lead to disputes.
b. Lack of Privity: Privity of contract is the legal relationship between parties to a contract. Third parties often lack privity, making it difficult for them to enforce contracts.
c. Changing Circumstances: Changes in circumstances can affect the rights of third parties under a contract.
3. Examples:
a. Example 1 (Intended Third-Party Beneficiary): Party A contracts to build a house for Party B and includes a clause stating that Party B’s child, Party C, will inherit the house upon Party B’s death. Party C is an intended third-party beneficiary with the right to enforce the contract if necessary.
b. Example 2 (Incidental Beneficiary): Party X contracts to purchase land from Party Y. Party Z operates a nearby business and believes that the sale will benefit them indirectly. Party Z is an incidental beneficiary with no direct rights under the contract.
4. Legal Principles for Third-Party Rights:
a. Intended vs. Incidental Beneficiaries: Courts distinguish between intended and incidental beneficiaries. Intended beneficiaries typically have enforceable rights, while incidental beneficiaries do not.
b. Privity of Contract: The principle of privity limits the ability of third parties to enforce contracts. However, some jurisdictions have relaxed this rule.
5. Prevention and Protection:
a. Clear Contract Language: Parties should use clear and specific language in contracts to indicate whether they intend third parties to benefit or be adversely affected.
b. Consideration: Ensure that the third-party beneficiary provides some form of consideration (e.g., payment) to strengthen their ability to enforce the contract.
c. Legal Advice: Parties should seek legal counsel when dealing with complex contracts involving third parties to ensure compliance with applicable laws and protect their interests.
In summary, third-party rights in contract law involve situations where individuals or entities not party to a contract can benefit from or be adversely affected by the contract’s terms. Problems can arise in determining the nature of the third-party’s rights and the impact of changing circumstances. Parties should use clear language in contracts and seek legal advice when dealing with third-party rights to prevent disputes and ensure proper protection of their interests.
Undue Influence
Undue influence is a legal doctrine that arises when one party exerts improper pressure or influence on another party during contract formation, leading to an unfair or involuntary agreement.
1. Concept of Undue Influence in Contract Law:
a. Definition: Undue influence occurs when one party, often in a position of power or trust, uses excessive pressure, manipulation, or coercion to compel another party to enter into a contract against their free will or judgment.
b. Elements of Undue Influence: To establish undue influence, certain elements must be present: – Confidential Relationship: A special relationship of trust and confidence between the parties. – Unfair Persuasion: One party must exert unfair persuasion or manipulation to induce the other party to enter into the contract. – Weakened Consent: The victim’s free will and judgment must be significantly impaired due to the undue influence.
2. Problems that Could Arise with Undue Influence:
a. Determining Undue Influence: Identifying when undue influence has occurred can be challenging, as it often involves subjective judgments about the parties’ relationship and interactions.
b. Proof: Proving undue influence may require detailed evidence of the circumstances, the nature of the relationship, and the alleged manipulation.
3. Examples:
a. Example 1 (Elderly Person and Caregiver): An elderly person, relying heavily on a caregiver for assistance and companionship, is persuaded by the caregiver to sign over their entire estate in a will, leaving little to their family members. If the elderly person was unduly influenced by the caregiver, the will may be challenged on the grounds of undue influence.
b. Example 2 (Business Partner Dominance): In a business partnership, one partner with superior knowledge and control over the company’s affairs pressures the other partner into signing a contract that significantly favors the dominant partner’s interests. If the pressured partner can demonstrate undue influence, the contract may be invalidated.
4. Legal Principles for Undue Influence:
a. Voidable Contracts: Contracts formed under undue influence are generally voidable at the option of the victimized party.
b. Confidential Relationship: Undue influence is often more likely to be found in cases where a confidential or fiduciary relationship exists, such as between attorney and client or parent and child.
5. Prevention and Protection:
a. Independent Legal Advice: Encourage parties to seek independent legal advice before entering into significant contracts, especially in situations where a power imbalance exists.
b. Transparency: Maintain transparency in contractual negotiations, and avoid any actions or statements that may be perceived as exerting undue pressure or influence.
c. Record Keeping: Parties should keep records of all communications and negotiations to demonstrate the absence of undue influence.
In summary, undue influence in contract law involves the exertion of improper pressure or manipulation to induce another party to enter into a contract against their free will. Problems can arise in identifying undue influence and providing proof. To protect against undue influence, parties should seek legal advice, maintain transparency, and document their interactions during contract negotiations. Contracts formed under undue influence are generally voidable, allowing the victimized party to challenge the contract’s validity.
Contract
Contract Issues
- Starting a New Business: When launching a new venture, there are many contracts to consider, such as partnership agreements, supplier contracts, or lease agreements for a space. A contracts attorney can ensure that these agreements protect the business owner’s interests, comply with relevant laws, and outline clear rights and obligations for all parties involved.
- Employment Contracts: A person offered a job might consult a contracts attorney to review the terms of an employment contract before signing. This is especially important for high-level positions or industries where non-compete clauses, intellectual property rights, and confidentiality agreements are common. The attorney can negotiate terms to be more favorable or to clarify certain provisions that might be too restrictive or vague.
- Intellectual Property Rights: Anyone entering into a contract involving the licensing, sale, or use of intellectual property will benefit from a contracts attorney who can draft and review agreements to ensure the IP rights are clearly defined and protected. This could involve anything from publishing a book to selling a patent or licensing software.
- Real Estate Transactions: Real estate contracts are complex and involve significant financial commitments. An attorney can review purchase agreements, lease contracts, or property management agreements to protect a client’s interests, ensuring that terms regarding payment, maintenance, dispute resolution, and property descriptions are properly addressed.
- Service Agreements: When hiring or providing services, a service agreement outlines the scope of work, payment terms, timelines, and responsibilities of each party. An attorney can help draft such agreements to ensure they are fair and include remedies if the services are not performed to the agreed standard.
- Mergers and Acquisitions: These transactions involve numerous contracts and legal complexities. A contracts attorney would perform due diligence, review and draft the agreements, and ensure compliance with all legal requirements.
- Dispute Resolution: If there is a breach of contract or a dispute arises from a contractual relationship, an attorney can help resolve the issue. They can provide advice on legal rights and obligations, represent a client in negotiations, and draft settlement agreements.
- Protection Against Future Litigation: A contracts attorney can draft contracts in a way that includes clear dispute resolution clauses, which might mandate arbitration or mediation before any court action. This can save a party significant time and money by avoiding litigation.
- Regulatory Compliance: Certain contracts must adhere to specific regulatory requirements, such as those in healthcare, finance, or construction. A contracts attorney can ensure that agreements comply with these regulations to avoid penalties or voided contracts.
- Custom Contracts: When standard contracts do not suffice for particular needs, a contracts attorney can create tailored agreements, such as for custom manufacturing orders, bespoke service arrangements, or unique joint ventures.
- Updates to Existing Contracts: Changes in the law or business circumstances might necessitate updates to existing contracts. An attorney can review and amend contracts to ensure they remain compliant and relevant.
Contract Law
Contract law attorneys specialize in the handling of issues related to the creation, execution, and enforcement of agreements between individuals, businesses, or other entities.
- Legal Expertise: Contract law is intricate, with nuances that can significantly impact the parties involved. For example, a contract attorney would be aware of the necessity to include a severability clause, which ensures that if one part of a contract is deemed invalid, the rest of the agreement remains enforceable. Without such expertise, a person might draft a contract lacking this clause, risking the entire contract being voided if one provision is problematic.
- Protecting Interests: A contract must protect the interests of all parties. For instance, a contract attorney drafting a non-disclosure agreement (NDA) for a company sharing sensitive information with a contractor would ensure the NDA includes clear definitions of what constitutes confidential information, obligations for maintaining secrecy, and penalties for breaches. Without these specifics, the company’s interests could be at risk if the contractor inadvertently leaks information.
- Legally Enforceable: A contract must be legally binding. This means it must meet certain legal requirements, such as the capacity of the parties to contract, lawful subject matter, and mutual consent. A contract attorney would know, for example, to include an offer, acceptance, and consideration (something of value exchanged between the parties), which are essential for a contract to be enforceable. If a contract lacks these, it may not hold up in court.
- Drafting Documents: The actual writing of the contract is crucial. A contract attorney will use precise and clear language to avoid ambiguity. For instance, in a lease agreement, they would specify the exact duration of the lease, the amount of rent, when it’s due, and the responsibilities of both the landlord and tenant concerning property maintenance. Vague terms could lead to disputes and legal challenges.
- Terms and Conditions: These are the specific provisions and stipulations that govern the contractual agreement. For example, in a service contract, the terms and conditions would outline the scope of the services provided, deadlines, payment schedules, and what happens if either party fails to meet their obligations (like late payment fees or service level agreements for performance).
- Obligations of the Parties Involved: This refers to what each party is agreeing to do or not do. In an employment contract, for example, the employer’s obligations could include providing a safe working environment and paying the agreed-upon salary, while the employee’s obligations could involve performing their job duties and adhering to company policies.
Importance of Contract Law
Their expertise is critical because contracts are at the heart of virtually every business operation and many personal transactions.
Contract law attorneys specialize in the intricate field of contract law, which is essential in both business and personal contexts. They are legal experts who handle a wide range of matters related to the creation, execution, and enforcement of agreements between parties. Here is a more detailed and comprehensive breakdown of the key areas and types of disputes or matters where a contract law attorney can provide assistance:
- Contract Drafting and Review: Contract attorneys assist in creating and reviewing contracts to ensure they are clear, legally sound, and enforceable. They pay close attention to details and language to ensure that the agreement accurately reflects the intentions of the parties involved.
- Contract Negotiation: In negotiations, contract attorneys represent their clients and work to secure favorable contract terms while maintaining fairness and ensuring the agreement is enforceable. They help navigate discussions and advocate for their clients’ interests.
- Breach of Contract: When one party fails to fulfill their obligations under a contract, contract attorneys play a crucial role in assessing whether a breach has occurred. They advise clients on potential remedies, which may include seeking damages, specific performance (forcing the other party to fulfill their obligations), or contract termination.
- Contract Disputes: Contract disputes can arise for various reasons, such as disagreements over contract terms, the quality of services or goods provided, or the interpretation of specific clauses. Contract attorneys assist clients in resolving these disputes, often through negotiation, mediation, arbitration, or litigation.
- Employment Contracts: Contract attorneys frequently work on employment contracts. They ensure that these agreements comply with labor laws and protect the interests of both employers and employees. Employment contracts may cover terms of employment, compensation, benefits, and non-compete clauses.
- Business Contracts: This category encompasses a broad range of contracts crucial to business operations, including:
- Partnership Agreements: Defining the roles and responsibilities of partners in a business.
- Non-Disclosure Agreements (NDAs): Protecting sensitive information from being disclosed.
- Service Contracts: Outlining the terms and conditions for services rendered.
- Supply Agreements: Establishing terms for the supply of goods or materials.
- Real Estate Contracts: Contract attorneys handle agreements related to real estate transactions, including sales, purchases, leases, and rentals. They also assist in resolving disputes arising from these contracts, which may involve issues like property defects or non-payment of rent.
- Consumer Contracts: Lawyers may assist consumers in disputes related to contracts for goods and services, ensuring that these contracts comply with consumer protection laws and are fair to all parties involved. This can include matters like product warranties and service agreements.
- Intellectual Property Contracts: Contract attorneys play a crucial role in drafting, reviewing, and enforcing contracts related to intellectual property, including licensing agreements for patents, trademarks, and copyrights. They help protect their clients’ intellectual property rights.
- Construction Contracts: Construction contracts can be complex and involve specific legal principles. Contract attorneys assist with the negotiation, drafting, and review of construction contracts, helping to manage the intricacies of these agreements.
- Online and Software Contracts: With the proliferation of e-commerce and software services, contract lawyers are increasingly involved in drafting and reviewing online contracts, such as terms of service, privacy policies, and software licensing agreements. They ensure these contracts protect the client’s interests and comply with applicable laws.
- Dispute Resolution: In the event of a contract dispute, contract attorneys can represent clients in various forms of dispute resolution, including mediation, arbitration, or litigation, depending on what the contract specifies for dispute resolution or what the parties agree to.
- In summary, contract law attorneys play a vital role in facilitating agreements, minimizing legal risks, and resolving disputes effectively when they arise. Their expertise is essential in ensuring that contracts are legally sound, enforceable, and fair to all parties involved, whether in business dealings or personal transactions. Their work requires a keen understanding of contract law principles, attention to detail, and strong negotiation and advocacy skills.
Contract law attorneys play a vital role in many aspects of business and personal affairs, helping to navigate complex issues, avoid potential disputes, and resolve matters effectively when disputes do arise.
Contract Law
“Whether parties have reached a contractual agreement and on what terms are
questions for the fact finder when conflicting versions of the parties’ negotiations
require a determination of credibility.” (Hebberd-Kulow Enterprises, Inc. v.
Kelomar, Inc. (2013) 218 Cal.App.4th 272, 283 [159 Cal.Rptr.3d 869].)
- “Whether a contract is illegal or contrary to public policy is a question of law to be determined from the circumstances of each particular case.” (Jackson v. Rogers & Wells (1989) 210 Cal.App.3d 336, 349–350 [258 Cal.Rptr. 454].)
- “In order for acceptance of a proposal to result in the formation of a contract, the proposal ‘must be sufficiently definite, or must call for such definite terms in the acceptance, that the performance promised is reasonably certain.’ [Citation.]” (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 811 [71 Cal.Rptr.2d 265].)
- “Whether a contract is sufficiently definite to be enforceable is a question of law for the court.” (Ladas v. California State Automobile Assn. (1993) 19
Cal.App.4th 761, 770, fn. 2 [23 Cal.Rptr.2d 810].) - “Consideration is present when the promisee confers a benefit or suffers a
prejudice. Although ‘either alone is sufficient to constitute consideration,’ the
benefit or prejudice’ “ ‘must actually be bargained for as the exchange for the promise.’ ” ’ ‘Put another way, the benefit or prejudice must have induced the promisor’s promise.’ It is established that ‘the compromise of disputes or claims asserted in good faith constitutes consideration for a new promise.’ ” (Property California SCJLW One Corp. v. Leamy (2018) 25 Cal.App.5th 1155, 1165 [236 Cal.Rptr.3d 500], internal citations omitted.) - “[T]he presumption of consideration under [Civil Code] section 1614 affects the burden of producing evidence and not the burden of proof.” (Rancho Santa Fe Pharmacy, Inc. v. Seyfert (1990) 219 Cal.App.3d 875, 884 [268 Cal.Rptr. 505].)
- “Being an affirmative defense, lack of consideration must be alleged in answer to the complaint.” (National Farm Workers Service Center, Inc. v. M. Caratan, Inc. (1983) 146 Cal.App.3d 796, 808 [194 Cal.Rptr. 617].)
- “ ‘It matters not from whom the consideration moves or to whom it goes. If it is bargained for and given in exchange for the promise, the promise is not
gratuitous.’ ” (Flojo Internat., Inc. v. Lassleben (1992) 4 Cal.App.4th 713, 719 [6 Cal.Rptr.2d 99], internal citation omitted.) - “The failure to specify the amount or a formula for determining the amount of the bonus does not render the agreement too indefinite for enforcement. It is not essential that the contract specify the amount of the consideration or the means of ascertaining it.” (Moncada v. West Coast Quartz Corp. (2013) 221 CONTRACTS CACI No. 302
- “ The breach must be material; element 2 captures materiality by requiring that the plaintiff have done the significant things that the contract required. Also, the two obligations must be dependent, meaning that the parties specifically bargained that the failure to perform the one relieves the obligation toperform the other. While materiality is generally a question of fact, whether covenants are dependent or independent is a matter of construing the agreement.(Brown v. Grimes (2011) 192 Cal.App.4th 265, 277–279 [120 Cal.Rptr.3d 893].) If there is no extrinsic evidence in aid of construction, the question is one of law forthe court. (Verdier v. Verdier (1955) 133 Cal.App.2d 325, 333 [284 P.2d 94].)Therefore, element 2 should not be given unless the court has determined thatdependent obligations are involved. If parol evidence is required and a dispute offacts is presented, additional instructions on the disputed facts will be necessary.(See City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th375, 395 [75 Cal.Rptr.3d 333, 181 P.3d 142].)
- Express and implied-in-fact contracts have the same legal effect, but differ in how they are proved at trial: “ ‘Contracts may be express or implied. These terms, however, do not denote different kinds of contracts, but have reference to the evidence by which the agreement between the parties is shown. If the agreement is shown by the direct words of the parties, spoken or written, the contract is said to be an express one. But if such agreement can only be shown by the acts and conduct of the parties, interpreted in the light of the subject- matter and of the surrounding circumstances, then the contract is an implied one.’ ” (Marvin v. Marvin (1976) 18Cal.3d 660, 678, fn. 16 [134 Cal.Rptr. 815, 557 P.2d 106], internal citation omitted.)
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