Introduction

In The Paper Chase, a TV series based on a 1973 movie about the adventures of first-year law students at Harvard, Professor Kingsfield, the Contracts professor, tells his students the following:

The study of law is something new and unfamiliar to most of you, unlike any other schooling you have ever known before. You teach yourselves the law, but I train your minds. You come in here with a skull full of mush, and, if you survive, you leave thinking like a lawyer.

Getting you to think like a lawyer is the goal of law school, but reaching that goal can seem more arduous than it has to be. When you take the course called Contracts, for example, you’ll probably find that you’re mostly reading cases, and you never see a contract.

One reason for this disconnect is that the course in Contracts is traditionally designed to teach you “legal method” — skills such as reading cases, analysis, and synthesis — and not the substance of contract law, which is often sort of incidental. The only problem is that you have to know the rules and principles of contract law in order to have some grist for the analytical mill.

Because your casebook may not present the material in an easily accessible and understandable format, Contract Law For Dummies is designed to plug that gap. It can help you wrap your brain around the most fundamental concepts and help you see the forest, not just the trees. Consider this book your stepstool up to the higher-complexity coverage you’ll encounter in your classes.

About This Book

Contract law isn’t exactly a science or an art; it’s a little of each. As a science, contract law is governed by certain principles and rules. As an art, contract law often requires creativity as courts apply the rules and interpret the language of contracts. Because of this, Contract Law For Dummies contains a little of both. It presents the rules that govern contracts and provides numerous examples to help you apply those rules to different fact situations. This presentation enables you, as a budding contract lawyer, to do the following:

More accurately predict a court’s ruling on any given contract dispute.

Know when you have to follow a rule and when you can change it.

Draft contracts that more effectively protect your clients’ interests.

Pass your law school and bar exams.

This book is organized so you can read it from cover to cover or skip around to only those parts, chapters, or sections that capture your current fancy or serve your present needs. I’ve been teaching contract law for 30 years and practiced it for 7 years before that, and I’ve developed a unique approach that has been very successful for my students. This book follows that approach, presenting what you need to know in the order that tends to be most effective.

As you’ll soon discover, however, developing the skills required for understanding and practicing contract law — and doing it well — isn’t always a linear path. While discovering new concepts and ways to interpret the language of contracts, you often must skip back to review what you thought you already knew and understood. This book is optimized for skipping around to find exactly what you need whenever you happen to need it.

Conventions Used in This Book

I use several conventions in this book to call your attention to certain items. For example:

Italic highlights new, somewhat technical terms (such as objective manifestation and parol evidence), which I follow up with straight- forward, easy-to-understand definitions.

Boldface text indicates keywords and phrases in bulleted and numbered lists.

Monofont highlights web addresses.

A widget is a hypothetical good bought and sold in Contracts classes.

Contracts with a capital C refers to the study of the subject, and contracts with a small c refers to agreements.

I generally cite the North Carolina version of the Uniform Commercial Code (UCC), because the Uniform version is under copyright, whereas an enacted statute is in the public domain.

When I refer to “the Code,” I mean the UCC. And when you see “the Restatement,” I’m referring to the Second Restatement of Contracts.

What You’re Not to Read

You can safely skip anything you see in a gray shaded box. We stuck this material in a box (called a sidebar) for the same reason that most people stick stuff in boxes: to get it out of the way so you don’t trip over it. However, you may find the brief asides in the sidebars engaging, entertaining, and perhaps even mildly informative.

Foolish Assumptions

In writing this book, I made a few foolish assumptions, mostly about your motivation and how you’re going to use this book:

You’re planning to master U.S. contract law. This book mentions English law, international law, and the contract law of other countries only in passing.

You’re eager to tackle contract law.

You’re probably going to supplement this text with more formal study, including coursework, additional reading, assignments, and briefing the cases.

You understand that my approach to teaching contract law is only one of many effective ways.

In class, you won’t say, “But Burnham says. . . .”

I make no assumptions concerning how much you already know about contract law — you needn’t know anything to get started.

How This Book Is Organized

To assist you in navigating this book’s contents, I divvied up the chapters that comprise this book into seven distinct parts. This section provides a quick overview of what I cover in each part.

Part I: Introducing Contract Law and Contract Formation

In a contract law case, one of the first things the court has to determine is whether the parties even have a contract. The chapters in this part introduce and explain the essential elements of contract formation (offer, acceptance, and consideration) along with notable exceptions — promises that are enforceable without a contract.

As a bonus, Chapter 1 provides an overview of contract law and introduces you to the two sources of governing rules: the Restatement of Contracts and the Uniform Commercial Code (UCC).

Part II: Determining Whether a Contract Is Void, Voidable, or Unenforceable

To challenge the formation of a contract in the court of law, a party may present a contract defense — proof claiming that certain additional facts undermine the contract’s formation and destroy its enforceability. This part explains different contract defenses, including whether a party did anything illegal or unfair and whether the parties had the ability to make a contract, as well as the factors that determine whether an oral agreement is enforceable.

Part III: Analyzing Contract Terms and Their Meaning

Contract disputes arise when the parties don’t concur on which terms they agreed to or what the terms mean. One party may claim that the parties agreed to a term that doesn’t appear in the written contract. A contract may have gaps that fail to address unforeseen circumstances. Or the language in a contract may be ambiguous. The chapters in this part discuss several strategies that the courts use to plug the gaps in a contract and interpret what the language really means . . . or at least what it would mean to reasonable people standing in the parties’ shoes.

Part IV: Performing the Contract or Breaching It

Whether the parties formed a contract is only half the story. The other half deals with the performance of that contract. The chapters in this part tackle nonperformance issues. Here you find out whether changes made to a contract after formation are enforceable, whether the occurrence of unforeseen events or the nonoccurrence of certain conditions excuses performance, and how one party may breach a contract even before performance is due.

Part V: Exploring Remedies for Breach of Contract

If a party breaches the contract, the courts must decide how to remedy the breach in a way that’s fair for both parties. This isn’t tort law, where the courts try to punish the wrongdoer. In contract law, the goal is to give the non-breaching party what she expected from the performance of the contract but no more than that. The non-breaching party shouldn’t get a windfall at the expense of the breaching party.

The chapters in this part introduce and explain the various methods available to the courts to remedy a breach.

Part VI: Bringing Third Parties into the Picture

A contract often affects more than the parties who made it. A contract is like a piece of property that can be carved up and bought and sold. When parts are transferred, third parties can get involved in performance and enforcement of the contract. The chapters in this part help you recognize the rights and duties of those third parties and decide under which circumstances third parties are allowed to enforce contracts and may have duties to perform under a contract.

Part VII: The Part of Tens

Every For Dummies book includes a Part of Tens — chapters containing ten bite-sized, easily digestible tips, tricks, or insights. Here I offer ten key questions to ask when analyzing a contract problem and ten famous people and philosophies in contract law.

Icons Used in This Book

Throughout this book, icons appear in the margins to call your attention to different types of information. Here are the icons and a brief description of each.

Everything in this book is important (except for the stuff in the shaded boxes), but some information is even more important. When you see this icon, read the text next to it not once but two or three times to tattoo it on your gray matter.

Tips provide insider insight from behind the scenes. When you’re looking for a better, faster way to do something, check out these tips.

This icon appears when you need to be extra vigilant or seek additional guidance before moving forward. Don’t skip this important information — I’m warning you!

Certain cases have strongly influenced contract law and how the courts interpret the law and language of contracts. To spot these key cases, look for the Key Case icon.

Contract law makes a lot more sense when you see how it applies to fact situations, so I use hypothetical situations liberally throughout the book to illustrate and simplify the explanation of certain concepts. The Example icon flags these hypotheticals so you can easily spot them.

Where to Go From Here

Contract Law For Dummies is designed to take you from ground zero to a fundamental understanding of contract law. If you’re interested in the big-picture view of contract law in theory and practice, check out Chapter 1. Otherwise, read the book from cover to cover, skip around by using the table of contents as your guide, or head to the index if you need guidance on a more specific topic.