Chapter 1

INTRODUCTION

I. MEANING OF “CONTRACT”

A. Definition: A “contract” can be defined for most purposes as an agreement which the law will enforce in some way. See C&P, p. 1.

1. Containing at least one promise: A contract must contain at least one promise, i.e., a commitment to do something in the future. A contract is thus said to be “executory,” rather than “executed.”

Example: Suppose A transfers title to her car to B, and in return simultaneously receives $1,000 from B; this whole transaction is done on the spur of the moment. No contract has been created. Since the transaction contains no promise by either party of a future performance, it is completely executed, rather than executory. If, on the other hand, A had promised that she would transfer title to B, and B had promised to give A $1,000 (or had in fact given A the $1,000 immediately), there would be a contract, since A‘s performance was to occur in the future.

2. Written vs. oral contracts: The term “contract” is often used to refer to a written document which embodies an agreement. But for legal purposes, an agreement may be a binding and enforceable contract in most circumstances even though it is oral. The few kinds of contracts for which a written document is necessary are discussed in the chapter on the Statute of Frauds, infra, p. 267.

3. Contracts vs. quasi-contracts: Contracts must be distinguished from what are sometimes called “quasi-contracts.” A quasi-contract is not a contract at all, but is rather the term used by some courts to denote a recovery imposed by law where justice so requires, even though the parties have not made any agreement. Thus a physician who renders emergency services to an injured pedestrian he finds on the sidewalk might be allowed to recover in quasi-contract even though his services were not requested by the victim (or by anyone else). Quasi-contractual recovery is discussed more fully infra, p. 325.

a. Implied in law: A quasi-contractual recovery is often called “implied in law” recovery. The term “implied in law” should not be confused with a contract that is “implied in fact.” An “implied-in-fact” contract is a real contract, but one in which agreement is reached by the parties’ actions, rather than their words. If a person visits a doctor to discuss an ailment, an agreement to pay a reasonable fee will be “implied in fact” even though neither party mentions payment. Implied-in-fact contracts are treated exactly like “express” contracts (i.e., contracts agreed upon by words) for almost all purposes, but are treated very differently from “implied-in-law” contracts (i.e., quasi-contracts).