Contract Law

Chapter 6 Lecture Notes

Contractual Intent       

            The objective of this chapter is to introduce the concept that external events can have an effect on the validity and enforceability of a contractual relationship.  Many students believe that if a contract exists on paper its terms are enforceable.  This chapter provides the opportunity to discuss the idea that intent is an important factor in contracts, as well as other areas of law.    
            The chapter starts with a Chapter Overview that highlights the main areas that will be discussed in the text:  fraud and misrepresentation; duress; and mistake.  The most important points are previewed in order to focus the student’s attention on the material that will follow.                   
            Contractual intent is defined by explaining that subjective factors must be taken into consideration when interpreting the validity of a contractual agreement.  Most of the book concerns that concept of “reasonableness” and objective interpretation, so this is a slightly new point to be considered by the student.                      
           Section C, Fraud and Misrepresentation, indicates the five requisite elements of contractual fraud and contracts fraud with misrepresentation.  The distinction between fraud and misrepresentation can provide the basis for classroom discussion on when misrepresentation becomes fraud, how fraud can be proven, and the potential criminal implications of fraudulent contractual situations.  It is a good idea to reinforce the concept that a single factual circumstance may involve several areas of law — most students tend to categorize facts into only one area of legal concern.
            The section on Duress includes a discussion of physical, economic, and mental duress, as well as contracts of adhesion.  The two areas that usually cause problems for students are economic duress and contracts of adhesion.  The classroom discussion can focus on proving the elements of duress in attempting to void a contract.
            Section E, Mistake, is a good starting point for differentiating between objective and subjective factors and problems in draftsmanship and interpretation.  Because paralegals are often called upon to draft initial versions of contracts, or to interpret existing documents, special attention can be drawn to mistakes and ambiguities in creating the terms of the contract.             
            The chapter continues with a Chapter Summary that provides a recapitulation of the material discussed in the body of the chapter.  The summary acts as a quick review of the subject matter and as a reinforcement of the concepts learned.  In addition, the Chapter Summary includes a Synopsis, which acts as an outline for the student that can be used as preparation for classroom lectures.
            The section of Key Terms is, in fact, a mini-glossary of the terms used in the chapter.  This section reinforces the legal terminology that is imperative for the paralegal to understand in order to function effectively in a work situation.
            Chapter 6 provides five Exercise problems.  Question 1 is a simple fact pattern based on the chapter material that can be discussed or argued for both sides.  The last four questions all require the student to be able to synthesize and explain the concepts learned in the chapter.                      
            Two Cases for Analysis are included as an exercise in case analysis and the case method of instruction.  The cases are introduced by a brief paragraph that explains how the cases relate to the material contained in the chapter.
            The first case, Schulte v Harvey, concerns the effect of a mutual mistake in the enforceability of a contract.  The questions following this case raise the issue of the difference between a mutual and a unilateral mistake.
            Levey  v. Citimortgage, Inc. involves a discussion of unconscionability and breach of fiduciary duties.
            The section of Cases for Analysis is followed by four Suggested Case References.  These cases are introduced by questions that the cases resolve.
            Ethical Considerations, the last section of the chapter, underscores how the ABA Rules of Conduct may apply to the issues discusses within the body of the chapter.