Chapter 07 - The Essentials of Contract Law
6. When common law courts obtained jurisdiction over commercial cases handled by
admiralty courts, the merchants fought back by establishing their own arbitration
groups to avoid common law altogether.
7. The common law courts finally began to see the wisdom of integrating common law
with the law merchant and this integration practice became more accepted by the
beginning of the 18th century.
8. In the 19th century, Parliament passed the Bills of Exchange Act and the Sale of
Goods Act both of which codified common law principles which by that time had
been successfully integrated with most law merchant principles.
9. When the National Conference of Commissioners was established in 1895 in the
United States, it developed two model laws, the Uniform Negotiable Instruments Act
which followed the Bills of Exchange Act and the Uniform Sales Act which was
patterned after the Sale of Goods Act.
10. The traditions of the common law and the law merchant were merged, with the
principles of the law merchant dominating the law governing commercial
C. The Restatement of the Law of Contracts
1. Restatements are restatements of the common law written clearly and organized in a
2. Restatements of the Law are written by the American Law Institute, an organization
founded in 1923 consisting of lawyers, judges, and law professors.
3. Restatements are persuasive, not binding.
4. Restatements are adaptive and sometimes do more than restate the law in that they
may create the law as lawyers, judges, and law professors struggle to compromise on
the meaning, intent, and objectives of common law.
5. Early drafting of the Restatement of the Law of Contracts narrowly defined the
interpretation of consideration leaving no room for a situation in which before a
contract exists, a promise is made, relied on, and then broken.
6. Illustrating the role of the drafters in regard to struggles with the law, to remedy the
situation involving a promise being broken outside the confines of a contract, the
concept of promissory estoppel was added to the Restatement.
II. The Multi-Dimensional Nature of Contract Law (7-2)
A. The Elements of a Contract
1. Mutual Assent
a. Once the offer has been properly made by the offeror and accepted properly by
the offeree, then mutual assent exists between them.
b. Situations that might destroy assent include: fraud (both active and passive),
misrepresentation, mistake, duress, and undue influence.
a. Consideration is the thing of value promised to the other party in exchange for
something else of value promised by the other party.
b. Courts are generally not concerned with the adequacy of consideration unless the
consideration is unconscionable.
c. Parties can settle disputes through an accord and satisfaction.
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