Contract Law: From Trust to Promise to Contract (HLS2X) | Introduction | Building Contracts through Trust, Promise, Money, and Credit

July 30, 2020

Contract Law: From Trust to Promise to Contract (HLS2X) | Introduction | Building Contracts through Trust, Promise, Money, and Credit

July 30, 2020

Contract Law: From Trust to Promise to Contract (HLS2X)

Introduction |Building Contracts through Trust, Promise, Money, and Credit

Instructor Charles Fried, Beneficial Professor of Law:

My re-written lecture notes for Introduction Building Contracts through Trust, Promise, Money, and Credit hyperlink: https://1drv.ms/b/s!Ar6iJPTO61dwxDCDxvILQ2g_Lih2

Let Professor Fried take us one (1) twist story further. Now, trust gives us promises and, promises creates intrinsic value measurements of unit types. We can cash in on our future and, we can coordinated our activities in communications, agreements, and understanding into a trade exchange when we had planned our cooperation between two (2) or more persons from trusts, promises, and commitments overtime. And, promises gives us a unit of measure of an intrinsic value in type of money payments which allows us to coordinate our trade exchange activities with two (2) or more persons, we do not know. Our intrinsic values of money are promises to and from a person who[m] we have coordinated our trade activities from our past and future exchanges with a person, we do not know and, perhaps, we will never meet. Let us say, again, you have wanted your best friend custom-made five (5) pairs of sandals but, you do not need to make your best friend custom-made one (1) pair of boots. In fact, you do not even make custom-made boots.

Instead you raise beef and, your best friend is a vegetarian; however, you will gladly take your best friend money in a coordinated trade exchange activities but, you do not grow and sell vegetable produces, you sell beefs, as shown in our picture image below.

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Except, as often happens in our lives and businesses, you do not make custom-made boots for your best friend to coordinated a trade exchange activities with him in the month of June and, you do not have your best friend money in your pocket but, your best friend thinks. You will have his money come wintertime in an exchange for your custom-made one (1) pair of boots; in order to complete you and your best friend transactional coordinated trade exchange activities overtime when you have custom-made your best friend one (1) pair of boots, or you have raised and slaughtered your cow to be sold, as beefs to your best friend. This is another deadweight loss, if we cannot deal in the now [present day] because your best friend has no money in the now [present day]; in order to complete his transactional coordinated trade exchange activities with you have caused, you an excess burden in making your best friend one (1) pair of boots in the month of October.

Except, we can build on what we have already done in our primitive coordinated trade exchange activities overtime, as shown in our picture image below.

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Instead of you promising your best friend one (1) pair of custom-made boots in the month of October and, your best friend has promised, you his payment in the month of October including additional money currencies (in interests for his payment delay) than you would have originally received from an intrinsic value in type of money payment. If your transactional coordinated trade exchange activities happen in the month of June. And, if you believe, your best friend promise and, your best friend keeps his promise than both of them are much happier with their transactional coordinated trade exchange activities overtime. And, your deadweight loss has been avoided because your best friend has given you his money currencies, as an intrinsic value in type of money payment in the month of June for his one (1) pair of custom-made boots that you are supposedly scheduled to make and completed by the month of October on Credit, as shown in our picture image below.

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What is credit?

Credit is the ability to borrow money or access goods or services with the understanding that you will pay later. Lenders, merchants, and service providers (known collectively as creditors) grant credit based on their confidence you can be trusted to pay back what you borrowed, along with any finance charges that may apply. To the extent that creditors consider you worthy of their trust, you are said to be creditworthy, or to have "good credit." [2]

And, credit is derived from the Latin word for “believe” meaning having faith in, or you think to be true, or to trust. So, you should notice, how tall our trust is, in our picture image below, as shown.

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In our credit promise to pay from an intrinsic value in type of money payment in the future by reasons of trust, we can climb past our primitive coordinated trade exchange activities overtime. And, the ladder, we have constructed to build our cooperation that develop into each other trusts which has led us to promises and commitments with one (1) another. And, we can rise to the very next level over promises and commitments when we are climbing to the next ladder step of money currencies which are an intrinsic values measurement by ways of unit types through cooperation. Also, we can climb ever higher above our unit of measurements of an intrinsic value in type of money currencies by ways of climbing the ladder next step to credit. Therefore, every ladder step along our way are coordinated trade exchange activities through cooperation was based on one (1) another trusts. In our final analogies on trust which leads us to promise and commitment, to money currencies and, to credit. Now, we stand very tall indeed in our coordinated trade activities in real-time exchange, in our picture image below, as shown.

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What are a legal contracts?

A contract is a legally enforceable agreement between two or more parties. It may be oral or written. A contract is essentially a set of promises. Typically, each party promises to do something for the other in an exchange for a benefit.

Required Characteristics:

To constitute a legal contract, an agreement must have all of the following 5 characteristics:

1. Legal purpose. A contract must have a legal purpose to be enforceable. Steve hires Paul to kill Susan. Steve drafts an agreement outlining Paul's responsibilities, namely to acquire a gun and shoot Susan in the head. The agreement also specifies the amount Steve will pay Paul once Susan is dead. A contract of murder for hire is illegal. If Paul fails to fulfill his obligations under the agreement, Steve will have no recourse against Paul. The agreement Steve has drafted is unenforceable.

2. Mutual Agreement. All parties to the contract must have reached a "meeting of the minds." That is, one party must have extended an offer to which the other parties have agreed. For example, Jim signs a contract with Tom's Tree Trimming. The contract outlines the scope of the work Tom will perform on Jim's property. Jim and Tom have a mutual agreement regarding the work that will be done.

3. Consideration. Each party to the contract must agree to give up something of value in exchange for a benefit. For example, you hire an independent contractor to repave your driveway. You and the paving contractor sign an agreement in which you promise to pay a sum of money in exchange for the paving work. Both you and the contractor have agreed to give up something of value. You have agreed to pay money, and the contractor has agreed to perform the paving work.

4. Competent Parties. The parties to a contract must be competent. That is, they must be of sound mind, of legal age, and unencumbered by drugs or alcohol.

5. Genuine Assent. All parties must engage in the agreement freely. A contract may not be enforced if mistakes have been made by one or more parties.[3]

So, we have arrived to analyzes Contracts which are at the very top of our step ladder. And, contracts have allowed us to avoid, so many deadweights losses overtime and, create a more effective and economic sustainability in our society. And, Contracts comes with some exceptions when we coordinated our trade exchange activities through cooperation is based on trust which leads us to promises and commitments for which, the government will stand behind your communications, agreements and understandings with one (1) another by means of coordination.

Do you recall, some of our example in our previous online MOOC lessons from our verbalized primitive coordinated trade exchange activities overtime? For example, you go into a restaurant owner[s] establishment and, you take a seat at the restaurant establishment owners’ table and, the restaurant establishment owners’ waiter handed, you a menu with choices of entrée meals with an associated prices. And, you tell the waiter, you will order the spinach soup, fish cakes and apple pie, as a meal for dinner. Now, you have a verbalized contract coordinated trade exchange activity through cooperation with the restaurant establishment owners for your ordered dinner. And, you have promised and committed to pay the restaurant establishment owners for your served dinner to your restaurant table and, the restaurant establishment owners’ chef[s] will cook your dinner, as agreed from a coordinated trade exchange activities through cooperation. However, you and the restaurant establishment owners’ employee[s] do not trust one (1) another, in the same way the two (2) best friend who are the custom sandals and boots makers, or those eight (8) college students who are sculling through the water inside of their thin boat rowing their oars had trusted each other. And, you and the restaurant establishment owners’ employee[s] are both complete stranger to one (1) another. You have never seen or met the restaurant establishment owners’ waiter or chef before, but, you expect to get your dinner, and the restaurant establishment owners expect to get paid for their serves and, serving you, your dinner because you have created a transactional coordinated trade exchange activities through cooperation. Which lead to your trust, promise, and commitment to pay the restaurant establishment owners from a verbalized contract. In order to serve you a meal, after, you have sat down at restaurant table and, you have ordered, your dinner from the restaurant menu. And, if you do not pay for your meal, the government will make you pay by ways of a civil lawsuit against you from the restaurant establishment owners. And, if you have paid for your meal in advance, after, you have made reservation and, you did not receive, your meal for which, you have paid in advance ordered, the government will make the restaurant establishment owners pay, you back and then some in a civil lawsuit. Therefore, contracts let us step ladder climb even higher in our coordinated trade exchange activities in an intrinsic values measurement by ways of a unit types through cooperation which leads to your trusts, promises and commitments in real-time.

We can depend on a person, we do not know and maybe do not even trust because contracts are coordinated trade exchange activities through cooperation which leads to our trusts, promises and commitments in real-time for which, the government will stand behind, our trusts, promises and commitments. And, if we have a good government, remember the painting that Professor Fried showed us, in our previous online lesson, Buon Governo (Good Government)? We can make a coordinated trade exchange activity in an intrinsic values measurement by ways of a unit types and go about our business. And, we can trust each other, as if we were friends because the government will stand behind our contracts and, makes us act in a trustworthy way, as if, we were friends, as if, we had trusted each other. In fact, in a good government which is governed fairly and, where a person can go confidently about their business, buying and selling by ways of trade exchanges or, those citizens come to trust each other through transactional activities overtime. Even though, those citizens are strangers to one (1) another will eventually become friends. In a civic obedience is a kind of a limited friendship. Let us call, limited friendship a civic friendship. Now, we can go from trust which leads us to promise and commitment, to money currencies and, to credit contracts and, maybe, even, to friendship. And, a civic friendship is, after all, a kind of a pleasant relationship when you can walk in any restaurant owner[s] establishment and, you are pretty sure that those strangers employed at the restaurant owner[s] establishment will serve you a meal and, the restaurant establishment owners can be sure that s[he] [they] is [are] going to get paid. Therefore, rather than eyeing each other suspiciously, you can smile because our contracts are legally enforceable agreements between two (2) or more parties. Next, we will start on when promises are and when promise are not contracts, and there are rare and tricky cases when contracts are not promises at all.