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Louisiana Bar Exam July 2024 > 7. Code III: Contracts > Flashcards

7. Code III: Contracts Flashcards

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1
Q

Contract

A

an agreement that creates/ extinguishes/ modifies obligations

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2
Q

Unilateral Contract

A

only one party owes a duty

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3
Q

Bilateral Contract

A

both parties bind themselves reciprocally

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4
Q

2 Important Effects of Bilateral K

A
  1. each party is an obligor AND obligee
  2. when parties bind themselves reciprocally their obligations are co-relative
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5
Q

Onerous Contract

A

reason why obligor bound himself was to obtain a benefit for himself

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6
Q

Gratuitous Contract

A

reason bound was to benefit obligee or some other person

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7
Q

Gratuitous Contract

A

reason bound was to benefit obligee or some other person

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8
Q

Principal Contract

A

k whose obligation is secured by another K

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9
Q

Accessory Contract

A

k which provides security … dependent on principal k

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10
Q

Nominate Contract

A

given a special designation (special name/ rules)

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11
Q

Innominate Contract

A

no special designation/ no special rules

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12
Q

Communicative Contract

A

performance of parties is co-relative to the performane of the other party

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13
Q

Aleatory Contact

A

where performance/ extent of performance of any party to K depends on an UNCERTAIN EVENT

ONE PARTY’S PERFORMANCE MUST BE CERTAIN

(not the same as a conditional contract)

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14
Q

Requirements for Valid K

A
  1. capacity
  2. consent
  3. cause
  4. object
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15
Q

Capacity

A

all persons have contractural capacity

EXCEPT:
1. minors not emancipated
2. interdicts
3. persons deprived of reason at time of K

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16
Q

Capacity Enforceable for Minor When

A

(a) other party reasonably relies on minor’s false assertion of majority (LIE + REAS RELIANCE)

(b) related to minor’s business or necessary to education and support

OR

(c) when K is gratuitous

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17
Q

Onerous K enforceable DESPITE PARTY DEPRIVED OF REASON when:

A

other party knew/ should have known of the lack of capacity

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18
Q

K made by non interdicted party lacking capacity can be attacked after his death when:

A
  1. K is gratuitous
  2. K evidences a lack of understanding
  3. K is minor within 30 days of death
    OR
  4. application for interdiction filed before death
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19
Q

Consent

A

evidenced by offer and acceptance

generally no form requirements

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20
Q

Offer

A
  • personal to offeror
  • generally revocable
  • expires when…
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21
Q

When Offer is Irrevocable

A

(a) specifies a period of time, irrevocable during that time period
(b) does not specify but intends a period of tine for offeree to

ADD TO THIS CARD- NOTES CUT OFF

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22
Q

Expiration of Offer: When Offer is Revocable

(aka default rule)

A

if not accepted in reasonable time

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23
Q

Expiration of Offer: When Offer is Irrevocable

A

expires when period of irrevocability expires

CHECK- NOTES CUT OFF

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24
Q

Acceptance: When?

A
  • revocable = when transmitted by offer (“mailbox rule”)
  • irrevocable = upon receipt

CHECK- NOTES CUT OFF

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25
Q

Rejection is effective ___________

A

upon receipt

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26
Q

Acceptance by Performance Types

A
  1. acceptance by commencement of performance
  2. acceptance by completion of performance
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27
Q

Acceptance by Commencement of Performance

A

offeror invites acceptance by performance

AND

it is contemplated that performance will be completed if commenced

= formed when performance begins

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28
Q

Acceptance by Completion of Performance

A

NOT revocable once performance has commenced for a reasonable time necessary to complete the performance

  • offeree not bound to complete
  • offeree must give prompt notice if accepting by performance (unless offeror knew/ should have)
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29
Q

Acceptance by Silence

A

EXCEPTIONAL CIRCUMSTANCES ONLY

when silence leads offeror to reasonably believe that the offer was accepted

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30
Q

Nonconforming Acceptance

A

acceptance not in accord with the terms of an offer is a COUNTER OFFER

exception for merchants

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31
Q

K of Adhesion

A

losing arg

when “particularly one sided”

one party has superior bargaining power = subject to special scrutiny

LA does not have doctrine of unconscionability

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32
Q

Cause

A

the reason a party obligates himself

  • helps judge know what promises to enforce:
    • distinguishing onerous/ gratuitous Ks
    • distinguishing errors that constitute vices of consent/ those that don’t
    • identified Ks that shouldn’t be upheld bc immoral/ illegal
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33
Q

Cause Need NOT be Express

A
  • effective If there is any valid cause (even a lie)
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34
Q

Simulation

A

K in which parties do not express their true cause

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35
Q

Detrimental Reliance

A

promissor obligated when:
1. promisee RELIED on the promise to her DETRIMENT
2. promisor KNEW/ SHOULD HAVE that promisee would rely
3. promisee was REASONABLE in so relying

= recovery discretionary with the court

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36
Q

If Detrimental Reliance is on Gratuitous Promise without Formalities

A

reliance NOT reasonable

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37
Q

Object

A

performance obligor owes to obligee

  • lawful
  • possible
  • determined or determinable
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38
Q

Future Things are a ________ object

A

future things are a valid object

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39
Q

Promise de Porte Fort

A

object of K is an act of a 3d party: OG obligor is bound by obligation UNTIL 3P binds himself

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40
Q

Stipulation Pour Autris

A

party may stipulate a benefit for a 3P beneficiary

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41
Q

4 Steps to Determine Consent

A
  1. ID offer - decide if revocable or not
  2. if revocable, was it revoked?
  3. if not revoked or if it was irrevocable, was it expired?
  4. if didn’t expire and wasn’t revoked, acceptance?
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42
Q

Vices of Consent

A
  • error
  • fraud
  • duress
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43
Q

Bilateral Error

A

consent vitiated if BOTH parties are in error

  • parties can reform the instrument to reflect their true mutual consent
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44
Q

Error Remedies

A

Rescission of K

NO DAMAGES

45
Q

Unilateral Error

where only one party is in error, error will vitiate that party’s consent WHEN:

A
  1. it concerns a cause without which the obligation would have not been incurred (PRINCIPAL CAUSE)
    AND
  2. the cause was known/ should have been known to the other party
46
Q

Problems with Unilateral Error

A
  • the cause element
  • the “but for cause” requirement
  • the knowledge requirement
  • failure to read K
47
Q

Unilateral Error: The Cause Element

A

error concerns a cause when it bears on the:
- nature of K
- contractural object/ substantial quality of that object
- the person/ qualities of the other party
- anything parties regarded/ should have in good faith as a cause
- the law when a party was drawn erroneous conclusions of law and entered into a binding K based on them

48
Q

Unilateral Error: The “But-For Cause” Requirement

A

party can rescind based on error only if the party would not have bound himself had he not suffered the error

49
Q

Unilateral Error: The Knowledge Requirements

A

Other party knew/ should have of CAUSE (not the error)

50
Q

Unilateral Error: Failure to Read K

A

not a valid argument

51
Q

Rescission for Damages When there is ERROR

A

when unilateral error, that party may GENERALLY rescind the K

52
Q

Exceptions to Rescission When there is Unilateral Error

A
  • if party willing to perform as intended by party in error
  • court may not allow rescission when effective protection of other party’s interest requires K to be upheld
  • if error was “inexcusable”
53
Q

Liability for Damages where there is Error

A

party who obtains rescission on grounds of his own error is liable for any loss sustained by the other party

unless the latter knew/ should have of the error

54
Q

Fraud

A

misrepresentation or suppression of the truth made with the INTENT to obtain an UNJUST advantage or cause a loss or inconvenience to the other party

55
Q

Fraud Remedies

A
  • DAMAGES
  • ATTORNEY’S FEES
    + rescission
56
Q

Exception to Fraud

A

when a party could have EASILY ASCERTAINED the truth without difficulty or special skill

  • unless relation of confidence has reasonably induced party to rely on the other’s ascertations
57
Q

Fraud _________ be a “but for” cause so long as it ____________ consent.

A

Fraud NEED NOT be a “but for” cause so long as it SUBSTANTIALLY INFLUENCES consent.

  • must have reliance on the statement
58
Q

Fraud through Silence

A

only when facts IMPOSE A DUTY TO SPEAK

(special relationship/ duty to disclose)

59
Q

Fraud Committed by 3P

A

vitiates consent if a party not in error knew/ should have known of the fraud

60
Q

Duress

A

party who’s consent is vitiated knew truth but agreed to K anyway because he felt he was forced to consent

duress of such a nature as to cause a reasonable fear of unjust and considerable injury to a party’s person/ property/ or reputation

(or someone you love)

61
Q

Duress Remedies

A
  • rescission
  • damages
  • attorney’s fees
62
Q

Fear in Duress

A

both objective and subjective

63
Q

Unjust Injury in Duress

A

threat to perform a lawful act / exercise a legitimate right = NOT duress

64
Q

3P and Duress

A

perpetrator can be a 3P and no requirement that other party of K knew/ should have known of the duress

65
Q

Victim of Duress

A

can be spouse/ ascendant/ descendant/ or close friend of K party

66
Q

Absolute Nullity

A

violates a rule of public order (object is illicit/ immoral)

  • cannot be confirmed
  • any party can invoke or court can declare it on its own initiative
  • does not prescribe (action to annul)
67
Q

Relative Nullity

A

violates a rule intended to protect a private party (lack of capacity/ vice of consent)

  • can be confirmed
  • only party who rule is intended to protect may invoke nullity
  • action to RESCIND prescribes 5 years from when grounds for nullity ceased or was discovered
68
Q

Effects of Nullity

A

null K deemed NEVER TO HAVE EXISTED

  • performance must be restored (if can’t - court can award damages)
69
Q

Rule of Severability

A

nullity of one portion does not render entire K null

UNLESS from the nature of the provision/ intention of the parties it can be presumed that wouldn’t have made K without the provision

70
Q

Nullity ______ impair rights acquired by onerous K by 3P in good faith.

A

Nullity DOES NOT impair rights acquired by onerous K by 3P in good faith.

  • for immovables, recordation applies
71
Q

Effect of Conventional Obligations

A

Ks have effect of law for the parties and can only be dissolved by consent on grounds provided by law

  • Ks must be performed in GOOD FAITH (if BF, greater liability for damages)
  • K’s rights/ obligations are heritable
72
Q

Breach (Failure to Perform)

A
  1. nonperformance
  2. defective performance
  3. delay in performance

= aggrieved obligee entitled of DAMAGES AND EITHER specific performance OR dissolution

73
Q

Remedies for Failure to Perform

A
  • specific performance
  • damages
  • non pecuniary damages
  • contractural modification of liability
  • stipulated damages
  • delay damages (moratory)
  • dissolution
74
Q

Specific Performance

A

available when obligation is to deliver a thing/ not do a thing/ or execute an instrument

UNLESS it is impracticable

75
Q

Impracticability

A

a. impossible
b. greatly disproportionate in costs than the actual damage caused
c. no longer in the obligee’s interest
OR
d. if substantial negative effect on the interest of 3P

76
Q

Specific Performance when the Obligation is TO DO Something

A

discretionary

if agreement enforced by detrimental reliance, court may award damages instead of specific performance

77
Q

Damages

A

generally measured by
1. loss sustained by obligee
AND
2. the profit of which he was deprived

78
Q

Damages When Obligor in Good Faith

A

obligor liable only for damages reasonably foreseeable when K was made

79
Q

Damages When Obligor in Bad Faith

A

obligor liable for all damages that are a direct consequence of his failure to perform

80
Q

Bad Faith Obligor

A

intentional and malicious failure to perform

81
Q

Damages - Obligee Misconduct

A

no recovery if
1. his BF caused obligor’s breach
OR
2. he concealed facts he knew/ should have known would have cause failure at the time K was formed

82
Q

Damages - Negligence

A

reduces damages proportionally

83
Q

Damages - Duty to Mitigate

A

obligee has a duty to make reasonable efforts to mitigate damages caused by obligor’s breach when:

  1. they are small in comparison to the potential losses
    AND
  2. it is virtually certain that the risks incurred will avoid at least part of the loss
84
Q

Nonpecuniary Damages

A

allowed when:

  1. the K was intended to gratify a “non-pecuniary” interest
    AND
  2. obligor knew/ should have known that this failure to perform would cause this type of loss

OR

obligor intended to aggrieve obligee’s feelings through failure to perform

85
Q

Contractual Modification of Liability

A

generally allowed,

NOT enforceable if limiting/ excluding liability for:

  1. intentional/ gross fault that causes damage to other party
    OR
  2. causing physical injury to the party
86
Q

Stipulated Damages

A

obviates the need for party to prove damages

either SP or stipulated damages but NOT BOTH (unless delay damages)

87
Q

Delay Damages (Moratory)

A

owed from the time obligor is “put in default”:

  1. when time for performance if fixed
  2. by written demand
  3. by oral demand made before 2 wits
  4. by filing just for specific performance
  5. by a specific provision in K

obligor cannot be put in default before obligation is due

88
Q

Extrajudicial Dissolution

A

= entitled to dissolution IF:

  1. express dissolution clause for breach
  2. obligee gives notice to perform within reasonable time
  3. without notice if evident obligor will not perform OR if delayed performance would be of NO VALUE to obligee (“time is of the essence”)
89
Q

Judicial Dissolution

A

(court can grant obligor additional time to perform)

FACTORS court considers to grant dissolution:

  1. extent and gravity of failure to perform
  2. nature of obligor’s fault
  3. good/bad faith of parties involved
  4. the surrounding economic situation that make dissolution opportune or not
90
Q

When Dissolution is NOT Available

A

when obligor has rendered a substantial performance and unperformed part does not substantially impair the interest of the obligee

91
Q

Effect of Dissolution

A

parties restored to pre-K position

92
Q

Absolute Simulation

A

parties intend K to produce no effects

= no effect as to between parties

93
Q

Relative Simulations

A

intend K will produce different effect than one stated in K

= produces intended effect if requirements for them are stipulated

94
Q

Revocatory Action

A

an obligee may annul an act of the obligor
that causes or increases his insolvency
and that occurred after right of the obligee arose

  • K made in regular course of business may NOT be annulled
95
Q

Insolvent

A

debts > assets

96
Q

Prescription of Revocatory Action

A

1 year from when obligee learned/ should have of the act

MAY NOT be Brough more than 3 years after the act

97
Q

Oblique Action

A

an obligee may exercise a right of the obligor if the right is heritable AND the obligor’s failure to exercise the right causes/ increases his insolvency

98
Q

Conflicts of Laws Rough Rule

A

apply law of state whose policies would be MORE SERIOUSLY impaired if NOT applied

“rule of comparable impairment”

99
Q

K is Valid as to Form if Made in Conformity with the Law of:

A

a. law of state of making
b. law of state of performance
c. common domicile or place of business of parties
d. law governing substance of K

  • exception if law governing substance requires certain form for reasons of PUBLIC POLICY, then K must comply with that form
100
Q

Special Contracts

A
  • deposit and sequestration
  • loan
  • compromise
101
Q

Deposit Contract

A

k in which depositor delivers a movable thing to depository for safekeeping – depository bound to return thing upon demand

102
Q

Sequestration Contract

A

parties agree to deliver a thing to a depository pending resolution of a dispute

103
Q

Loan for Use Contract

A

gratuitous K whereby lender delivers a non-consumable thing to borrower for his use

borrower must preserve thing as a prudent administrator, use it according to its intended purpose, and return the thing after he finishes using it

104
Q

Loan for Consumption Contract

A

K whereby lender delivers fungible and consumable things to borrower who is permitted to consume them

must replace with same kind and quantity

105
Q

Compromise Contract

A

k whereby 1 or more parties make concessions to settle a dispute or uncertainty concerning an obligation to other legal relationship

106
Q

Form for Compromise

A

in writing or rendered in open court and capable of being transcribed

107
Q

Accord and Satisfaction

A

a compromise made when claimant of disputed claim accepts a payment tendered with a clearly written condition that acceptance extinguishes the obligation

108
Q

When Compromise Can be Rescinded

A
  • vice of consent

NOT: error of law OR lesion

Louisiana Bar Exam July 2024 (19 decks)

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