7.2 & 7.3 & 7.4 - Contracts Flashcards
A pro is that the law will enforce:
Contract
What are the 5 methods of contract formation?
- Express contracts
- Implied-in-fact contract
- Implied-in-law or Quasi Contract
- Unilateral contract
- Bilateral contact
A contract formed by language, oral or written:
Express contract
A contract formed by language, oral or written:
Express contract
A contract formed by conduct:
Implied-in-fact contract
A remedy that allows a plaintiff to recover a benefit unjustly conferred upon the defendant - a remedy to prevent unjust enrichment:
Implied-in-law contract or Quasi contract
A contract where there is one promise which is given in exchange for performance. A contract is not formed until performance is completed.
Unilateral contract
Ann promises to give barb $10 if barb will wash Ann’s car is an example of what type of contract?
Unilateral contract
A contract where there are two promises - a promise is exchanged for another promise. A contract is formed as soon as the promises are exchanged.
Bilateral contract
Ann promises to give Barb $10 is Barb promises to wash Anns car. What type of contract is this?
Bilateral contract
Contracts involving real estate, insurance services, and employment (RISE) are governed by:
Common law
The uniform commercial code (UCC) sales article governs:
Contracts for the sale of goods
What are the 3 requirements for a legally enforceable contract?
- An agreement made up of an offer and an acceptance
- Exchange of consideration
- Lack of defenses
Agreeing to the same bargain at the same time or a meeting of the minds is referred to as the:
Mutual assent or agreement of the contract
Widely distributed statements such as advertisements are considered:
Not offers but only invitations to seek offers
Advertisements that limits the scope of the persons who can accept such as “first 5 customers can buy coffee makers for $1” are considered to be:
An offer
An offer for the sale of goods (UCC) generally only need to include:
Quantity term (100 widgets, etc.)
An offer to create a contract under common law (real estate, insurance services, employment) must include:
Identity of the offeree
Price
Time of performance
Quantity involved
Nature of work to be performed
To create a contract, an offer must be accepted before:
It is terminated
An offer can be terminated in a number of ways by either party, what are those ways?
Revocation by offer or
Rejection by offeree
Termination by operation of law
A counteroffer is considered to be:
A rejection and an offer
If either party dies or becomes incompetent prior to acceptance, the offer is terminated. What is the exception to this?
If it is an option contract, it is not terminated by death of a party
What is the mailbox rule?
Acceptances are generally effective when they are dispatched (mailed, emailed, faxed, etc.)
What are the two elements of consideration?
- There must be something of legal value given by each party
- There must b a bargained-for-exchange
Something is of legal value if it:
Constitutes either a detriment to the promise or a benefit to the promissor
This can make a contract unenforceable:
Defenses
A contracting arty can establish the defense of fraud if they can prove:
- Misrepresentation of material fact by defrauding party
- Scienter (intent to deceive)
- Intent to induce reliance
- Reasonable reliance
- Damages
Occurs when a party is deceived into signing something that does not look like a contract:
Fraud in the execution
Occurs when a defrauded party is aware they are making a contract, but the terms are materially misrepresented:
Fraud in the inducement
Which is void and which is voidable:
Fraud in the execution
Fraud in the inducement
Fraud in the execution: void
Fraud in the inducement: voidable
An innocent misrepresentation has all the elements of fraud except:
Scienter
Is innocent misrepresentation void or voidable?
Voidable by the party who relied on the misrepresentation
This arises when a party;s free will to contract is overcome by an unlawful use of a threat of harm:
Duress
If the harm threatened to sign a contract is physical force, the contract is void or voidable?
If the harm threatened to sign a contract I economic or social, the contract if void or voidable?
- Void
- Voidable
This is when a party’s free will to contract is overcome by the defendants abuse of a position of trust or confidence. The person in the position of trust or confidence uses the position to take advantage of the other’s weakness, infirmity, or distress:
Undue influence
Undue influence makes a contract void or voidable?
Voidable
A mutual mistake makes a contract void or voidable?
Voidable
Ann enters into a contract with barb to purchase barbs car for $1,000. Unbeknown to either party, the car was destroyed by a fire what happens to the contract?
The contract is void
Generally, a unilateral mistake (mistake made by one party) is or is not a defense in court?
Is a defense
Exception: unilateral mistake as to material fact is a defense if the other party knew or should have known of the mistake
Failure to have a license required to protect the public (CPA, attorney, doctors, etc.) makes a contract void or voidable?
Failure to have a license but the license is required merely to raise revenue (all vendors at a fair pay a $25 license fee), makes a contract void or voidable?
Void
Neither, its enforceable
A person can become bound on the contracts they enter into as a minor upon reaching the age of majority by ratifying the contract. A contract may be ratified by:
- Failing to disaffirm within a reasonable time after reaching majority
- Expressly ratifying the entire contract orally or in writing
- Retaining or accepting the benefits
Which types of defenses make a contract void?
- Fraud in the execution
- Duress (physical)
- Illegality
- Adjudicated mental incompetency
This provides that legal action must be commenced within a certain period of time:
Statute of limitations
Although contracts statues of limitations vary, what is the typical length of time?
4 to 6 years measured from the time of breach
Although the general rule is that contracts need not be in writing, size contracts require some type of writing to be enforceable with the party trying to void the contract needing to have signed it. Those contracts include (MYLEGS):
- Contracts regarding the consideration of Margie
- Contracts which cannot be performed within 1 year
- Contracts involving interest in land
- Contracts by executors or similar representatives to pay estate debts out of personal funds
- Contracts for the sale of goods for $500 or more
- Contracts to act as surety (pay of the debt of another)
If a sales contract has been modified, does the original contract or the modified contract determine whether writing is required?
The modified contract
If after the parties enter into a contract an event occurs that will make performance of the contract objectively impossible (impossible for ANYONE to perform), what happens?
Impossibility is an available defense
An agreement to substitute one contract for another, and satisfaction is the execution:
An accord
Available as a defense to a party who has been released from a contract. It occurs when a new contract substitutes a new party for an old party in an existing contract.
Notation
A condition that must occur before the other party must perform:
A condition that must occur simultaneously:
A condition that will occur after a party’ duty to perform h arisen and will cut off that duty:
Condition precedent
Conditions concurrent
Condition subsequent
If one party prevents the other from performing contract duties, what has occurred?
A material breach and the non reaching party is excused from performance
Prohibits a party in a lawsuit involving a fully integrated written contract from introducing evidence at a trial
Parol evidence rule
A clause in a contract that specifies what damages will be if there is a breach:
Liquidated damages
Punitive damages are available for what? And not available for what?
Available for fraud
Not available for breach of contract
This cancels the contract and restores the parties to their former position:
Rescission or cancelation
Under this, a party cannot rescind or cancel if a contract has been substantially performed. The non-breaching party;s only remedy is monetary damages for the minor breach.
Under the common law
Applies only to the sales of goods:
Sales Article of the UCC
The following are excluded from the sales article and are covered by common law contracts:
Personal services
Real estate
Intangible personal property (stocks, patents)
Fixtures - things attached to the land
One who deals in goods of the kind sold or who has special knowledge regarding the goods being sold:
Merchant
To qualify as a merchant’s firm offer what three things must be?
- Seller must be a merchant
- Offer must be in writing and signed by the merchant
- Offer must not stay open for longer than 3 months
The general rule is that under the UCC, a shipment of non conforming goods is:
Both an acceptance and a breach of contract
An exception to the GR that shipment of non conforming goods is that: if the seller reasonable notifies the buyer that nonconforming goods are shipped only as an accommodation to the buyer, the shipment is:
Not an acceptance and is a counteroffer
During auctions, the bid is the what? And the fall of the hammer is the what?
Bid = offer
Hammer = acceptance
All auctions are with reserve, which means:
The seller does not have to sell unless an adequate bid is made
Under UCC, a modicfication of a contract for the sale of goods is what?
Enforceable even without consideration as long as the modification is sought in good faith
Under common law, a modification of a contract Is what?
Not enforceable unless consideration is given
Under the UCC, the statue of limitations is how long?
4 years from the time of breach
Contracts for the sale of goods for $500 or more must be evidenced by a writing signed by the party being sued. What are the 4 exception?
- Contracts for specially manufactured goods
- Merchant sends another merchant a written confirmation
- Contracts parties have admitted in court
- Contracts that have been performed to the extent that the performance has been accepted
Under the sales article, a contract will be discharged for objective impossibility to perform or just for mere impracticability?
For mere impracticability it not need to be impossible
As a general rule, the sellers basic duty is to:
Hold conforming goods for the buyer and give the buyer reasonable notice to enable the buyer to take delivery
If goods are damaged or destroyed after risk of loss has passed to the buyer:
The buyer is not discharged from the contract, rather the buyer must still pay the contract price
Title and risk of loss cannot pass until the goods are:
Identified
Goods are identified when they:
Are marked, segregated, or in some manner identified as goods for a specific buyer
In this case, a buyer usually picks up the goods at the sellers place of business:
In this case, the parties contemplate a common carrier will be used to ship the goods:
- Non carrier cases
- Carrier cases
Under a non carrier case, risk of loss passes to the buyer upon the seller’s tender of delivery of the goods to the buyer if the seller is or is not a merchant?
Seller is not a merchant
Under a non carrier case, risk of loss passes to the buyer only upon actual delivery to the buyer if the seller is or is not a merchant?
Seller is a merchant
Under a carrier case, risk of loss passes to the buyer when goods are delivered to the carrier with shipment contracts or with destination contracts?
With shipment contracts
Under a carrier case, risk of loss passes to the buyer when goods reach the destination and the seller tenders delivery with shipment contracts or with destination contracts?
Destination contracts
This is a shipment contract. The seller must get the goods to the carrier for risk of loss to pass.
FOB the sellers place
This is a destination contract. The seller must get the goods to the destination and tender delivery for risk of loss to pass.
FOB buyers place
If the seller sends nonconforming goods, the risk of loss:
Remains with the seller regardless of the shipping terms unless the buyer accepts the defective goods
The UCC, provides for 2 types of non final sales:
Sale on approval
Sale or return
The sale is not final until the buyer gives approval. Title and risk of loss remain with the seller until the buyer approves:
Sale on approval
The sale is completed on delivery, but the buyer has the right to return the goods. Risk remains with the buyer until the olds are completely returned to the seller:
Sale or return
If there is no agreement as to when title will pass, title passes when:
The seller completes their delivery requirements
What are the four types of warranties that would make a perfect tender (goods and delivery conform exactly to the contract without any defects):
- Express warranties
- Implied warranty of title
- Implied warranty of merchantability
- Implied warranty of fitness for a particular purpose
Will arise from any statement of fact or promise made by the seller, any description of the goods made by the seller, or any sample or model shown by the seller. The goods will conform to the statement of fact, to the description, or to the sample or model:
Express warranties
The seller has good title and the right to transfer that title. There are no unstated encumbrances. The goods do not infringe on any patent or trademark:
Implied warranty of title
The implied warranty of title can only be disclaimed by:
Specific language or by circumstances that indicate the seller is not guaranteeing he has title. A general disclaimer cannot disclaim the title (merchandise is sold as is, its all faults, etc.)
Can an express warranty be disclaimed?
No
A warranty that the goods are fit for ordinary purposes. Is made only on sales by merchants:
Implied warranty of merchantability
Implied warranty of merchantability can be disclaimed by:
A statement that the goods are sol “as is” or “with all faults”
This warranty arises when the buyer relies on any seller to select goods suitable for the buyer’s particular purpose. The seller must know of the particular purpose and that the buyer is relying on him or her to select the goods:
Implied warranty of fitness for particular purpose
Fitness of merchantability can be disclaimed by:
Selling the goods “as is” or “with all faults”
Occurs when either the buyer or seller indicates in advance of performance that he will not perform:
Anticipatory repudiation
The buyer usually has the right to inspect goods prior to payment however, the buyer may not inspect prior to payment in what case?
A cash on delivery sale (COD)
The right to recover goods wrongfully in the hands of the seller:
Replevin
If the buyer has paid part r all of the price and the seller is insolvent:
The buyer may recover the goods from the seller if the goods are identified
If the owner of goods entrusts them to a merchant who deals in goods of the kind sold, and the merchant sells them in the ordinary course of business to a bond ride purchases for value, the purchaser:
Gets title to the goods even though the merchant did not have good title
