Basic Contract Law Flashcards
Forbearance is
Contractual Promise not to do something
Consideration is
something of value exchanged by the parties as evidence of agreement to the terms of a contract. A contract isn’t a contract without consideration
The term mutual assent is
the meeting of the minds that has to occur for a valid contract to come about. Also known as mutual agreement or offer and acceptance, it’s the fully agreed-upon exchange of promises by the parties.
Mutual assent vs reality of consent
Mutual assent speaks to the complete and unreserved agreement of terms and conditions. Reality of consent focuses on the fact that the agreement was arrived at as a voluntary act of good faith.
A mistake of fact usually refers to
lack of awareness of or the forgetting of a material fact. It can also be a mistaken belief in something that is not a fact or a misunderstanding about an actual fact. It cannot, however, be a result of a neglect of legal duty.
Constructive fraud is considered to be:
An unintended breach of duty that benefits the defaulting party
An act (or omission of an act) that is legally declared fraudulent
Actual fraud can be committed by:
Knowingly and purposely putting forward a false statement as though it were fact
Unknowingly making a false statement as though it were fact when you had no reasonable cause to believe it was true — a form of negligent misrepresentation
Suppressing the disclosure of a known material fact
Making a promise with no intention of performance
Any other effort or act to intentionally deceive or mislead
Unilateral mistakes (an error made by one party) of fact _______ release parties from their obligations.
Do not
A mistake of law requires that there be a
misunderstanding of all parties regarding the understanding or awareness of applicable law.
Unilateral mistakes (an error made by one party) of fact ______ release parties from their obligations.
Do not
Duress vs undue influence
Undue influence is when someone is able to persuade another’s decisions due to the relationship between the two parties. Usually, one party is in a superior position over the other, whether that be due to elevated status, higher education, or emotional ties.
Unlike duress, undue influence doesn’t involve a direct threat. Instead, it involves excessive pressure by the party in the dominant position on the party in the inferior position.
The term lawful objective speaks to the idea that a contract
cannot require any illegal activities or outcomes. A contract with lawful objective conforms to all relevant laws and statutes.
Supervening illegality is a term that refers to
a situation where a change in law renders an offer or an existing contract legally impossible to complete. When this happens, it will result in the discharge of the contract.
five essential elements of a valid contract.
The Five Essential Elements Of A Valid Contract;
1. Offer & acceptance.
2. Consideration.
3. Legally competent parties.
4. Reality of consent.
5. Lawful objective.
In its defective state, a _____ contract couldn’t be completed even if the parties wanted to.
A void contract has no legal effect. From inception, the stipulations and conditions in a void contract cannot be legally enforced. It represents an attempt to create a legally binding agreement but does not impose any legal rights or satisfy the requirements of a legally valid contract.
Void contracts are typically agreements which:
Are missing one or more essential elements of a valid contract
Require an illegal or impossible act
Lack proper consideration
Contain a material mistake
Cannot be completed due to an operation of law or act of God
Void-ABLE contracts are
potentially valid contracts where at least one party has the option to rescind or terminate the contract
Voidable contracts often involve a party who is incapable of legally entering into a contract. A minor or an adult incapacitated by mental illness or the influence of medication or alcohol are some of the most common examples of this.
Additionally, contracts entered into under duress or as a result of fraud or misrepresentation are also voidable (by the injured party).
Voidable contracts entered into by a minor can be valid at the option of the minor.
T or F
T
A minor can force performance on the other party, but that party cannot force performance on the minor.
If a minor does decide to hold up their end of the bargain, the contract converts from voidable to valid.
When a party performs their obligation to a contract that they could have rescinded, they are said to have ______ that contract.
Ratified
An unenforceable contract is
one that has (or had) the potential of being a valid contract, but its enforcement is barred by some attribute of the contract or technicality of law.
Even so, unenforceable contracts can be fulfilled if both parties are ______, just not ___
Willing
Compelled
The statute of frauds is
a state-level law that requires certain types of contracts to be in writing to be enforceable.
In North Carolina, while the statute states that a contract not in compliance is “void” if not in writing, courts treat an oral or incomplete agreement as _____ and ___, rather than ____ from the outset.
Voidable/unenforceable
Void
The parol evidence rule is
the legal concept that says that oral evidence can be used to support a written contract but can NOT be used to contradict one — particularly a written contract that is clearly intended to be the final expression of the agreement.
Parol contracts are
orally created contracts or the oral modification of written contracts. Their enforceability depends on the circumstances surrounding their creation.
Statutes of limitations are
state and federal laws establishing time limits for bringing certain kinds of legal actions.
The doctrine of laches is
“use it or lose it” rule. If you don’t use your right to bring suit, you eventually lose it.
Doctrine of Laches vs. the Statute of Limitations
the statute of limitations is focused on the statutory time limit for making a claim, while the doctrine of laches relies on the court’s discretion as to whether or not a plaintiff has waited too long to make a claim.
Contract Classifications and what they mean
- Implied: a contract created by the actions of the parties rather than by express agreement.
- Express: a contract with explicitly stated and agreed-upon terms and conditions.
- Bilateral: a two-party contract containing an exchange of promise from both parties.
- Unilateral: a two-party contract where one party makes a promise.
- Executed: a contract in which all terms and promises have been fulfilled
- Executory: a contract that has not yet been fully performed.
Brokers must present ___ offers immediately
All
once the offeror has been notified of an offer’s acceptance, _______ the offer has passed.
Right to revoke
Brokers in North Carolina are prohibited from _______ legal documents for others,
Drafting
Absolute auction is an action to ___ reserve
Without
And auction with reserve means
Auction can be stopped by seller
Are contracts lacking a legal element void or voidable?
Voidable
Novation is a mutual agreement of the parties to
replace an existing contract with a new one.
As the name implies, a subsequent modifying agreement is one where
the parties to the original contract enter into a new contract modifying the terms of their original understanding.
Accord and satisfaction is an agreement in which
the parties agree to discharge the original contract in favor of a new one. The “new” contract is basically the old contract with accepted performance being substantially less than what was initially promised.
