Basic Contract Law Flashcards
Consideration
Anything of value offered as incentive, such as money, or action
Express contract
Parties have expressed all terms and conditions as agreed upon between then
Can be oral or written
Implied contract
A contract implied through conduct and actions
Bilateral contract
Based on mutual exchange or acts between parties. (Contract)
And
Unilateral contract
One party makes a promise and the other responds with action to the promise but is not legally obligated to do so
(Keyword if)
Executed contract
Contract has been full performed.
Executory contracts
Contracts that have not been fully performed
Valid contract
Contracts that are binding and enforceable
Voidable contract
Failure to meet a legal requirement in negotiating the agreement
Void contracts
Can be legally or automatically void. Absolutely unenforceable and has no legal force or effect
Mutual assent
Parties must enter the contract voluntarily and agree to the terms and conditions
Illusory offer
Offer is vague and acceptance will not form a valid contract
Counteroffer
Rejection followed by a new offer
Termination of offers
Expiration Death or insanity Revocation Expiration of a reasonable time period Failure to comply Expiration of power of attorney Acceptance
Earnest Money
The money the buyer deposits with the offer to purchase to show that the buyer earnest or sincere
Contractual capacity
Must be legally competent to contract
Mutual mistake
Mistake of fact or mistake of law
Does not excuse either party from performance
But can constitute legal grounds to nullify an agreement
Duress
Fear or threat
Time is of the essence
Creates a strict interpretation of the performance dates and does not allow flexibility
Land contracts
(Installment contracts, conditional sale contracts)
Falls under statute of frauds
Accord and satisfaction
Settlement agreement between the parties, often involving compromise
Novation
Substitution of a new contract for an old one
Assignment
Transfer of legal rights and obligations by one party to another
Usually assignable when it is not prohibited
Parol evidence rule
Assumes the written words reflect the agreement and that anything orally agreed upon can be disregarded
Compensatory damages
Compensation for any financial loss caused by the breach as may be awarded by a court
Liquidated damages
If the amount for damages is agreed upon in the contract
