Ch 10: Nature and terminology (contracts)

Question 1

Common Law governs all contracts except when it has been modified or replaced by statutory law, True or False?

Answer 1

True

Question 2

What does contract law deal with?

Answer 2

Contract law deals with the formation and enforcement of agreements between parties.

Question 3

Pacta Sunt Servanda

Answer 3

Agreements shall be kept.

Question 4

Promisor

Answer 4

The person making the promise.

Question 5

Promisee

Answer 5

The person to whom the promise is made.

Question 6

Contract

Answer 6

Promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes as a duty.

Aka: Legally binding agreement between two or more parties who agree to perform or to refrain from performing some act now or in the future.

Question 7

Intent is determined by what?

Answer 7

Objective theory of contracts.

Question 8

Objective theory of contracts

Answer 8

Theory that a party’s intentions to enter into a legally binding agreement or contract is judged by outward objective facts as interpreted by a reasonable person, rather than by the party’s own secret subjective intention.

Question 9

Objective Facts include?

Answer 9

1. What the party said when entering into the contract.
2. How the party acted or appeared (Intent may be manifested by conduct as well as by oral or written words)
3. The circumstances surrounding the transaction.

Question 10

Requirements for a valid contract

Answer 10

1. Agreement
2. Consideration
3. Contractual Capacity
4. Legality

Question 11

Agreement

Answer 11

Includes and offer and acceptance.

Question 12

Consideration

Answer 12

Something of value received or promised (money) to convince a person to make a deal.

-Any promises made by the parties to the contract must be supported by legally sufficient and bargained for consideration.

Question 13

Contractual Capacity

Answer 13

Both parties entering into the contract must have the contactual capacity to do so; the law must recognize them as possessing characteristics that qualify them as competent parties.

Question 14

Defenses to enforceability of a contract

Answer 14

1. Voluntary consent-The consent of both parties must be voluntary (can’t be formed under fraud or intoxication. etc)
2. Form-The contract must be in whatever form the law requires

Question 15

bilateral Contracts

Answer 15

The offer can accept simply by promising to perform. “Promise for a Promise”

Question 16

Unilateral Contract

Answer 16

Offer is phrased so that the offeree can accept the offer only by completing the contract performance.
“Promise for an act”

Question 17

Present day view on revoking a contract

Answer 17

An offer to form a unilateral contract becomes irrevocable once performance has begun.

Question 18

Formal Contracts

Answer 18

Contracts that require a special form or method of creation to be enforceable.

Ex: negotiable instruments- checks drafts, promissory notes, certificates of deposit.

Question 19

Bills of Lading

Answer 19

Documents evidencing receipt of, and title to, goods shipped.

Question 20

Informal Contracts

Answer 20

Include all other contracts. (besides formal)

Question 21

Express Contract

Answer 21

The terms of the agreement are fully and explicitly stated in words, oral or written.

Question 22

Implied Contract

Answer 22

Implied from the conduct of the parties (Implied-in-fact contract)

Question 23

Requirements for implied contracts

Answer 23

1. The plaintiff furnished some service or property.
2. The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected.
3. The defendant had a chance to reject the services or property and did not.

Question 24

Executed contract

Answer 24

contract that has been fully performed on both sides

Question 25

Executory Contract

Answer 25

Contract that has not been fully performed by both parties.

If one party has fully performed but the other has not, the contract is said to be executed on one side, but executory on the other… still considered executory

Question 26

Valid Contract

Answer 26

Contract that has the elements necessary to entitle at least one of the parties to enforce it in court.

Question 27

Voidable Contract

Answer 27

Valid contract but one that can be avoided at the option of one or both of the parties.

Contracts made my minors, mentally incompetent, and intoxicated people may be voidable.

Question 28

Unenforceable Contract

Answer 28

Contract that can not be enforced because of certain legal defenses against it.

Ex. Contracting with someone to travel and buy prescriptions from Canada.

Question 29

Void Contract

Answer 29

No contract at all. A void contract produces no legal obligations on any of the parties.

Question 30

Quasi Contracts

Answer 30

Contracts implied in law. Are not real contracts. (Quasi=Latin for “as if” or “analogous to”)

They do not arise form any agreement, expressed or implied, between the parties themselves. They are fictional contracts that courts can impose on the parties “as if” the parties had entered into an actual contract.

Question 31

Quantum meruit

Answer 31

Latin meaning “as much as he or she deserves”

Question 32

Plain Meaning Rule

Answer 32

The meaning of the terms must be determined from the face of the instrument- From the written document alone.

Question 33

Extrinsic Evidence

Answer 33

Any evidence not contained in the document itself

If document is clear and unambiguous a court cannot consider extrinsic evidence.

If document is unclear and ambiguous extrinsic evidence may be admissible to clarify the meaning of the contract.