Ch 10: Nature and terminology (contracts) Flashcards
Common Law governs all contracts except when it has been modified or replaced by statutory law, True or False?
True
What does contract law deal with?
Contract law deals with the formation and enforcement of agreements between parties.
Pacta Sunt Servanda
Agreements shall be kept.
Promisor
The person making the promise.
Promisee
The person to whom the promise is made.
Contract
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.
Intent is determined by what?
Objective theory of contracts.
Objective theory of contracts
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.
Objective Facts include?
- What the party said when entering into the contract.
- How the party acted or appeared (Intent may be manifested by conduct as well as by oral or written words)
- The circumstances surrounding the transaction.
Requirements for a valid contract
- Agreement
- Consideration
- Contractual Capacity
- Legality
Agreement
Includes and offer and acceptance.
Consideration
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.
Contractual Capacity
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.
Defenses to enforceability of a contract
- Voluntary consent-The consent of both parties must be voluntary (can’t be formed under fraud or intoxication. etc)
- Form-The contract must be in whatever form the law requires
bilateral Contracts
The offer can accept simply by promising to perform. “Promise for a Promise”
Unilateral Contract
Offer is phrased so that the offeree can accept the offer only by completing the contract performance.
“Promise for an act”
Present day view on revoking a contract
An offer to form a unilateral contract becomes irrevocable once performance has begun.
Formal Contracts
Contracts that require a special form or method of creation to be enforceable.
Ex: negotiable instruments- checks drafts, promissory notes, certificates of deposit.
Bills of Lading
Documents evidencing receipt of, and title to, goods shipped.
Informal Contracts
Include all other contracts. (besides formal)
Express Contract
The terms of the agreement are fully and explicitly stated in words, oral or written.
Implied Contract
Implied from the conduct of the parties (Implied-in-fact contract)
Requirements for implied contracts
- The plaintiff furnished some service or property.
- The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected.
- The defendant had a chance to reject the services or property and did not.
Executed contract
contract that has been fully performed on both sides
Executory Contract
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
Valid Contract
Contract that has the elements necessary to entitle at least one of the parties to enforce it in court.
Voidable Contract
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.
Unenforceable Contract
Contract that can not be enforced because of certain legal defenses against it.
Ex. Contracting with someone to travel and buy prescriptions from Canada.
Void Contract
No contract at all. A void contract produces no legal obligations on any of the parties.
Quasi Contracts
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.
Quantum meruit
Latin meaning “as much as he or she deserves”
Plain Meaning Rule
The meaning of the terms must be determined from the face of the instrument- From the written document alone.
Extrinsic Evidence
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.
