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blaw > ch 11: breaches and stuff of contracts > Flashcards

ch 11: breaches and stuff of contracts Flashcards

1
Q

can a contract be voided bc of a mistake

A

yes

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2
Q

what type of mistake makes a contract voidable

A

mistake of fact

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3
Q

mistake of fact must include what

A

material fact

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4
Q

what is material fact

A

a fact that a reasonable person would consider important when determining action

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5
Q

unilateral vs bilateral mistake

A

uni- 1 party
bi-2 parties

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6
Q

unilateral + exeptions

A
  • does not usually give relief unless
  • the other party shoulda known abt the mistake
    -substansial mathematical error
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7
Q

bilateral contract

A

-misunderstanding on both parties concerning a basic assumption on which the contract was made.”

-when both parties are mistake abt the same material fact (can be rescinded by either party)

-word/term in the contract may be subject to diff interpretations which does not allow for a meeting of the minds which is why it can be rescinded

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7
Q

jet ski example

A

elena intends to sell jetski to luke for 5,000 dollars but when sending the email she puts 4,000 and he accepts before he is told abt the mistake- this is binding

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7
Q

mistakes of value

A

If a mistake concerns the future market value/ quality of the object of the contract,

-contract enforceable. (not able to be rescinded)

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8
Q

violin example

A

Toby buys a violin for cheap because neither party believes it’s valuable. but it turns out to be rare. Both parties made a mistake of value so→ contract CANNOT be rescinded.

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9
Q

When parties form a contract, their agreement establishes the value of the object of their transaction at the ….

A

moment

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10
Q

what is fraudulent misrepresentation

A

when an innocent party is fraudulently induced into a contract which can be avoided since they did not voluntary consent to the terms

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11
Q

T or F- innocent party can either rescind the contract or enforce it and seek damages for
any harm resulting from the fraud

A

true

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12
Q

what 4 things does fraudulent representation need to consist of

A

1- misrepresentation of material fact

2- intent to deceive

3- innocent party must justifiably rely on misrepresentation

4- to collect damages party must have been harmed as a result

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13
Q

1- misrepresentation of material fact

A
  • can be thru words or actions
    -when a party goes outta there way to conceal a fact

-tom selleck suing bs the guy said he was fit for competitions

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14
Q

2-There must be an intent to deceive

A

-Scienter (guilty knowledge) -means the misrepresenting party knows they are misrepresenting facts, showing intent to deceive.

  • also applies if someone makes a statement they don’t believe is true or recklessly makes a statement without caring if it’s true or false.

-also met if someone claims a statement is based on personal knowledge or investigation when not

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15
Q
  1. The innocent party must justifiably rely on the misrepresentation.
A

-the deceived party must have a real reason for relying on the misinterpretation

-must be an imp factor in which induced the party to entering the contract

-however not justified if the party believed extravagant stuff or if they knew the true facts

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16
Q
  1. To collect damages, a party must have been harmed as a result of the misrepresentation
A

-since recessions purpose is to return parties back to position they were before the contract- showing injury is necessary and proof is required

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17
Q

undue influence

A

when a party was entered into a contracted as a result of excessive influence

-ex- old person entered into one by guardian which benefits the guardian

-essential that the party taken advantage of does not exercise free will

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18
Q

duress

A

the use of threats to force someone to enter a party

  • ex blackmail
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19
Q

how to establish duress

A

-there must be proof that the threatening party is threatening smth they have no right to do and it usally must be wrongful/illegal

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20
Q

Privity of contract

A

A third party—one who is not a direct party to contract—normally does NOT have rights

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21
Q

exceptions to privity of contract

A

Transfer the rights or duties arising from the contract to another person through an assignment (of rights) or a delegation (of duties).

  1. A third party beneficiary contract—a contract in which the parties to the contract intend that the contract benefits a third party.
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22
Q

Privity of contract

A

A third party—one who is not a direct party to contract—normally does NOT have rights

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23
Q

exceptions to privity of contract

A
  1. Transfer the rights or duties arising from the contract to another person through an assignment (of rights) or a delegation (of duties).
  2. A third party beneficiary contract—a contract in which the parties to the contract intend that the contract benefits a third party.
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24
Q

third party beneficiary

A

someone who directly benefits from 2 ppls contracts meaning they become and intended beneficiary enabling them to have legal rights and can sue

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25
Q

holly and fox example

A

Someone borrowed money from another. That person then loaned money to someone else who promised to pay the person the original lender back. They didn’t. The first guy can sue the third because the third is the promisor.

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26
Q

Definition of “Third Party Beneficiary

A

One for whose benefit a promise is made in a contract but who is not a party to the contract

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27
Q

Incidental Beneficiary

A

third person who unintentionally benefits from a contract between two other parties. However, because the contract wasn’t made with the intent of benefiting them, they generally have no legal rights to enforce the contract.

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28
Q

what is the most common way to discharge/terminate contractual duties

A

by performance of the duties

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29
Q

discharge meaning

A

the end of an obligation when both sides have their duties in the contract, or when something occurs (like an event or a legal rule) that frees them from having to continue.

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30
Q

Definition of “Performance”

A

fulfillment of duties arising under a contract with another

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31
Q

In most contracts, promises of performance are not expressly conditioned/ qualified but are absolute promises T or F

A

T

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32
Q

Absolute promises

A

are commitments in a contract that must be performed and if not then .the parties will be in breach of contract.

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33
Q

Condition

A

requirement in a contract that depends on something happening in the future. If that thing doesn’t happen, the contract is canceled.

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34
Q

Condition Precedent

A

Condition that must be fulfilled b4 a party’s performance can be required.

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35
Q

tender

A

offer to perform by a person who is ready, willing, and able to do so

36
Q

2 types of performance

A

-complete
-substansial

37
Q

complete performance

A

when parties beformance is as agreed and perfect

38
Q

Substantial Performance

A

A party who in good faith performs substantially ALL of the terms of a contract can enforce the contract under the doctrine of substantial performance.

39
Q

requirements to qualify as substantial performance

A

1-The party must act in good faith—if they intentionally fail to follow the contract, it’s a breach.

  1. The work done must be close to what was promised, with only minor differences that can be fixed with money.

3.The result must provide almost the same benefits as originally agreed in the contract.

40
Q
  • If performance IS substantial, the other party’s duty
A

remains absolute

41
Q

If performance is NOT substantial

A

then there is material breach and the other party is entitled to damages

42
Q

damages

A

the cost to fix the work and make it match the contract, but only if that cost is reasonable.

43
Q

if the cost is reasonable

A

then compliance

44
Q

If the cost is unreasonable

A

damages are based on the difference in value between what was done and what would have been done if the contract had been fully completed.

45
Q

Jacob & Youngs v. Kent, Kent

A

Kent hired J&Y’s to install plumbing, he specified a certain brand in the contract. J&Y used a comparable brand. Kent refused to pay, and the court sided with J&Y (construction company) because the method that they used was not greatly far off from the original promised method. Therefore they substantially performed the contract.

46
Q

t or f
a nonbreaching party is excused from the performance of contractual duties.

A

t

47
Q

Breach of contract

A

not doing what you promised in a contract.

48
Q

material breach

A

when the performance is not at least substantial, meaning it’s a major failure. If this happens, the other party doesn’t have to fulfill their part of the contract and can sue for damages caused by the breach.

49
Q

A minor breach

A

means the nonbreaching party might pause their duties until the issue is fixed, but they still need to perform their obligations. Once the minor breach is resolved, they must continue fulfilling the contract.

50
Q

ANY contract can be discharged by agreement

A

of both of the parties

51
Q

Rescission

A

process by which a contract is canceled/ terminated, and the parties are returned to the positions they occupied before forming it.

52
Q

Mutual Rescission:

A

agreement btw the parties to cancel their contract, releasing them from further contractual obligations.

53
Q

for mutal recission what must occur

A

a new agreement w new offer acceptance and consideration

54
Q

Agreements to rescind most executory contracts

A

are still enforceable whether in writing

55
Q

Uniform Commercial Code (UCC)- rescind a sales contract

A

agreements to rescind a sales contract must be in writing if the original contract requires written rescission.

56
Q

Release

A

contract in which one party forfeits the right to pursue a legal claim against the other party.

57
Q

Discharge by Operation of Law

A

contractual duties may be discharged by operation of law.

include material alteration of the contract, an applicable statute of limitations, bankruptcy, impossibility or impracticabil

58
Q

Material Alteration of the Contract

A

To prevent changes to written contracts, the law allows an innocent party to be released from the contract if the other party makes a significant alteration without permission and the unware party discoveres it

59
Q
  1. Statutes of Limitations
A

set a time limit for when a party can sue for a specific reason. After this period ends, they can no longer file a lawsuit.

60
Q

Bankruptcy

A

. Bankruptcy: attempts to allocate a debtor’s assets to creditors in a fair and equitable fashion.
Once the assets have been allocated, the debtor receives a discharge in bankruptcy

i. Ordinarily PREVENTS the creditors from enforcing most of the debtor’s contracts.

61
Q

Impossibility of Performance:

A

After a contract has been made, supervening events may make performance impossible in an objective sense

-applies only if the event could not have been forseen

62
Q

objective impossibility

A

literally cannot be done

63
Q

subjective impossibility

A

-impossible for them not anyone to perfrom

-“i simply cant do it”

-results in a breach of contract

64
Q

When Performance Is Impossible (3)

A

-when one of the parties dies or becomes incapacitated

-when the specific subject matter is destroyed

-when law redners performance illegal

65
Q

Temporary Impossibility

A

If Temporary Impossibility arises, once the temporary event ends, the parties ordinarily must perform the contract as originally planned.

66
Q

Commercial Impracticability

A

Courts may also excuse parties from their performance when it becomes SIGNIFICANTLY difficult or expensive than the parties originally contemplated at the time the contract was formed.

  • The added burden of performing not only must be EXTREME but also must NOT have been known or reasonably foreseeable by the parties when the contract was made. - Usually involves an event that increases the cost or difficulty of performance
67
Q

Frustration of Purpose

A

A contract will be discharged if supervening (following) circumstances make it impossible to attain the purpose both parties had in mind when they made the contract.

-Must NOT have been reasonably foreseeable

68
Q

damages of a breached contract

A

Courts say that innocent parties are to be placed in the position they would have occupied HAD the contract been fully performed.

69
Q

4 types of damages

A

-compensatory
-consequential
-punitive
-nominal

70
Q

Compensatory

A

Compensatory
Damages that compensate the nonbreaching party for loss of bargain

Compensate only the damages proven to be caused by the loss of the bargain

-college example

71
Q

consequential damages

A

Foreseeable losses happening bc of a breach of contract

Ex- a seller fails to deliver goods knowing the buyer plans to resell them immediately which can let the reseller receive lost profits as consequential damages

72
Q

punitive damages

A

Not generally awarded as the focus is on the compensating the party for loss not punish the wrongdoer

However if breach involves a tort- punitive and reg damages may be allowed

73
Q

Nominal

A

When there is no actual fnan loss from a breach but it is still recognized

Damages usually small like $1 - just to show principle

74
Q

Standard measure

A

For compensatory damages to cover the diff btw the value of promised and actual performance

75
Q

incidental damages

A

Expenses that are caused directly by a breach of contract

ex-If a supplier fails to deliver goods, and the buyer has to pay extra to get the goods from another supplier

76
Q

Sale of goods

A

Difference btw contract price and market price at term of the breach

77
Q

Sellers breach

A

when seller breaches real estate contract the remedy=specific performance in which buyer is awarded the property

78
Q

what if specific performance isnt possible

A

the diff is btw the contract and market price of the land

79
Q

Buyers breach

A

also the diff btw contract price and market price

80
Q

Minority rule-

A

if the seller’s breach is unintentional, the buyer can only recover their down payment and any expenses, returning the buyer to their pre-sale position instead of giving them the benefit of the bargain.

80
Q

Rescission

A

Canceling the contract and returning both parties to their original positions.

81
Q

duty to mitigate

A

it is the innocent parties duty to mitigate or limit the damages and without doing this the court may reduce their damages they can earn

82
Q

what happens if damages and money are not enough to fix the breach of the contract

A

nonbreaching party can go to court for equitable remedy which include

-rescission
-restitution
-specific performance
-refromation

83
Q

Waiver of breach

A

When nonbreaching party decides to accept not good performance instead of demanding full performance

Means they give up the right to demand perfect performance

84
Q

Restitution

A

Recovering any benefits conferred to the other party under the contract.

85
Q

Reformation

A

Changing the contract to reflect what the parties actually intended.

86
Q

when is refromation used

A

-cases of fraud or mutual mistakes, such as clerical errors.

-incorrect written statements, ex they agreed orally but it was written down wrong

Covenant not to compete -written non-compete agreement is deemed too restrictive (in terms of time or area), courts may reform the terms to make them reasonable instead of voiding the entire contract.

87
Q
A

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