CH. 3 Flashcards
What are the six essential elements of the formation of a contract
Offer, acceptance, consideration, intention, capacity, and legality.
void contract
A void contract has no legal effect. A contract may be declared by a judge to be void if it is for illegal purposes, or if one of the six essential elements is missing.
an exchange of a promise for a performance; the performance brings the contract into existence.
unilateral contract
an exchange of a promise for a promise, the exchange of promises brings the contract into existence.
bilateral contract
lets ppl know that you are ready to accept offers eg. advertisement
Invitation to treat
when can one party revoke an offer and have no consequence?
before accepted by the other party
three instances under which an offer lapses?
- Not accepted before it expires due to a deadline.
- Not accepted within a reasonable time when there is not deadline.
- A party dies, becomes mentally ill, or loses the capacity to contract.
An agreement by an offerer to leave an offer open for a certain amount of time
Option
The price a party pays for the promise. Price does not only include money, it could be any good or service of any value. The exchange of benefits
Consideration
a promise with no consideration in return- no contract
Gratuitous Promise
what does a seal do?
Promises made under a seal are binding even in the absence of consideration.
Unconscionable transactions
The judge feels that the bargain was unfair due to
(1) lopsided bargaining power
(2) abuse of authority, or
(3) breach of fiduciary duty. The court may set the contract aside.
How could someone lack the capacity to contract?
Mental illness, substance abuse, senility and sometimes being a minor
When is it safe to contract with a minor and know they will be bound by the contract?
Contracts for employment or apprenticeship, or for a necessity of life, such as legal advice, medical treatment, clothing and reasonable transportation. A minor must be able to create valid contracts for things that are beneficial to the minor.
agents and principals?
agent acts on behalf of the principal
Why would anyone ever grant another person power of attorney over their affairs?
To manage property, personal care, and medical treatment if you are unable to manage these things yourself.
When dealing with a corporation, is it necessary to verify whether the officer has the proper authority to contract for the corporation?
no- officer need only appear to have authority
6 remedies one would expect when a contract is breached.
- rectification (typos to amending the contract)
- rescission
- Damages (general, punitive, exemplary)
- injunction
- specific performance
- quantum meruit (reasonable worth of the good)
If a foreign embassy fails to pay for a convention hall, can they be sued
no- they have diplomatic immunity
eight types of contracts which must be in writing:
- Land
- Marriage
- Co-signing
- Estate trustee’s promise to pay out of own pocket
- Agreement involving minors that must be ratified when the minor is of age.
- Longer than one year to complete.
- Sale of goods over a certain amount when the money or the goods have not yet changed hands.
- Agreement to deliver goods at a future date.
9 exceptions to the privity of contract rule?
- Tort law bypass
- principal of agents
- vicarious liability
- corp. form by amalgamation
- collateral warranties
- novation (replacing the person who is obliged to do something with a new person who assumes the obligation)
- interest in land
- assignment of rights
- trusts
- life insurance policies.
With cash on delivery (COD) contracts who retains title and risk until the goods are delivered and paid for?
the seller
Once a contract is written, it cannot be changed without consent of both parties.
Parol Evidence Rule
What are the four ways contracts can be discharged?
By Performance, agreement, frustration, & operation of law (bankruptcy, death, limitation acts)