Ch 6: Contract Law Flashcards
What are contracts?
An Enforceable voluntary agreement, who’s terms can be expressed or implied
Name 4 elements of a contract
Elements: offer, acceptance, rejection, consideration, capacity to contract, intention to create legal obligations, lawful purpose
Contract Formation:
Offers must contain all essential terms and acceptance must be___
an Unequivocal agreement or it will be seen as a counter offer
Contract Rejection:
Must be communicated to the offeror
Postal Acceptance Rule:
acceptance complete when the communication is placed in the mailbox
Recipient Rule:
acceptance complete only when the recipient has received the communication
Procurement:
purchase of goods and/or services, often through a bid process
What is contract Consideration?
each party must give, or promise to give, something of value
It is a pre-req for an enforceable contract. Lack of consideration is an un-enforceable promise of a “gift”
Amendments: must have fresh consideration
Agreements to Agree:
• Agreements to agree are not enforceable
Letter of intents are an ___
Name 3 dangers
Expression of intention to form a contract in the future
Dangers:
1. Parties may not appreciate they are unenforceable
- Parties may commence performance without ever creating a formal contract
- On the urging of one of the parties, it may be interpreted by the court as an enforceable contract
Name 3 ways to void a contract:
- Mistake
- Misrepresentation
- Duress
- Unconscionability
- Frustration
Voiding a Contract: Mistakes
What are 3 pre-reqs to void a contract for a mistake?
- The mistake must be material (significant)
- The mistake must be mutual (both parties must
have been mistaken) - Mistake must have been made at the time the agreement was made
NOTE: There is no remedy for a mistaken party if the mistake was not mutual
Voiding a Contract: Misrepresentation
Name the 3 categories
1. fraudulent (intentional false statement, most
serious)
2. negligent (statement carelessly made)
- innocent (difficult to obtain a remedy)
Voiding a Contract: Duress
What is Duress?
The improper pressure, threats, or coercion used to induce a party to enter into a contract.
- Must be extreme pressure
- Fine line between legitimate business pressure, and duress
- What is acceptable depends on the context: the law protects vulnerable people
Voiding a Contract: Unconscionability
What is it?
A contract so unfair, oppressive, and one-sided that the courts won’t enforce it.
- Generally requires extreme inequality of bargaining power at time of contract formation
- Commercial contracts rarely unconscionable
- Court may refuse to enforce the contract at all, or interpret it very leniently
Voiding a Contract: Frustration
Frustration occurs when an unforeseen event makes performance impossible, or of no value
Force majeure clauses: prescribe the consequences of unlikely events
Modern force majeure clauses are exhaustive, and so frustration is rare
Amendment of Contracts:
Must be agreed upon by both parties.
Name the requirements for the contract to apply
Original contract may specify formalities for amendment, and these should be obeyed
Requirements for contract apply: agreement, consideration, certainty of terms, intention to create legal obligations
Amendments may be voided, e.g., for duress
What are Waiver and Estoppel?
Waiver: when a party, by words or conduct, relieves the other party of the duty to perform
Estoppel: “to be stopped”; a party is estopped from enforcing rights that it has waived
Quantum Meruit is___
“the amount it is worth”; when it is not appropriate for the remainder of the contract to be enforced, but compensation is given for the work already done
- Requires that there be no valid contract in place for the work in issue
- May be used to compensate for constructive changes that are not within the contract
