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
