Chapter 10 - Contracts Flashcards
What is a bilateral contract?
Two promises are made, basically a contract for a contract (ex: you pay me $3 for this gum)
Contract is formed when promises are exchanged
What is a unilateral contract?
One promise for an act (Ex: I’ll pay anyone $100 who will find my dog)
A contract is formed when performance is completed
What are the four things that are required for the formation of a Common Law contract?
Offer, acceptance, consideration, lack of defenses
What do Common Law contracts cover?
Real estate and services
What is needed for an offer to be valid?
- Definite terms (may be implied)
- Intent to make offer or contract
- Communication to offeree (constructively received when available to offeree)
What is an implied-in-law (quasi-contract)?
Contract that occurs when the courts decide parties should be treated as if there was an agreement even though there wasn’t actually one.
Used to make sure one party is not unjustly enriched
Ex: If a person who appears to be poor is given substantial medical services for free but is found to be extremely wealthy later can be required to pay the fees if the courts require them to.
What would cause an offer to terminate?
- Expiration
- Revocation (unless an option contract, which is consideration paid to keep the offer open)
- Rejection
- Couteroffer
- Operation of law (death, insanity, destruction of subject matter, illegality of subject matter)
What is the mirror image rule?
An offer must accept all terms and conditions without any alteration. If there are alterations then it is a couteroffer.
What is the early acceptance (mailbox) rule and what are exceptions to this rule?
Acceptance is effective when transmitted or dispatched
Exceptions (effective when received) are when:
- States “only valid upon receipt” by offeror, so no mailbox rule
- Acceptance is made by unauthorized means
- Offer indicates that acceptance must be received by a specific date
What are some examples of consideration?
All consideration must be legally sufficient
- Transfer of money
- Transfer of property
- Services
- Covenant not to compete (if reasonable)
- Out of court settlement
What are two types of consideration that are NOT allowed for a contract?
When does modifying a contract not terminate it?
When both parties are providing new consideration
What are some examples of voidable events?
- Duress using economic or social threats
- Undue influence
- Misrepresentation of material fact
- Mistake
- Capacity
- Intoxication
- Incompetent persons
What is fraud in inducement?
When inaccurate statements were made with the expectation they’d be relied on, information was of proximate cause of harm to the plaintiff, and the other party had actual or constructive knowledge they were providing faulty information.
What are examples of things that actually void a contract?
- Extreme duress (physical threat)
- Fraud in execution (party enters contract without being aware of it)
- Illegal subject matter
- Incompetent persons
What is the statute of frauds and what type of contracts does it cover?
Statute that says that certain contracts must be in writing
GROSS
Sale of Goods worth $500 or more
Real estate sales
Over one year required to perform contract (bilateral)
Suretyship (guarantee debt of another)
Statements in consideration of marriage
Who needs to sign a written contract?
The person who is backing out (the weasel)
What are some exceptions to the statute of frauds concerning the sale of goods?
SPAM
Specifically manufactured by the seller
Partially performed (enforced to extent of performance)
Admits in court there was a contract
Merchant does NOT object within 10 days to confirmation
What is the parole evidence rule?
What is a novation?
When another party outside of the contract replaces the assignor
What is an assignment?
If a party transfers the rights they possess in a contract to a third party, the assignee will enforce the rights transferred to them. The assignor loses the ability to enforce.
What can cause discharge of a contract?
- By performance
- By agreement
- Recission: the parties are restored to their originial position
- Accord and satisfaction: “satisfaction of the new is satisfaction of the old”
- Novation: one party accepts the performance of a third party in place of the party in the contract
- By operation of law
- By breach
What is the statute of limitations?
Time period in which a lawsuit must be initiated
