Chapter 11-13 Flashcards
Promises for past actions
Mere promise; offering something for past actions is not consideration
Elements of a Contract
1) Agreement (Offer and Acceptance)
2) Consideration
3) Capacity
4) Legality
Traditional vs Modern view of revocation of unilateral contracts
Traditional: Revocation allowed until full completion of performance
Modern: Can’t revoke once performance has been substantially undertaken
Formal Contract
Contract that requires a special form or method to be enforceable
Informal Contract
Does not require a specified form or method to be valid
Elements to form an implied contract
1) Plaintiff furnished some goods or services
2) Plaintiff expected to be paid and defendant knew or should have known that payment was expected
3) Defendant had a chance to reject services and did not
Quasi Contract
Contract that the courts create in order for someone to not experience injustice. Created to avoid the unjust enrichment of one party at the expense of another.
Ex. Abel fixes Ben’s pipes while he is out of town and requests $200. Ben refuses because no contract, Abel goes to court to enforce because it would have cost Ben thousands.
Executed vs Executory
Executed: Contract has been fully performed by both parties
Executory: Contract has not been fully performed by one or more parties
“Plain Meaning” Rule
A court will enforce a contract according to its obvious terms when it is clear and unequivocal. “A chicken is a chicken”
Requirements of an Offer
1) Offeror must have a serious intent to be bound by the offer
2) The terms of the contract must be reasonably certain and definite
3) Offer must be communicated to the offeree and received.
Statements that do NOT reflect intent
1) Expressing an opinion
2) Statements of future intent
3) Preliminary negotiations: “I would be open to considering your offer”
4) Invitation to bid
5) Advertisements
6) Live auctions
Offers must express these terms
1) Identification of the parties
2) Object or subject matter of the contract
3) Consideration; and
4) Time of payment, delivery, or performance
When is revocation effective?
Once it is received
Option Contract
Irrevocable offer that is held open for a specified period of time in return of consideration
Mirror Image Rule
Offeree’s acceptance must match the offeror’s offer exactly. Any change is a counteroffer.
Operation of Law terminations of contracts
1) Lapse of time
2) Destruction of subject matter
3) Death or incompetence of a party (unless option contract)
4) Supervening illegality
Mailbox Rule
Acceptance is valid when the offeree sends it using an authorized means. If the authorized means is not used, there is no acceptance.
If a substitute is used, accpetance is effective once received, not dispatch.
E-SIGN Act
Recognizes the validity of electronic contracts, records, and signatures.
Contracts that cannot be electronic
1) Court papers
2) Divorce Decrees
3) Evictions/Foreclosures
4) Prenups
5) Wills
Uniform Electronic Transactions Act (UETA)
Law proposed by the UCC that removes barriers to forming E-Contracts. States that state law cannot give greater legal status or effect to one company or type of technology.
Consideration must contain:
1) Legally sufficient value
2) Bargained for exchange
Legally sufficient value can be:
1) Promise to do something you are not legally obligated to do
2) Performance of an action you are not required to take
3) Refrain from an action you have the right to take (forbearance).
Forbearance
Refraining from taking an action you have the legal right to undertake.
Bargained for exchange
An item of value must be given or promised by the offeror in return for the offeree’s promise or performance. Both parties must get something of value.
Hamer v. Sidway
Hamer promised not to drink alcohol, shoot pool, swear, etc. until he was 25. Uncle died and he sued estate for his money and won. Set precedent for forbearance as consideration.
Pre-existing Duty Rule
One cannot promise to do something they are legally liable to do or promise the same consideration in another active contract.
Recission
The unmaking of a contract that returns the parties to their pre-contract positions, then creating a new contract at the same time. If one party is gaining more consideration, the other must gain more too.
Past Consideration
Promises made in return for past actions are unenforceable. No bargained for exchange, both parties don’t get something.
Illusory Promise
If the terms of the contract don’t definitely express a promise to perform. Anything with “might, may, consider.”
Requirements Contract
A buyer and seller agree that the buyer will purchase all the goods of a designated type that the buyer needs. If the buyer buys goods from a different seller, broke requirements contract.
Output Contract
Buyer agrees to purchase everything the seller produces, their entire output. If the seller begins to sell to other buyers, or buyer doesn’t buy everything, it’s a breach of contract.
Option to cancel clause
If the promisor has the option to cancel the contract before performance has begun, even after acceptance, the promise is illusory.
Accord and Satisfaction of debt
Debtor offers to pay, and the creditor agrees to accept a lesser amount than the creditor originally claimed to be owed.
1) Amount of debt must be in dispute (unliquidated)
Liquidated vs Unliquidated Debt
Liquidated: Amount is certain and agreed upon
Unliquidated: Amount is in dispute
Release
A contract where one party forfeits the right to pursue a legal claim against the other. Prevents any futher recovery beyond the terms in the release. Prevents people from suing after settlement agreements.
Requirements for Release
1) Made in good faith
2) Be in writing (in most states); and
3) Be accompanied by consideration
Covenant not to sue
An agreement to substitute a contractual obligation for refraining to sue. Must be supported by consideration.
Promissory Estoppel
A person who has detrimentally relied on the promise of another may be able to obtain recovery.
Promissory Estoppel Requirements
1) Must be a clear and definite promise
2) Promisor should have expected that the promisee would rely on the promise
3) Promisee reasonably relied on said promise
4) The promisee’s reliance resulted in substantial detriment
5) Enforcement of the promise is required to prevent injustice.
Statute of Limitations for creditors to sue a debtor
4 years
Consideration required when a debtor offers to pay a past debt past the statute of limitations.
Creditor does not have to provide any additional consideration if the debtor offers to pay past debts.
