Chapter 11 Flashcards
Contract Law
formation of and keeping promises
Sources of Contract Law
Common law governs except when modified/replaced by statutory law (UCC) or by admin agency regulations
Common law governs real estate, employment, insurance.
Functions of Contract Law
Designed to provide stability, certainty and predictability for both buyers and sellers
Used to avoid disputes in businesses
Definition of a Contract
Promise to set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty
Agreement that can be enforced in court
Objective Theory of a Contract
what a party said when entering into the contract
how a party acted or appeared
the circumstances surrounding the transaction.
Requirements of a Valid Contract
- Agreement
- Consideration
- Contractual Capacity
- Legality
Agreement
offer and acceptance
Consideration
- supported by legally sufficient/bargained-for consideration (of value received or promised to convince a person to make a deal).
Contractual Capacity
Both parties entering into the contract must have the contractual capacity to do so
Legality
the contract’s purpose must be to accomplish some goal that is legal and not against public policy.
Enforceability of a Contract
- Voluntary Consent
- Form (must be what law requires and most be in writing)
Bilateral Contract
type of contract that arises when a promise is given in exchange for a promise.
Unilateral Contract
type of contract that arises when a promise is given in exchange for a promise. (contests, lotteries, prizes)
Revocation of Offers for Unilateral Contracts
once performance has been substantially undertaken, the offeror cannot revoke the offer
Formal
contract that by law requires a specific form, such as being executed under seal, to be valid
Informal
contract that does not require a specified form or formality in order to be valid
Types of Formal Contract
Negotiable instruments (checks, promissory notes, etc)
Letter of credit (international sales)
Bill of landing (document evidencing receipt of or title of goods)
Express
contract in which the terms of the agreement are fully and explicitly stated in words, oral or written
Implied
contract formed in whole or in part from the conduct of the parties (as opposed to an express contract).
Executed in Contract
a contract that has been completely performed by both parties.
Executory in Contract
contract that has not yet been fully performed.
Valid Contract
- Agreement (offer and acceptance)
- Supported by legally sufficient consideration
- Made by parties who have the legal capacity to enter into contract
- Legal purpose
Voidable Contract
a valid contract but one that can be avoided at the option of one or both parties
Also can ratify i.e. make valid
Unenforceable Contract (Void)
cannot be enforce because of certain legal defenses against it.
Void contract = no contract at all
Quasi-Contracts
contracts implied in law (not actual contracts), fictional contracts “as if”
Equitable rather than legal, imposed to avoid unjust enrichment of one party
Limitations on Quasi-Contracts
Quasi-contracts exist to prevent unjust enrichment
The party obtaining the enrichment is not held liable in some situations.
Plain Meaning Rule
meaning of the terms must be determined from the face of the instrument—from the written document alone. A court is bound to give effect to the contract according to this intent.
Extrinsic Evidence
evidence that relates to a contract but is not contained within the document itself, including the testimony of the parties, the testimony of witnesses, and additional agreements and communications.
