Chapter 12 Flashcards
contract
agreement that can be enforced in court; formed by two parties, each of whom agrees to perform or refrain from performing some act now or in the future
every contract involves at least two parties
1) offeror
2) offeree - accepts offer - made to them
two types of contracts
bilateral
- offeree must only promise to perform (most contracts)
unilateral
- offeree can accept the offer only by completing the contract performance
requirements of a valid contract
1) agreement
2) consideration
3) contractual capacity
4) legality
agreement
offer and acceptance
offer by one party to enter into the agreement and an acceptance of the terms of the offer by another party
must have mutual understanding (same page)
consideration
any promises made by parties to the contract must be supported by legally sufficient and bargained for consideration (something of value received)
so the value given in return for a promise or performance
exchange of something of value between both parties involved
why have contract in 1st place
contractual capacity
both parties entering into the contract must have the contractual capacity to do so
- law must recognize them as competent
mental capacity required by law - bound by that contract
if you are minor, can pull out of contract *(void) *
intoxication also (courts rarely permit because of this)
- is the contract voidable
- was intoxication voluntary
legality
contracts purpose must accomplish some goal that is legal
contract to do something prohibited by fed or state statutory law is illegal and unenforceable (also contract to commit a tortious act)
offers made in anger, jest, or undue excitement are
usually not offers
mirror image rule
requires acceptance be on precisely the same terms as the offer
ambiguous terms
must have meeting of the minds (most contracts fail because of AT)
problems with AT - not specific enough
what must be present to make a contract legally binding
something of legally sufficient value
bargained for
termination of the offer
- lapse of time
- destruction of the specific subject matter of the offer
- death or incompetence of the offeror or the offeree
- supervening illegality of the proposed contract
what is lapse of time
- **related to termination by operation of the law **
- an offer terminates automatically by law when the period of time specified has passed
- if offer states will be left open until a particular date, offer will terminate at midnight on that day
- if offer does not specify a time for acceptance, offer terminates at the end of a reasonable period of time
what is supervening illegality of the proposed contract
- related to termination by operation of law
- it is a statute or court decision that makes offer illegal automatically terminates the offer
counteroffer
rejection of an offer (terminating the offer
- usually change in/addition to terms of original offer automatically terminates that offer and subs the counteroffer
adhesion contracts
no negotiation
“take it or leave it”
mandatory arbitration
drafted by one party but not the other
statue of frauds
must be in writing
1) contracts that cannot be completed in one year
2) land/real estate
3) contracts for sale of goods over $500
4) contracts for marriage (pre-marital contracts)
preventing fraud, must sign, examples given
duty to mitigate damages
a person who claims damages as a result of breach of contract has a duty under the law to “mitigate” or reduce those damages
example: Jane signs lease in Aug for 1 yr; breaks the lease and moves out in Jan.
example: property owner and builder contract to build a home - builder purchases all materials and starts building - before finished property owner breaches contract
attorney fees
must have in contract that you are entitled to attorney fees if the other person breaches the contract
(except for leases)
covenants not to compete in employment contracts
non-compete clauses
