Chapter 12, Formation of traditional and E-Contracts Flashcards
How is intent of contract determined? (3 ways)
Objective theory
- What was said when entering into contract
- How the party acted
- The circumstances surrounding the transaction
What are the 4 requirements of a legal contract?
Agreement - offer & acceptance
Consideration - something of value is received or promised
Contractual Capacity - Must be competent parties
Legality - purpose of contract must accomplish goal not against public policy
Meeting of the minds
When 2 parties objectively look like they want to enter into a legal obligation
3 Elements of an offer
intention -offeror must have intention to become bound by the offer
definite -The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract.
communication-The offer must be communicated to the offeree.
Type of contract that involves holding an offer open for X amount of time in return for payment
An option contract
-Can’t be revoked
These 2 types of contracts are not covered by article 2
Real-estate and services contracts
Acceptance of an offer must be Unequivocal (and communicated)
the mirror image rule
Definiteness of an offer includes 4 terms
Identification of parties
The identification of the object or subject matter
The consideration to be paid
The time of payment, delivery, or performance
The Mailbox rule
Under this rule, if the authorized mode of communication is the mail, then an acceptance becomes valid when it is dispatched (placed in the control of the U.S. Postal Service)—not when it is received by the offeror
Consideration
the value given in return for a promise or a performance. The consideration, which must be present to make the contract legally binding, must be something of legally sufficient value and must be bargained for.
In consideration, there 3 elements of a “legally sufficient value
A bargain for someone to do something
A PROMISE to do something that one has no prior legal duty to do.
Forbearance - The act of refraining from exercising a legal right
The preexisting duty rule
If a party is already bound by contract to perform a certain duty, that duty cannot serve as consideration for a second contract.
Implied in fact contracts
Determine what parties are agreeing to by conduct
3 Types of Contractual incapacity
Minority
intoxication
insanity
3 options incapacitated parties can do
1) Disaffirm (void) the contract prior to achieving capacity
2) Disaffirm the contract for a reasonable time after achieving capacity
Affirm (ratify) the contract after achieving capacity
3) Affirm (ratify) the contract after achieving capacity
Promissory Estoppel
A doctrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies. Such a promise is binding if justice will be better served by the enforcement of the promise.