Chapter 12 - Practical Contracts Flashcards
What are the four times that a contract needs to be in writing?
- The Statute of Frauds requires it
- The deal is crucial to your life of the life of your business
- The terms are complex
- You do not have an ongoing relationship with the other party.
What is a lawyer’s primary goal?
To protect their clients by avoiding litigation, now and in the future.
When is it best to negotiate touchy subjects?
When the relationship is just beginning, when everyone is on friendly terms and eager to make a deal, rather than waiting until trouble stikes.
What are some costs of using a lawyer?
- Legal Fees
- Time spent bargaining
- Hours used to read complex provisions
- the potential for goodwill to erode during negotiations.
What does ‘Control the Pen’ mean?
Be the one who prepares the first draft of the contract.
Typically, which party prepares the contract draft?
The party with the most bargaining power.
Why might a party use vagueness?
They are trying to get a commitment from the other side without obligating itself.
What is the true test of whether a vague clause belongs in a contract?
Whether you would sign the contract if you know that the other side’s interpretation would prevail in litigation.
How is ambiguity interpretted?
Against the drafter of the contract.
What is the difference between vagueness and ambiguity?
Vagueness occurs when the parties do not want the contract to be clear. Abiguity means the provisions is accidentally unclear.
When does ambiguity occur?
When the parties think only about what they want a provision to mean, without considering the literal meaning or the other side’s perspective.
What are the three things does intpreting the ambiguity against the draftor is meant to do
- Protect laypeople from the dangers of form contracts that they have little power to change. The courts are especially sympathetic to laypeople if a company prepares a form contract and give the otherside only a “take it or leave it” option.(Think Insurance Policies)
- Protect people who are unlikely to be represented by a lawyer. Most people do not hire a lawyer to read form contracts. And without an experienced lawyer, it is highly unlikely that an individual would be aware of the ambiguity.
- Encourage those who prepare contracts to do so carefully.
What an a Scrivener’s Error?
A typo (A scrivener is a clerk how copies documents)
What happens in the case of a Scrivener’s Error?
A court will reform a contract if there is clear and convinving evidence that the mistake does not reflect the true intent of the parties.
What things should you check at minimum when reviewing a contract?
- Names of the parties
- The Dates
- Dollar Amounts
- Interest Rates
What is the structual parts that make up a contract? 6
- Title
- Intro Paragraph
- Covenants
- Breach
- Representation and Warranties
- Boilerplate