Chapter 4 Flashcards
When does a Bilateral Contract get enforced?
- once the promise is made by the offeree
When does a Unilateral Contract get enforced?
- once the performance is performed by the offeree
Unilateral vs. Bilateral Contracts
Unilateral - “Promise for an act”
Bilateral - “Promise for a Promise”
Executory Contract
- a contract not fully performed by either party
Executed Contract
- a contract fully performed by all parties
Most common form of lawsuit
- Breach of Contract
Examples of Non-offers for Agreement
- Preliminary negotiations
- Advertisements
- Auctions
Ways to terminate an offer
- Revocation (offer taken back prior to acceptance)
- Rejection (offeree says no)
- Lapse of time
- Counteroffer
- Termination by Law
Mailbox Rule
- acceptance of a contract must be by reasonable means, otherwise there is no acceptance until received by offeror
Contracts that must be in writing
- takes > 1 year
- sale of goods over $500
- Transfer of an interest in real property
- Promise to perform obligations of others
- Promise made in contemplation of marriage
Parol Evidence Rule
- prohibits the use of oral evidence or extraneous evidence if contrary to terms of written contract
- “written contract speaks for itself”
Repudiation
- “Anticipatory Breach”
- one party IN ADVANCE OF TIME OF PERFORMANCE notifies innocent party that they will not perform under contract
Rights of Innocent Party during Repudiation
- Repudiation AKA “Anticipatory Break”
- can treat contract as breached and find replacement
- wait and see
- innocent party is discharged if chooses to be
Most common remedy in breach of contract?
- Money
- no punitive damages however
Types of Monetary Damages
- Compensatory damages
- Consequential damages
- Liquidated damages
Compensatory Damages for Contracts
- compensates for injuries actually sustained
- must be proven to have arisen from the breach in contract
- Lost Profits generally not recoverable
Consequential Damages
- damages that flow from the result of the breach
- only recoverable if they are reasonably foreseeable and the non breaching party tried to mitigate damages
- Can be foreseeable by only one party
Liquidated Damages
- Damages stipulated in contract in event of breach
- Common in construction contracts
- Cannot be excessive
- Must be an adequate estimate
Equitable Remedies
- Reformation
- Rescission and Restitution
- Specific Performance
Reformation
- Rewrites a contract to express true agreement of the parties
- Used because of clerical errors, or to fix an invalid portion of the contract
Rescission and Restitution
- Rescission is an action to undo or cancel a contract
- Used in fraud, mistake, duress or failure of consideration
- If innocent party had expenses or money due, then restitution is owed
Agency by Agreement
- Written or Oral Contract
- Express and Implied Authority
- Called Power of Attorney if in writing
- Unless under Statute of Frauds, Agency relationship does not have to be in writing
Express Authority
- Explicitly agreed power
Implied Authority
- power necessary to carry out express authority