Chapter 4 - Contract Law Flashcards
What is a contract?
A contract is an agreement of wills by which one or several persons obligate themselves to one or several other persons to perform a prestation.
Obligations
Contracts create obligations. In order for an obligation to exists, there are three basic requirements.
- There must be at least 2 parties who agree to doing something for each other
- There must be a prestation that is the object of the obligation
- There must be a lawful reason for undertaking the obligation
What is a Prestation?
A prestation is all of these:
- A payement or performance
- The rendering of a service
- Doing or not doing something
A prestation can be a good, a service, or money! (i.e. - you buy a book: you give money, they give you book)
What are the ways in which an obligation may come into existence?
One of two ways:
- Emerging from contracts entered into verbally or by writen (some must be in writing - marriage / mortgages)
- Emerge from an act carried out by someone (causing damage to property)
What is the difference between a Legal and a Natural obligation?
A legal obligation is sanctioned by law and enforceable in a court. Failure to perform, means the opposing party could sue and the right to demand performance.
A natural obligation is one that is only morally binding. Contracts have PRESCRIPTIONS ( 3 years) - after which point they have no right to sue you, but you still owe the money, however you only pay if you feel morally bound to.
In which way do contracts work?
Contracts are bilateral agreements, meaning obligations work in both directions with both parties agreeing to commit.
A contract is considered as creating the law between the two parties with respect to the subject matter of the contract.
Parties have an obligation to follow the terms of the contract as much as possible. Where the agreement is lacking - **the civvil code is used to compensate.
Classification of Contracts
- Adhesion VS Mutual Agreement
- Synallagmic VS Unilateral Contracts
- Onerous VS Gratuitous Contracts
- Commutative VS Aleotory Contract
- Contracts of Instantaneous Performance VS Successive Performance
Contracts of Adhesion v. Mutual Agreement
Adhesion: When one party sets the terms of a contract and the other party simply agrees. Even if there are negotiations that end up unsuccesul, its sull adhesion.
Mutual Agreement: When two parties negotiate - both contribute to the terms and come to an agreement of contract details.
Synallagmatic v. Unilateral Contracts
Synallagmatic: both parties have a prestation (obligation) to perform. Both parties agree to give something to the other (i.e. I’ll give you my book, you give me money)
Unilateral: only one party has an obligation to perform, the second party simply accepts it (i.e I donate $10 to childrens hospital)
Onerous v. Gratuitous Contracts
Onerous: In which there is some economic exchange that both patries get in return. (i.e. I get money, buyer gets my book with financial value - an also be a service: two students exhange books!)
Gratuitous: FREE! One party gives something and the other received nothing in return (donation to hospital would be gratuitois because the hospital provides nothing in return.)
Commutative v. Aleotory Contracts
Commutatuve: Having knowledge of the end result of the contract (i.e. you buys a tran ticket to TO, you know you’ll end up in TO)
Aleotory: We do not know the end results or it is uncertain - we know the variables but what comes out is unknown (i.e. hiring a lawyer to defend you)
Instantaneous v. Succesive Performance
Instantaneous: One time off interaction (buying a book once)
Succesive: Repeat of performance (paying for phone plan each month to receive the service)
Consumer Contracts
Where an individual (not a company) aquires property/services for personal use from a business.
Offer and Acceptance Definitions
Contracts are entered into voluntarily - there must be a clear meeting of minds of people involved: this is called Consensus in Idem
An offer is a clear firm proposition with a genuine intention to enter into a contract.
An acceptance will create a contract but must be in the same terms as the offer. Any added conditions is a counter offer not an acceptance.
A contract is formed when and where acceptance is received by the offeror
Conditions of Formation
7 essential elements for a valid contract
- an exchange
- of consents,
- between persons,
- having capacity to contract,
- in any form, unless a special “form” is required
- a cause,
- an object
Exchange
Two conditions that make a contract stand without it being nullified
- Exchange of consent
- Express vs Tacit: Express is a very clear gesture of communication showing you agree to contract (head nod, signature, highfive). Tacit is an assumption that you agree (sitting down at hairdresser without syaing a word)
Offer and Acceptance
A contract is formed when and where acceptance is received by the offeror
OFFER
- if there is a set term - an offer cannot be revoked before that time exprires
- If there is no term - an offer may be revoked at any time and ends in a reasonable time.
- Death, bankrupcy or protective supervision causes offer to lapse before acceptance was received.
ACCEPTANCE
Silence =/ Acceptance (apart from rent increase)
Consent - Defects of Acceptance
- Error - must be a real error not a personal mistake (Amazon sent you the wrong product)
- Fraud - Person contracted based on intentional false infomation OR the person misled, lied or omit information to manipulate you to contract
- Fear - Can’t contract out of fear (pressure, authority, physical)
- Lesion - Taking Financial advantage of a person who is presummed to not know better (may only be claimed by minors and inapt adults)
Capacity to Contract
MINORS
- All minors can enter contracts for usual needs (clothes, food, books)
- 14 + can contract for employement or business
- Parents “of right” must legally represent them unless in emancipation.
- minors can avoid responsibility for contractual aundertaking for which they do not have legal capacity
Adults
Inapt adults under protective supervision cannot contract
Cause & Form
CAUSE: a reason needs to exist for the contract. An illegal cause nulls the contract
FORM: No need for particular workding or format, expet for marriages, mortgaes and notarial wills or insurance (all longer term and deal with a lot of money)
- the official form can be anything: handshake, head nod, tacit, etc.
Nature of Nullity
Contracts not meeting the conditions of formation may be declared null:
Canceling a contract stops the obligations moving forward but does not allo to go and get your money back
Nullifying a contract makes it as if it never existed and the person has to pay back in restitution
- Absolute Nullity: nullify on the basis of breaking public law
- Relative Nullity: nullify on the basis of violating private individual interest.
Failure of performance allows the creditor to…
- Reduce or refuse to perform obligations
- Nullify (Resolution) or Cancel (Resiliation) the contract
- keep any propety until performance is completed
- Seek an injunction.
Injunctions
A creditor asking court 2 order a deptor to stop doing, not do, or to perform a particular act. A permanent injunction is granted as the final trial judgement
Interlocutory Injuntcion
Temporary injunction granted for the duration of the proceedings until a final judgement is rendered.
Three conditions to such, must demonstrate:
- interest and seriousness of the issue
- injunction is necessary to avoid irreparable injury before final judgement
- that on the balance of convenience, he will suffer significantly more than the defendant
Provisional Injunction
Case of urgency, a plaintiff will request that an injunction be issued before the defendant has received notice of interlocutory hearding.
- this injunction can last no longer than 10 days.
Interpretation of Contracts pt.1
Wen interpreting a contract a judge will
- uncover the real intentions of the parties when entering the contract
- Look at the historical nature of the parties
- Clauses will be interpreted in a similar manner to other clauses (they must all be related)
- Existing clauses MUST have some effect
*Multipe meaning workds must conform to the subject matter - all same words have the same meaning.
Interpretation of Contracts pt.2
- in contracts of adhesion, the accepting party is given the benefit of the doubt
- Incidental obligations exist - not everything must be written to be active by the party
- Illegible clauses are null unless explained
- Abusive clauses are null
- A nullified clause does not make the whole contract invalid if it doesn’t affect the contact.
Default of Contracts
Prior to taking action against a debtor, he must be placed in default either by
- By the contract itself (fails to perform)
- By extrajudicial demands - sending a letter requesting performance withing a time period
- By operation of law - fails to perform in useful time, or where performance is impossible due to debtor fault.
Damages
Damages must always be real and calculable.
- Present Damages - bodily, moral or material
- Future Damages - must be certain and able to assess.
- Punitive Damages - must be intenritonal, no criminal record and be a charter violation.
- Penal Damages - “if you don’t do what we agree on, this is the penalty, and this is the deadline” - paying x amount a day everyday over the deadline.
- Assesing Damages - Compensating for deprived profit (moral damage)
