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LOMA 311- ISTAR > Chapter 6 > Flashcards

Chapter 6 Flashcards

1
Q

Define a contract

A

a legally enforceable agreement between two or more parties. It consists of a or a set of promises.

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2
Q

Are the parties to a contract free to decide which jurisdiction’s laws will govern the validity and effects of their contract?

A

yes, the court typically apply the laws of the place designated by the parties.

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3
Q

What is the traditional common law rule (in terms of conflicts of law rules for undesignated jurisdiction contracts?)

A

a contract is governed by the law of the place where the contract was created. Typically the place where the last act to create the contract was completed.

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4
Q

What is the conflict of law rule known as the centre of gravity rule?

A

the law of the jurisdiction that has the greatest interest in the contact governs the contract.

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5
Q

Define a formal contract

A

‘is a contract that is enforceable because the parties met certain formalities concerning the form of the agreement
i.e. sale of real property

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6
Q

define an informal contract

A

a contract that is enforceable because the parties met requirements concerning the substance of the agreement rather than requirements concerning the form of the contract.
i.e. insurance contracts

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7
Q

define a bilateral contract

A

a contract under which both parties make legally enforceable promises.
ie. for sale of goods

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8
Q

Define a unilateral contract

A

a contract under which only one of the contracting parties make a legally enforceable promise.
ie. life insurance

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9
Q

Define a commutative contract

A

an agreement under which the parties specify in advance the values that they will exchange; moreover the parties generally exchange items or services that they think are relatively of equal value.
ie. annuity contract

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10
Q

define an aleatory contract

A

one party provides something of value to another party in exchange for a conditional promise. If the condition were to happen, then one party may receive something of greater value than what that party gave in exchange for the original promise.
ie. insurance contracts .

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11
Q

what is a conditional promise?

A

a promise to perform a stated act if a specified, uncertain event occurs.

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12
Q

Define a bargaining contract

A

Contracts, created when both parties, as equals, set the terms and conditions of the contract. Both parties have the right to negotiate terms.
-(most contracts)

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13
Q

define a contract of adhesion

A

contracts that one party prepares and that the other party must accept or reject as a whole, without any bargaining between the parties as to the terms of the contract.
ie. individual life insurance policies and annuities

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14
Q

what is a valid contract?

A

a contract that is enforceable by law

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15
Q

What is a void contract?

A

an agreement that was never enforceable by law,

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16
Q

What is a voidable contract

A

a party has the right to avoid her obligations under the contract without incurring legal liability.

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17
Q

According to the common law rule, the formation of a valid informal contact involves 4 general requirements. Name them

A
  1. the parties to the contract must mutually assent (agree) to the terms of the contract
  2. the parties must exchange legally adequate consideration
  3. the parties must have contractual capacity.
  4. the contract must be for a lawful purpose.
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18
Q

When is a contract considered mutually assent?

A

all the parties must intend to be bound by the contracts terms
each party must clearly manifest the intent to be bound by making some outward expression of that intent

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19
Q

Define an Offer,

A

a proposal that if accepted by another according to its terms, constitutes a binding contract.

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20
Q

What do you call the party who makes an offer, and the part to whom the offer is made?

A
  1. offeror

2. offeree

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21
Q

When would an offer be considered definite?

A

when it indicates that the offeror intends to be legally bound if the offeree accepts the offer. The offered terms must be definite enough that any resulting contract can be enforced.

22
Q

Name someways an offer can terminate

A
  1. lapses
  2. revoked
  3. Rejected
23
Q

An offer needs to be accepted without qualifications. If the offeree tries to substitute new terms they are rejecting the first offer, and making a counter offer. What is a counter offer?

A

it terminates the original offer, with a new one with the roles from the original offer now switched.
- note a counter offer is still an offer.

24
Q

What happens if either party dies or loses contractual capacity after an offer has been made?

A

the offer automatically terminates by operation of law.

25
Q

Define acceptance of an offer.

A

its the offeree’s unqualified agreement to be bound to the terms of the offer.
-If all other requirements for a contract is met, a contract is created when the offeree unconditionally accepts an offer.

26
Q

What is the principal of freedom of contract?

A

the parties have the right to contract with whomever they choose and on whatever lawful terms they choose.

27
Q

What are the 3 types of acceptances in Civil law jurisdiction

A
  1. written acceptance
  2. oral acceptabce
  3. acceptance by conduct.
    1 and 2 are express acceptances (orally or in written)
    3 is an implied acceptance.
28
Q

To be enforceable, a contract must be supported by legally adequate consideration. Define consideration

A

is whatever a promisor asks for and receives in exchange for his contractual promise.
(consideration is legally adequate if it was bargained for an exchanged between parties)

29
Q

define contractual capacity, and name the two primary groups who have limited contractual capacity.

A

it means that a person has the legal power to enter into a valid contract.

  1. minors
  2. mentally incapacitated.
30
Q

Name and define a primary common law exception in which a specific type of contract is not voidable by minors.

A

Contracts of necessaries. which are goods and services that a minor or other incapacitated person actually requires to sustain her well-being.

31
Q

Name 3 kinds of promises that do not qualify as adequate consideration

A
  1. A gratuitous promise ( promise for nothing in exchange)
  2. past consideration ( promise made in exchange for acts already taken place)
  3. preexisting duty (a promise for a legal duty)
32
Q

What is the term used when a minor exercises his right to avoid a contract?

A

disaffirmance.

33
Q

define guardian.

A

an individual or group of individuals who is authorized by a court to take care of a person, known as the ward, and manage the ward’s property and affairs.

34
Q

The insure’s capacity to issue life insurance contracts within a given jurisdiction depends what?

A

both on the insurer’s articles of incorporation and on whether the insurer has obtained a license to offer life insurance contracts in that jurisdiction.

35
Q

In what situation would a court enforce a non-competition clause?

A

If the following requirements are met:

  1. clause serves a legitimate business purpose
  2. the restriction is reasonable in terms of its time limits, its geographical limits and the scope.
  3. the restraint does not impose an undue hardship
36
Q

define a wagering contract

A

its where either party may gain or lose depending on the outcome of an uncertain event, such as a sporting event.

37
Q

What is an insurable interrest?

A

defined as where a person would likely suffer a genuine loss or detriment should the e vent insured adjacent occur.

38
Q

According to the civil law jurisdiction what are 3 general requirements to form a valid contract.

A
  1. the parties must consent by means of an offer and an acceptance
  2. the subject matter of the contract must be certain
  3. An obligation created by the contract must have a cause.
39
Q

When does duress exist?

A

when a person acts wrongfully or threateningly to overpower the will of another so as to force that person to enter into a contract against their own free will.

40
Q

What is undue influence?

A

generally involves the misuse by one person of a positiion of trust or confidencfe to overcome the free will of another person.

41
Q

What is misrepresentation?

A

an untrue statement of facts.-

42
Q

What is material misrepresentation?

A

a misrepresentation that induces the other party to enter into a contract that it would not have been entered had the truth been known. - the contract is voidable by the innocent party.

43
Q

Name 4 methods for discharging a contract

A
  1. contractual obligations are met
  2. discharged by mutual agreement
  3. entering into an accord and satisfaction
  4. party can waive his rights to require another party’s performance of a contract.
44
Q

What is an accord and satisfaction?

A

where one party agrees to accept something other than what was initially agreed to

45
Q

Define waiver

A

the voluntary relinquishment of a known right.

46
Q

What is the Statute of Frauds law?

A

it declares certain types of contracts to beunenforceable unless they are evidence by a written document signed by the party to be charged with performing the contacy.

47
Q

What types of contracts must be in writting to be enforceable?

A
  1. promise by the executor or administrator of a deseased person’s estate to answer for a debt of the deceased out of the excutors’s or administratos own funds
  2. promise to be responsible for the debt or default of another
  3. marriage
  4. land interest
  5. An agreement that cannot be performed according to its terms within one year after the contract is completed.
48
Q

Several states and other common law jurisdictions have imposed a writing requirement for what types of agreements?

A
  1. insurance contracts
  2. promises to pay debt discharged in bankruptcy
  3. agreement to pay commissions to real estate agents
  4. aggrement that cannot be performed during the lifetime of the promisor.
49
Q

state the parol evidence rule

A

states that parol evidence is not admissible to add to, vary, or contradict, the terms of a written contract.

50
Q

What is parol evidence?

A

evidence that is extrinsic to a written agreement. It is only admissible to aid a cort in interpreting a written contract that is unclear.

LOMA 311- ISTAR (15 decks)

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