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CPA: REG > Chapter 6 Section 1: Contracts > Flashcards

Chapter 6 Section 1: Contracts Flashcards

1
Q

Define contract

A

A promise the law will enforce

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2
Q

Define express contract

A

Formed by language (oral or written)

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3
Q

Define implied-in-fact contract

A

A contract formed by language

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4
Q

Define implied-in-law contract

What is it also known as?

A

Not a contract - a remedy to prevent unjust enrichment

Quasi-contract

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5
Q

Define unilateral contract

When is it formed?

A

One promise given in exchange for performance.

Not formed until performance is completed

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6
Q

Define bilateral contract

When is it formed?

A

Two promises exchanged for each other

Formed when promises are exchanged

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7
Q

Define executory contract

A

Duties remain to be performed

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8
Q

Define executed contract

A

All of the duties have been performed

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9
Q

Where is common law derived from?
What falls under it?

RISE

A 
The courts
Real Estate
Insurance
Services
Employment
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10
Q

What does the UCC govern?

A

Contracts for sale of goods

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11
Q

What are the three requirements of a legally enforceable contract?

A

Offer and acceptance
Exchange of consideration
Lack of defenses

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12
Q

Does a contract need to be in writing?

A

Usually not

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13
Q

Define agreement

A

Mutual assent - a meeting of the minds

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14
Q

What is required for an offer to exist?

A

The communication must create a reasonable expectation in the offeree that the offeror intends to make a contract

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15
Q

What questions should be asked to determine if an offer exists?

A

Intent?
Definiteness and certainty?
Communication of the above?

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16
Q

Are advertisements offers?

What’s the exception?

A

Usually not - they’re invitations seeking offers

If the offeree is specified (rewards) it’s an offer

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17
Q

What needs to be specified in the offer for RISE?

UCC?

A

All terms for RISE

Only quantity for UCC

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18
Q

What are the three ways to terminate an offer?

A

Revoke
Reject
Automatic

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19
Q

Can you revoke an offer after you promise to keep it open?

A

Yes.

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20
Q

What are the three limits on the offeror’s power to revoke?

A 
Option contract
Unilateral contract (if work is begun)
Merchant firm offer
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21
Q

What is an option contract?

A

The offeree buying time for the offeror to keep the offer open

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22
Q

Can an offer be accepted after it is rejected?

A

Not really

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23
Q

When is a rejection, counteroffer, offer, or revocation effective?

A

When received

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24
Q

Under what three circumstances is an offer automatically terminated?

A

Death or incompetency
Destruction of subject matter
Illegality

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25
Q

What is the mirror image rule?

Under what law is it required?

A

An acceptance must be the mirror image of the offer

RISE

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26
Q

What is the mailbox rule?

What is the exception?

A

Acceptances are effective when dispatched, even if it is lost in the mail
If the offeror says they need to receive to offer for it to be valid

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27
Q

What needs to be exchanged in order to be called consideration?

A

Something of legal value - something you’re not otherwise obligated to do

28
Q

Does the consideration need to go to the third party?

A

Not necessarily

29
Q

Does the consideration need to be fair?

A

No, but it can’t be unconscionable and it must be arms-length

30
Q

Is a gift protected by law?

A

No

31
Q

Is a contract enforced if it is created for something that was already done?

A

No

32
Q

What is the detrimental Reliance/Promissory Estoppel rule?

A

A promise made by one party and detrimentally relied upon by another can be enforced without consideration (gift to charity if they spent the money already)

33
Q

What makes a contract void?

A

Fraud in the execution, nonexistence of subject matter, illegality, physical force duress, failure to have a license to protect the public

34
Q

What is required to establish fraud?

MAIDS

A 
Material misrepresentation
Actual and justifiable reliance
Intent to induce
Damages
Scienter
35
Q

Do opinions of value qualify as misrepresentation or fraud?

A

No

36
Q

What is the difference between fraud in the execution and inducement?

A

Execution is when a party tricks another into signing. It makes it void.
Inducement is when the terms of the contract are misrepresented. It makes it voidable.

37
Q

Does economic or social duress make it void or voidable?

A

Voidable

38
Q

Is a unilateral mistake a defense to a contract?

Is a mutual one?

A

Usually not, unless the other party knew or should have known
It’s voidable then

39
Q

If the seller doesn’t have a license, what does that do to the contract?

A

If the license is to protect the public, it makes it void (CPA or doctor)
If the license is to raise revenue it’s enforceable

40
Q

Are promises not to compete enforceable?

A

If reasonable.

41
Q

Explain how contracts work with minorites

A

Minors can disaffirm a contract, even for a while after they turn 18. They cannot disaffirm contracts for necessities. They can be bound to the contract if they ratify, but they must be an adult to ratify

42
Q

What is the statute of limitations under RISE?

UCC?

A

4-6

4

43
Q

What six contracts require writing under the Statute of Frauds?

A 
Marriage
Year (can't be done in a year)
Land (for over a year)
Executors to pay estates or debts
Goods (over $500) - not services
Surety
44
Q

For the Statute of Frauds regarding the over a year requirement, when does the year start?

A

From the date of a contract, it has to be IMPOSSIBLE to do in a year.

45
Q

What is an accord and satisfaction?

A

Same parties, new agreement. Until substitute is satisfied, you can sue under new or old. It does not discharge the original duty

46
Q

What is novation?

A

Same agreement, substituted party

47
Q

What is a substituted contract?

A

Like accord and satisfaction, but the duties under the original contract are discharged immediately.

48
Q

What is the parol evidence rule?

A

It prohibits a party in a lawsuit involving a fully integrated written contract from introducing evidence of oral or written statements from before or at the same time as the main one, or that seek to vary the terms of the contract.
Subsequent modifications are admissable, and it’s always admissable if it shows fraud, duress, or a mistake.

49
Q

What if there is a material breach of contract?

Immaterial?

A

Material - nonbreaching can be discharged from contract

Immaterial - nonbreaching is entitled to damages

50
Q

What is anticipatory repudiation, and what happens if it’s there?

A

It occurs when one person unequivocally indicates in advance of performance that they will not perform their duties when the time comes.
You can sue now, sue later, or cancel the contract.

51
Q

What is the purpose of damages?

A

They intend to put the nonbreaching party in as good a position as he would have been had there been no breach

52
Q

What is the standard measure of damages for personal service contracts?

A

Enough money to obtain subtsitute performance

53
Q

What are consequential damages?

A

Damages that are reasonably foreseeable as a result of the breach

54
Q

What is specific performance and when is it used?

A

Court order that the breaching party performs.

Land or unique items

55
Q

Can you get compensatory damages and specific performance?

A

No

56
Q

What is a liquidated damage?

A

It’s a clause in a contract that specifies what will be paid if there is a breach.

57
Q

Are punitive damages available in a breach?

A

Not usually

58
Q

When are punitive damages available?

A

Fraud

59
Q

What is rescission or cancellation?

A

Cancels the contract and restores the parties to their former position

60
Q

What is the doctrine of substantial performance?

A

A party cannot rescind or cancel if a contract has been substantially performed - the only remedy is monetary damages for the minor breach

61
Q

What third parties are generally given rights?

A

Only parties to the contract (have privity). They must be specifically named

62
Q

Are donee beneficiaries and creditor beneficiaries intended or incidental?

A

Intended

63
Q

What is an assignment of all rights under a contract interpreted as?

A

An assignment of a contract, which assigns rights and delegates duties

64
Q

What contracts can be assigned or delegated?

What are the exceptions?

A

Any

If it will change the obligor’s risk, or involves specialized personal service (surgeon)

65
Q

Can you assign offers?

What’s the exception?

A

No

You can assign option contracts

66
Q

Who is liable under a delegation of duties?

A

Both parties, unless there is novation

67
Q

Can you assign accounts receivable if the contract forbids it?

A

Yes, as long as you give the debtor notice

CPA: REG (35 decks)

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