Chapter 9 Contracts Flashcards
Sources
Article 2 ucc (uniform commercial code) - goods
State common law - services and land
Elements of a valid contract
Offer
Acceptance
Consideration
No defense
Conduct invalidating assent - what was done wrong to make the contract invalid. Steps
Duress Undue influence Fraud Non fraudulent misrepresentation Mistake
Another no defense (3 more)
Illegal
Lack of capacity - need to be 18 years or older
Not evidence by writing
Void and voidable contracts
Void - cannot be enforced in court
Voidable - can be made void.
Classification of contracts
Express contracts
Agreement stated in words, either oral or writing
Classification of contracts
Implied in fact contract
Agreement made in conduct - no words were said but a contract happened, ex. Supermarket
Executed and executory contracts
Exceeded contract
Contract that has been FULLY PERFORMED by all partied
Executed and executory contracts
Executory contract
A contract that has YET to. Be fully performed
Offer
Communication - offerer makes offer to offeree and the offeree must Have knowledge
Acceptance
Willingness to enter into a contract
Acceptance
Mirror image rule
Exact terms on both sides
Acceptance
Communication of acceptance
When it reaches the offeree either by mail or by email hitting SUBMIT
Consideration
Encouragement to enter a contract
Consideration
Legal sufficiency
Benefit to promissory (other person) and a detriment (loss) to the promise
Consideration
Bargain for exchange
Mutually agreed upon exchange
Examples of consideration
Money
Peace of mind
Conduct invalidating Assent
Duress
Wrong act or threat that overcomes free will
Conduct invalidating Assent
Duress
Physical compulsion
Involving FORCE renders contract VOID
Conduct invalidating Assent
Duress
Improper threats
Threat renders contract VOIDABLE
Conduct invalidating Assent
Undue influence
Renders
Taking unFair advantage of other party by dominant position b/c of confidential relationship renders a contract VOIDABLE
Conduct invalidating Assent
Fraud
Fraud in the execution
Renders
Document is used to deceive party into entering the contract
Renders VOID
Conduct invalidating Assent
Fraud
Fraud in the inducement
When no document is used to deceive other into entering a contract
Renders to be VOIDABLE
Conduct invalidating Assent
Non-fraudulent misrepresentation
Incorrect information is given
Conduct invalidating Assent
Non-fraudulent misrepresentation
Negligent misrepresentation
Renders
Speaker did not take care to ensure the information was correct
Renders VOIDABLE
Conduct invalidating Assent
Mistake
Mutual mistake
Both parties are mistaken either one can choose to walk away
Renders Voidable
Conduct invalidating Assent
Mistake
Unilateral mistake
Unless?
One party is mistaken about given facts, remains valid
Unless the other party knew or should have known about the mistake
Contractual capacity
Minors
Under the age of 18
Contractual capacity
Minor
Liability on contracts
Exceptions
VOIDABLE at the minors option
Clothes, food, and shelter NOT VOIDABLE
Contractual capacity
Mentally incompetent persons
Person under guardianship
Contrars made by person under guardian ship by court renders VOID
Contractual capacity
Mentally illness or defect
VOIDABLE, the Person does not know the extent of their actions
Contractual capacity
Intoxicated
Voidable and intoxicated can be drunk or drugs. Etc.
Illegal bargains
Violations of statutes
Court does enforce agreements declared illegal VOID
Illegal bargains
Violations of statutes
Licensing statute
Statute that require licenses for traits, professions or businesses, if violated renders VOID
Illegal bargains
Violations of statutes
Gambling statute
Statutes that forbid betting renders VOID
Illegal bargains
Violations of statutes
Usury statutes
Statutes that forbid to charge higher interest. Renders VOID
Illegal bargains
Violations of statutes
Sunday statutes
Prohibit certain activities in Sunday. Renders VOID
Illegal bargains
Violation of public policy
Injury to public good
Illegal bargains
Violation of public policy
Common law restraint of trade and the two types
Unenforceable
Unreasonable prevent of trade
- sale of business - can’t open of sell a business in an unreasonable geographic area or time
- Employment contracts - prohibiting employees form competing with employer for a reasonable time
Illegal bargains
Exculpatory clause
Excusing party from liability - unenforceable
Illegal bargains
Unconscionable contracts
Unfair or unduly harsh agreements are unenforceable
Illegal bargains
Procedural unconscionability
Unfair or irregular bargaining (how was the negotiation conducted)
Illegal bargains
Tortious conduct
Agreement that Requires a person to commit a tort is unenforceable
Illegal bargains
Corrupting public officials
Agreement that corrupt officers are not enforceable
Written contracts
Statutes of rules
Law that list the type of contracts that should be in writing
Written contracts
Contracts within the statute of frauds
Must be evidence by writing to be enforceable
Written contracts
Methods of compliance (how you go about writing the agreement)
- Specify the parties of contracts
- Specify subject matter on essential terms
- Be signed by party
Written contracts
Parole evidence rule
Contract is complete and no other evidence is needed to interpret
written contracts
Rules of interpretation of contracts
- Commonly accepted meaning are used unless party manifest different intentions
- Words control figures based in amount,
third parties to contracts
Privity of contracts
Only the parties to a contract can enjoy the right and perform the duties at the exclusion of third parties
Third party to contracts
Assignment of rights
Transfer to third party so assignees right to performed is extinguished ( passing the right to somebody so they can receive the benefits)
Third party to contracts
Delegation of duties
Transfer of contractual obligations (duty)
Third party to contracts
Assignment of contracts
Both rights and duties are assigned
Third party to contracts
Third party beneficiary contracts
One party promises to render performance by third person
Performance breach and discharge
Discharge
Termination of duty - party no longer has to do what was told
Performance breach and discharge
Discharge by performance
Fulfillment of obligation renders in discharge (party did all that was promised)
Performance breach and discharge
Discharge by breach (party failed to do what was promised)
Material breach - failure of one party to do most of or all of what was promised
Immaterial breach- failure of one party to do one small port of what was promised
Performance breach and discharge
Discharged by agreement of the parties
Mutual rescission
Agreement to terminate their respective duty
Performance breach and discharge
Discharge by agreement
Substituted contract
New contact discharges old contract
Performance breach and discharge
Discharge by agreement
Accord and satisfaction.
One party is given a new duty and is discharged from the old contract
Performance breach and discharge
Discharge by operation of law
Impossibility
Performance of the contract cannot be done.
Performance breach and discharge
Discharge of operation cannot be done
Destruction of subject matter
Discharge contract if occurs without the promissor fault
Contract remedies
Court awards plaintiff in breach of contract
Example: money
What are the two types of Contract remedies
Monetary damages
Remedies in equity
Contract remedies
3 types of monetary damages
Compensatory damages
Incidental damages
Consequential damages
Contract remedies
Monetary damages
Compensatory damages
Placing the injured party in as good a position as he would have held the other party
Contract remedies
Monetary damages
Incidental damages
Rise directly out of the breach
Contract remedies
Monetary damages
Consequential damages
Arising as a foreseeable result of the breach
Contract remedies
When is Remedies in equity available
When there is no adequate monetary remedy at law
Contract remedies
Types of remedies in equity
Specific performance
Injunction
Contract remedies
Remedies of equity
Specific performance
Ordering breaching party to render promised performance
Contract remedies
Remedies of equity
Injunction
Court order Prohibiting a party from doing specific act
Quasi contracts
Exception - remember benefits
Obligation that is supposed to avoid injustice
Requirements Quasi contracts
Oppose quasi contract when
Plaintiff confer a benefit Upon the defendant
The defendant allows or appreciate benefit
Defendants retention of benefit is inequitable (unfair )
Promissory estoppel
Doctrine enforcing some non-contractual promises
Requirements of promissory estoppel
- Promisor made a promise
- Promisee relied on promise to his detriment
- Promisor knew or should have known the promised would rely on that promise
Mutual assent
Offer
Definiteness
Offer must be specific in terms of quantity and price
Mutual assent
Offer
Lapse of time
Offer remains for the period specified or a reasonable period
Mutual assent
Offer
Counter offer
Counter offer that terminated original offer
Mutual assent
Offer
Death or incompetency
Either offeree or offerer terminates offer
Mutual assent
Offer
Destruction of the subject matter (item being bought or sold)
Offer can be terminated at any time before It is accepted
Mutual assent
Offer
Destruction of the subject matter (item being bought or sold) exception
Option contract- binds the offerer to keep the offer open for a specified time
Definition of a contract
Binding AGREEMENT, that courts ENFORCE
