Chapter 9: Formation of Traditional and E-Contracts Flashcards
A promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
Contract
A theory that a party’s intention to enter into a legally binding agreement, or contract, is judged by outward, objective facts.
Objective Theory of Contracts
“A promise for a promise” A contract where the offeree can accept simply by promising to perform.
Bilateral Contract
“A promise for an act” A contract where the offeree can accept the offer only by completing the contract performance.
Unilateral Contract
Contracts that require a special form or method of creation to be enforceable.
Formal Contract
Contracts where no special form is required, as the contracts are usually based on their substance rather than their form.
Informal Contract
A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written.
Express Contract
A contract that is implied from the conduct of the parties.
Implied Contract
A contract that has been fully performed on both sides.
Executed Contract
A contract that has not been fully performed by the parties.
Executory Contract
A contract that has the elements necessary to entitle at least one of the parties to enforce it in court.
Valid Contract
A valid contract but one that can be avoided at the option of one or both of the parties.
Voidable Contract
A contract that cannot be enforced because of certain legal defenses against it.
Unenforceable Contract
No contract at all
Void Contract
A promise or commitment to do or refrain from doing some specified action in the future. Must include intent, definiteness of terms, and communication
Offer
The offeror’s act of withdrawing (revoking) an offer
Revocation
A contract created when an offeror promises to hold an offer open for a specified period of time in return for a payment given by the offeree.
Option Contract
A rejection of the original offer and the simultaneous making of a new offer.
Counteroffer
Requires the offeree’s acceptance to match the offeror’s offer exactly–to mirror the offer. (Any changes in terms terminates the offer and substitutes the counteroffer.
Mirror image rule (Unequivocal Acceptance)
A voluntary act by the offeree that shows assent (agreement) to the terms of an offer.
Acceptance
Under this rule, if the authorized mode of communication is the mail, then an acceptance becomes valid when it is dispatched–not when it is received by the offerer. (Does not apply to instantaneous communications)
Mailbox rule
Must meet the same basic requirements (agreement, consideration, contractual capacity, and legality) as paper contracts, but are formed online. These are also formed for licensing agreements.
E-contracts
These are located in many online contracts and indicate the location (such as court or jurisdiction), in which contract disputes will be resolved.
Forum-selection clause
Requirements of a valid contract
- Agreement
- Consideration
- Contractual Capacity
- Legality
Offer and Acceptance
Agreement
Contract is judged by what a reasonable person in the Offeree’s position would conclude about the offer.
Intention
Silence is generally not considered acceptance, except when the offeree has a duty to speak which is…
- When Offeree takes benefit of services with opportunity to reject.
- Offeree has prior dealings with the offeror.
Terms that should be included in a contract by the offerer to be agreed on by the offeree including
- Acceptance of terms
- Payment
- Return Policy
- Disclaimer
- Limitations on Remedies
- Privacy Policy
- Dispute Resolution
Provisions
The act of clicking on a box indicating “I accept” or “I agree” to accept an online offer.
Click-on agreement
When the terms of a contract are expressed inside the box in which the goods are packaged. Usually, the party who opens the box is told that he agrees to the terms by keeping whatever is in the box.
Shrink-wrap agreement
Agreement terms over the internet, that do not require the person to click on anything to access the content. These are often unenforceable because they do not satisfy the agreement requirement of contract formation.
Browse-wrap terms
An electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.
E-signature
An act enabled by congress which provides that no contract, record, or signature may be “denied legal effect” solely because it is in electronic form. Does not apply to all documents.
Electronic Signatures in Global and National Commerce Act (E-SIGN)
Information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
Record
The value (such as cash) given in return for a promise or in return for a performance.
Consideration
What 2 elements of consideration have to be present in order to have a valid contract amount.
- Something of legally sufficient value must be given in exchange for the promise.
- There must be a bargained-for exchange.
What 3 things constitute “legally sufficient value” pertaining consideration?
- Promise to do something
- Performance
- Forbearance
The refraining from an action that one has a legal right to undertake.
Forbearance
A discussion of the contract between included parties, where the item of value must be given or promised by the offeror in return for the promisee’s promise, performance, or promise of performance.
Bargained-for exchange
The unmaking of a contract so as to return the parties to the positions they occupied before the contract was made.
Rescission
The concept that you can only bargain for something to take place now or in the future but not for something that has already taken place.
Past consideration
An agreement where then employee agrees not to compete with the employer for a certain period of time after the employment relationship ends.
Covenant to compete
The legal ability to enter into a contractual relationship.
Contractual capacity
The legal avoidance, or setting aside, of a contractual obligation.
Disaffirmance
If a contract is not legally binding because of a minor in the contract, and intoxicated offeree, or a mentally incapacitated offeree, what does it lack from being an enforceable contract?
Contractual capacity
When a lender who makes a loan at an interest rate above the lawful maximum, they commit…
Usury
Contracts that are not enforceable because of the negative impact they would have on society.
Contrary to Public Policy
Contracts with inconspicuous print or legalese that will generally be void are said to have…
Procedural Unconscionability
Contracts that are oppressive or overly harsh, or deny a remedy for nonperformance are said to have…
Substantive Unconscionability
Clauses that release a party from liability in the event of monetary or physical injury no matter who is at fault.
Exculpatory Clauses
What 5 type of contracts must be in writing and signed?
- Contracts involving Interest in Land.
- Contracts involving “One-Year Rule.”
- Collateral or Secondary Contracts.4. Promise Made in Consideration of Marriage. (Pre-Nuptial Agreements)
- Contracts for the Sale of Goods priced at $500 or more.
Transfer of contractual rights to a third party
Assignment
Transfer of contractual duties to a third party
Delegation
Party assigning rights to third party.
Assignor
Party receiving rights.
Assignee
Person to whom a duty or obligation is owed.
Obligee
Third party rights cannot be assigned when…
- When a statute expressly prohibits assignment.
- When a contract is personal in nature.
- If assignment materially changes rights or duties of obligor.
- When an Assignment Will Significantly Change the Risk or Duties of the Obligor
Third party duties cannot be delegated when…
- Special Trust in the Obligor.
- Special Skills/Talents of Obligor.
- Performance by a Third Party Will Vary Materially From that Expected by the Obligee.
- When the contract prohibits delegation.
Special third-party beneficiaries, that both parties intend to benefit at the time of the contract. Also gives the third-party the right to sue for a breach of contract.
Intended beneficiary
