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Intro to Law > Chapter Eight > Flashcards

Chapter Eight Flashcards

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1
Q

Requirements contract

A

a contract in which one party agrees to buy all its requirements for a particular product from the other party

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2
Q

Output contract

A

a contract in which one party agrees to deliver its entire output of a particular product to the other party

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3
Q

Option contract

A

a contract in which the buyer gives the seller consideration to keep the offer open for a stated period of time

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4
Q

Merchant’s firm offer

A

an offer made by a merchants in a signed writing that assures the buyer the offer will remain open for a specific period of time
It does not require consideration to be binding

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5
Q

Mirror image rule

A

the requirement that the acceptance exactly mirror the offer or the acceptance will be viewed as a counteroffer

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6
Q

Quasi-contract

A

although no contract was formed, the courts will fashion an equitable remedy to avoid unjust enrichment

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7
Q

Consideration

A

anything of value; it must be present for a valid contract to exist, and each side must give consideration

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8
Q

Unconscionable contract

A

a contract formed between parties of very unequal bargaining power where the terms are so unfair as to “shock the conscience”

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9
Q

Promissory estoppel

A

occurs when the courts allow detrimental reliance to substitute for consideration

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10
Q

Voidable

A

a valid contract that can be set aside at the option of one of the parties if she or he signed it (has disability or minor)

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11
Q

Disaffirm

A

minor must return goods but does not have to fulfill terms of contract, even if goods are damaged

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12
Q

Necessaries

A

normally food, clothing, shelter, and medical treatment

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13
Q

Void contract

A

a contract that is invalid even if it is not repudiated by either party

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14
Q

Covenant not to compete

A

restrict the right of an individual to earn a living or decrease compensation

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15
Q

Adhesion contract

A

a contract formed where the weaker party has no realistic bargaining power
Typically a form contract is offered on a “take it or leave it” basis

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16
Q

Exculpatory clause

A

a provision that purports to waive liability

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17
Q

Rescission

A

the act of canceling the contract and returning the parties to the positions they were in prior to the contract having been formed

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18
Q

Warranty

A

a guarantee, made by the seller or implied by law, regarding the character, quality, or title of the goods being sold

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19
Q

Implied warranty of merchant-ability

A

an implied promise that the goods being sold will be usable for the purpose for which they were sold

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20
Q

Implied warranty of fitness

A

an implied promise that the goods being sold will satisfy a special purpose

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21
Q

Parole evidence rule

A

an evidentiary rule that a written contract cannot be modified or changed by prior verbal agreements

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22
Q

Substantial performance

A

although a breach of contract, performance of all the essential terms of the contract will entitle the breaching party to be the contractual price minus any damages caused by the breach

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23
Q

Material breach

A

such a grave failure to fulfill the contractual terms that the other party is relieved of all contractual obligations

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24
Q

Perfect tender rule

A

the requirement that the goods delivered exactly meet the contractual specifications

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25
Q

Novation

A

when a third party is substituted for one of the original parties

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26
Q

Accord and satisfaction

A

the agreement and then the performance of something different than originally promised

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27
Q

Assignment

A

the transfer by one of the original parties to the contract of part or all of his or her interest to a third party

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28
Q

Delegation

A

the transfer by one of the original parties to the contract of his or her obligations to a third party

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29
Q

Specific performance

A

when money damages are inadequate, a court may use this equitable remedy and order the breaching party to performs his or her contractual obligations

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30
Q

Mitigation of damages

A

the requirement that the non breaching party take reasonable steps to limit his or her damages

31
Q

Cover

A

finding substitute goods

32
Q

Consequential damages

A

indirect damages that must be foreseeable to be recovered

33
Q

Liquidated damages

A

a contract provision that specifies what will happen in case of breach

34
Q

Contract information

A

an equitable remedy that allows the courts to “rewrite” contract provisions

35
Q

Uniform Commercial Code (UCC)

A

statutory provisions created by legal scholars
states would voluntarily incorporate provisions into their state statutes for uniform legal principles
all states adopt, states have options to change language

36
Q

Elements of a contract

A 
agreement
oral or written
enforced in court
what promises we should keep and excuses we allow
rule bound
37
Q

Element of a binding contract

A

Offer
Acceptance
Consideration

38
Q

Parts of the UCC

A 
10 articles
Article 1 - general provisions
Article 2 - sale of goods
Article 2A - leases
Article 9 - secured transactions
39
Q

Types of contract

A 
Bilateral vs Unilateral 
Express vs Implied 
Formal vs Informal
Executory vs Executed 
Valid vs Void
Voidable or Unenforceable
40
Q

Bilateral contract

A

one where a promise is exchanged for a promise

41
Q

Unilateral contract

A

a promise is exchanged for an act

42
Q

Express contracts

A

formed through words, either oral or written

43
Q

Implied-in-fact contracts

A

formed through conduct

44
Q

What can contracts be?

A

formal or informal

most contracts are classified as informal

45
Q

Valid

A

most contracts are considered valid

have all essential elements needed for a binding agreement

46
Q

Void

A

if a contract is for an illegal purpose

47
Q

Executory

A

in the process of the contract, not finished

48
Q

Executed

A

the process is finished, contract is complete

49
Q

Unenforceable

A

procedural error

50
Q

Merchant is defined as

A
  1. deals in the goods that are the subject of the contract or
  2. “holds” himself out as having knowledge or skill peculiar to the practice
  3. who employs someone who has the knowledge and skill
51
Q

Examples of code provisions that differ when a merchant is involved include

A 
Good faith
Firm offer
Additional terms
Modification without new consideration 
Implied warranties
52
Q

Clarifications

A

Contracts are not gifts
Consideration is one sided
Giver is free to take back without a consequence

53
Q

Offer and Acceptance

A

mutual agreement for legal binding relationship

  1. The parties
  2. The subject matter of the contract
  3. The price
  4. The time for performance
54
Q

Objective theory

A

outside observer could discern what was said, how the offeror acted and the circumstances

55
Q

Statements of intent and preliminary negotiations

A

beginning the process negotiations

56
Q

Terms definite

A

contract terms must be definite for remedy as well as evidence a bargain was struck

57
Q

Termination of an offer

A
  1. Offer’s actions
  2. Offeree’s actions
  3. By operation of law (death or statute of limitations)
    Option contract
    Merchant firm offer
    Offeree can reject
    Changing terms
58
Q

Acceptance

A 
Accept
Reject 
Counteroffer
Sending notification of acceptance or performing act requested 
Quasi contract
59
Q

Four parts of consideration

A

detriment to promise or benefit to promisor
problems with consideration
Unconscionable contract
Promissory estoppel

60
Q

Detriment to promise or benefit to promisor

A

both parties much exchange something of value

61
Q

Promise must be made with intent to induce action (Promissory Estoppel)

A

it must do so - the court must believe that would be unjust not to enforce promise

62
Q

Defenses to valid contract

A
  1. Lack if contractual capacity (minors, intoxication, mental incompetence)
  2. Illegal contracts and those that violate public (covenants not to compete adhesion contract)
  3. Lack of genuineness of assent (fraud, mistake)
  4. Breach of warranty
  5. Lack of proper format
63
Q

Rescinded

A

canceling contract and receiving punitive damages award

64
Q

When do you need a written contract?

A 
land
contracts cannot be performed in one year
collateral contracts 
promises (pre-nup)
sale of goods
65
Q

Termination of Contractual duties

A
  1. by performance
  2. by agreement
  3. when performance is impossible
  4. due to commercial practicability
66
Q

Third party rights

A

Assignment
Delegation
Third party beneficiaries

67
Q

Joan says to Jill, “For $25 I will buy your watch.” Jill replies, “OK.”

A

A bilateral, express contract has been formed.

68
Q

Jake said to Sam, “I will pay you $25 if you mow my lawn tomorrow.” The next day Sam showed up at Jake’s house and began to mow his lawn. When he was almost done, Jake said, “Oh, sorry. I take back my offer.”

A

Traditional and modern view

69
Q

Joe lived in a impoverished area of town. Because he did not have a car, his choice of appliance dealerships was limited. He went to the one closest to where he lives, “We Sell’um.” There he signed a contract to purchase a $300 refrigerator for 24 monthly installments of $50 each, for a total of $1200. Because Joe cannot read, he signed the contract without realizing what the total payments would be. After making 15 of the payments, Joe stopped his payments and the dealer sued him for the remainder. A court would be likely to say that

A

this is an example of an unconscionable contract and refuse to enforce the rest of the payments

70
Q

A buyer purchased a shipment of cotton from a seller, the cotton to be shipped on the Peerless. Unknown to either party there were two ships named the Peerless, one to depart in October and one in December. The buyer was thinking of the ship destined to leave in October and the seller the one in December. Consequently, the seller did not ship the cotton until December. By that time, the buyer no longer needed the cotton.

A

This is a classic example of a bilateral mistake. Because both were mistaken, no contract was ever formed, and the buyer will not be obligated to pay for the cotton.

71
Q

In situations that involve both sale of goods and the purchase of services, the courts will usually,

A

Try to determine which element predominates, the service or the sale of goods

72
Q

John was brought unconscious to the emergency room. He was severely injured and the emergency room doctor began immediate treatment. Once John had recovered, he refused to pay the hospital bill saying that he had never agreed to the treatment.

A

Even though there was no contract, the court might treat this as a case of “quasi contract” and order John to pay for the services rendered to him.

73
Q

Mary offered to sell his watch to Mitch for $150. Mitch said, “Great. I’ll take it, but I will only pay you $125 for it.”

A

Mitch’s response was a rejection and a counteroffer. For a valid contract to be formed, Mary must now accept Mitch’s offer.

Intro to Law (11 decks)

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