Chp1: Nature of Contracts Flashcards
What is the basic concept of contracts?
A contract is normally formed between 2 people that have mutual benefits and can be enforced by law. A third-party agreement such as an insurance contract can be done.
What are the 2 Main contrast for Contracts
1) Bilateral Vs Unilateral Contracts
2) Express Vs Implied Contracts
Bilateral Vs Unilateral?
1) Bilateral= Both parties expressly make promises, Purchase, Order
2) Unilateral= One-sided, typically a gift/donation
Express Vs Implied?
1) Express Contract= Contract made by words, spoken or written. The agreement is clear and concise.
2) Implied Contract= Terms are not clearly stated but are established through inference and deduction.
What is Litigation?
Clear and concise Contracts can quickly resolve disputes if it is clear, else there will be litigation.
What are the 5 Elements of Contracts?
1) Offer and acceptance
2) Meeting of the minds
3) Consideration
4) Lawful subject matter
5) Competent parties
What are Offer and Acceptance?
Offer is made when one party signifies the other partyy a willingness to enter a binding contract with specified terms.
When acceptance is made, this creates the contract.
Can an offer be revocable?
Yes, if the offer has not been accepted yet.
What is the revocation of an offer through the mail?
A mailed revocation of the offer is not considered to have been made until the letter of revocation has been received by the other party.
However, if an acceptance is sent through the mail prior to the revocation mail, it is considered that contract is made at the date of the postmark.
What is the meeting of the minds?
Mean that the contracting parties all agree on the basic meaning and legal implications of the contract.
If there is no meeting of the minds, the parties involved will not enter into a contract.
Elaborate Unreality of consent based on the Meeting of the minds
Right after a formal contract is made, it was known that suddenly there is no meeting of the minds.
Contract can be nullified if:
1) Strong evidence for demonstrating unreality of consent
2) Within a determined period after the formal contract is formed
What can lead to the nullification of the contract?
- Parties do not have the same perception of the
identity of the subject of the agreement. - Unilateral mistake or mutual error (unintentional)
- The subject of the agreement does not exist as a result of death, destruction by fire, etc
- Duress (threats forcing consent to an agreement)
- Misrepresentation (innocent misrepresentation of fact).
- Fraud (false representation of fact with intent to deceive).
- Fraud (deliberate failure to provide relevant information that is vital to an agreement).
Under 5 elements of Contract, what is Consideration?
- Consideration is something of value. It is the
primary reason or main cause for a person (or
party) to enter into a contract.
-Both parties to a contract must obtain consideration. Otherwise, the contract is not valid
-Something can be regarded as consideration
even though there is no actual benefit for a party. (Someone pay you not to get married)
Under 5 elements of Contract, what is Lawful Subject Matter?
- The subject must be clearly defined in existence.
It can’t violate any fundamental dictates of common law or public policy. - Lawful Subject Matter = Existence of Subject +
Legal Subject
Under 5 elements of Contract, what are Competent Parties?
-Anyone, with a few exceptions (infants or not
mentally competent), acting in good faith may
enter into a binding contract.
-If one of the two contracting parties is judged to
be incompetent, the contract can be nullified.
