Class 3-4: Contracts & Sales Flashcards
“____” is a legally enforceable promise.
A contract
The following are reasons why people... ● Fear of legal repercussions ● Private sanctions – boycotts ● Personal credibility ● Character – honesty as a virtue
Keep their promises
The two parties to a contract are…
Promisor
Promisee
Name the type of Contract:
Agreement manifested by words.
Express Contract
Name the type of Contract:
Agreement manifested by conduct.
Implied in Fact Contract.
Name the type of Contract:
Not actually a contract, but an obligation imposed by a court, out of equity, despite absence of a promise, in order to avoid injustice..
Implied in Law.
Most types of “______” contracts can be written, oral or based on certain types of conduct.
enforceable
A promise exchanged for a promise represents a “______” contract.
Ex:
“Kim, I’d like to buy that sweet bike of yours for $40. Sounds good,
John; I’ll bring it to school tomorrow. Great, I’ll bring the money.”
Bilateral
A promise exchanged for an act represents a “______” contract.
Ex:
“When you wash my dog, I’ll pay you $50.”
Unilateral
The following 5 things are necessary for an “____” contract. (KLAW FLASH CARD)
● Offer ● Acceptance ● Consideration ● Capacity ● Legality
Enforceable
The following are generally not considered “____”.
● Letters of intent to negotiate
● Invitations to Bid & RFPs
● Advertisements, catalogs and mass mailings
Offers
The following are requirements of an “____”.
(1) Offeror’s serious intent to be bound (can’t be an obvious joke).
(2) Reasonably definite terms (Identities, object/ subject matter including quantity b/c court can fill in market price, consideration, time, delivery, etc.)
(3) Offer must be communicated to offeree.
Offer
“____” are only valid once communicated and “received” by offered or her agent.
Offers
If there’s no stated offer duration, offers are presumed to be open for a “____” period of time.
reasonable
In telephone or face-to-face dealings, offers are presumed to end when?
Once the conversation ends, unless stated otherwise.
Usually, offer may be revoked by offeror any time prior to “____”.
acceptance.
● Except: signed “firm offers” by “Merchants” (person who deals in goods involved in K)
● Except: when an “option contract” is made by paying consideration to leave offer open
Generally, revocation is effective upon actual receipt by offeree or agent. The best way to revoke is usually to tell them…
“Hey, check yo’ email bro.”, then, “I hereby revoke my previous offer dated July 12…”
But, in case of a unilateral K, revocation must occur prior to the start of performance.
When the offeree proposes new/different terms (a counteroffer) to the offeror…
The original offer is rejected.
This exemplifies the common law “mirror image rule” in which an acceptance must exactly mirror the terms of the offer.
When receiving a job offer, be careful NOT to accidentally “_____”.
reject the offer!
RESPOND VERY CAREFULLY. An inquiry about an offer does not ordinarily constitute a rejection.
An offer will terminate, by operation of law if, PRIOR to “____” :
●The time for acceptance has expired. ●Subject matter of the contract has been
destroyed.
●One of the parties dies or becomes incompetent.
acceptance.
The following scenario describes characteristics of an…
●A voluntary act (in words or conduct) by offeree to show assent to the terms of the offer.
●Must be unequivocal.
●Must be timely communicated to offeror.
●Silence usually doesn’t qualify, unless an action demonstrates…
acceptance.
“____” is the value given in return for a promise.
Consideration
“____” must consist of legally sufficient value.
Consideration
To be adequate, consideration must consist of a legal detriment: May be promise to do (or refrain from doing) something you were not otherwise required to do.
The following encompass
“_______” cases.
● There’s no consideration if you’re already required to do a particular thing
● If you’re already obligated to do work in exchange for payment, you generally cannot enforce another agreement to do the same thing for more money.
Pre-existing Duty cases
(e.g., sheriff cant collect bounty)
Exception: If there are unforeseen circumstances in construction, courts will sometimes enforce a landowner’s promise to pay more money, even though it’s the same work as was originally contracted.
The following encompass
“_______” cases.
Promises made in return for actions or events that have already occurred are unenforceable; they’re gifts
Past Consideration cases
“____” is a legal doctrine providing that a person who has reasonably and substantially relied on a promise of another to his detriment may be able to obtain recovery.
(KLAW FLASH CARD)
Promissory Estoppel
Also known as detrimental reliance.
Used when there is no contract, usually due to lack of consideration.
Elements:
● Clear and definite promise
● Promisor should have expect that promisee would rely on it.
● Promisee did, in fact, rely.
● Promisee’s reliance was reasonable.
● Promisee’s reliance resulted in substantial detriment.
● Enforcement of promise is necessary to avoid injustice.
“_____” is an equitable claim in which the petitioner asks a court to order the respondent to disgorge and pay over benefits unfairly retained.
(KLAW FLASH CARD)
Unjust Enrichment
Elements:
● Benefits conferred by P upon D
● Appreciation of such benefits by D
● Unjust acceptance and retention of such benefits without the payment of value for them.
“____” contract - a valid contract that can be avoided at the option of one or both of the parties.
Voidable
● Ex: Contracts made by minors, incompetent persons, or intoxicated persons are voidable at the option of such persons. Such people may also choose to “ratify” the contract (and push forward).
“____” contract - A contract that produces no legal obligations on either party. Contracts made be void if they serve an illegal purpose or one party is adjudged to have lacked capacity to enter into a party.
Void
“____” contract - A contract that cannot be enforced because of legal defenses available by law
Unenforceable
Ex: some K’s must be in writing (see Statute of Frauds).
Contract Capacity concerns:
● Minors can enter into most contracts before that age, but…
Contract is voidable at the “option of the minor” (Issue for E-Contracts)
Age of majority in most states is 18.
Contract Capacity concerns:
Contracts entered into while (voluntarily) intoxicated are voidable, if the person…
“lacked mental capacity” to appreciate the legal consequences of entering into the contract.
Contract Capacity concerns (fill in the blank):
If a court has found a person “____” and appointed a guardian for them, the K is void because only the guardian can enter into contracts on their behalf.
If a court has not yet declared a person “____”, the K may be voidable, if the person did not know she was entering into the K or did not appreciate the consequences. But, if she was competent at the time of formation, it’s valid.
incompetent
Illegal contracts are “_____”, and thus illegality is a defense to enforcement of a contract.
Void
Examples:
● Contracts to commit a crime (void)
● Usurious loans (voided as to excess interest). The reason credit cards locate to states with high MAX rates.
● Gambling contracts (in most States)
The following is what type of defense to enforcement:
● Contracts in restraint of trade (e.g., price-fixing)
● Covenants not to compete that are unreasonable in length (~usually more than 1 year) or geography (e.g., worldwide or otherwise outside of promisee’s geographic range of business)
Contrary to Public Policy
The following is what type of defense to enforcement:
● Procedural: unfair surprise due to small print, legalese, contracts of adhesion that unreasonably favor the drafter.
● Substantive: oppressive, grossly imbalanced, overly harsh terms
Unconscionability (gross unfairness)
The following is what type of defense to enforcement:
● Basically, its an argument that there was no real meeting of the minds.
● If proven, it renders contract voidable at the option of the person who originally lacked voluntary consent.
Lack of voluntary consent
4 basic arguments:
●Fraudulent Misrepresentation (you lied to me)
● Undue influence (I’m feeble and was tricked)
● Mistake (I didn’t realize what we were agreeing to)
● Duress (you forced me)
What kind of mistake is the following?
If one of the parties is mistaken as to a material (important) fact, the contract is usually still enforceable, unless (1) the other party should have known that a mistake was made, (2) simple mathematical error, without gross negligence.
Unilateral Mistake of Fact
What kind of mistake is the following?
If there was a mutual misunderstanding concerning a basic assumption on which K was made, the K can be rescinded by either party.
Mutual Mistake of Fact
What kind of mistake is the following?
If one party mistakenly believes that an item is worth or less more than it really is, or is of a better or worse quality….tough luck buddy.
Mistake of Value
“____” - A knowingly false misrepresentation of material fact, with intent to deceive, that the other person relies upon, and which causes harm.
Ex: Jeweler says cubic zirconium is diamond.
Usually must be an affirmative statement of fact not just an omission, unless the seller prevents a buyer from learning about a material fact (hides damage).
Fraudulent misrepresentation
Note: it is also a tort.
“____” - When the party influenced did not actually act out of their free will.
- Arises when there exists a (1) special relationship (2) in which one party greatly influences another party (3) to the influencer’s benefit.
- Minors/Elderly vs. Guardians
- Doctor vs. Patient
Undue Influence