Contract Law Flashcards
Contract
Agreements between two or more parties enforceable in court
Express contract
A contract expressed in words
Implied contract
Formed via actions or as a result of a legal obligation
Principle of unjust enrichment
Dispute resolution should not allow unjust enrichment of a party at the expense of others
Four requirements for enforceability of contract
Capacity, mutual agreement, consideration, legality
Bilateral contract
Exchange of promises
Unilateral contract
A promise performed on condition of performance of an action (not binding on one party until performance)
Executed contract
Fully performed contract
Executory contract
A contract still in progress
Unenforceable contract
Contracts that do not meet requirements of enforceability
Void contract
Cannot be legally enforced under any circumstances
Voidable contract
Binding only on one party
Examples of incapacity
Minor, insane, intoxicated
Right of disaffirmance
Right held by minor when making contract;
Two caveats of disaffirmance
Innocent buyer caveat, necessaries caveat
Innocent buyer caveat of disaffirmance
Third party cannot obtain goods sold by minor to innocent buyer
Necessities caveat of disaffirmance
Minor need not restore necessities but must pay reasonable value
When minor is not considered as such
Ab initio ratification, tort, age fraud
Ab initio ratification (minors)
After reaching age of majority, can ratify contract via conduct or express agreement
Tort caveat (minors)
A minor who commits a tort is held responsible for the harm unless very young
Age fraud (minors)
If not obvious to other party, age fraud removes right of disaffirmance
Insanity
Any mental infirmity impairing ability to make contracts; confers right of disaffirmance
Two conditions of voidability under intoxication
Intoxication impaired ability to make contracts; other party was aware of intoxication
Conditions of an offer
Communicates intent to enter contract, definite enough for court to determine intent, communicated to other party
Period of acceptance for offer
As long as specified or for a reasonable period of time as determined by a court.
Advertisements as offers
Typically not considered specific enough
Counteroffer
Proposition of alternative terms to a contract than what laid out in offer; not considered acceptance
Common law vs. UCC on manner of acceptance
Mailbox rule vs. any reasonable manner of acceptance
Silence as acceptance
Under special circumstances, such as when conveyed in conduction, when agreed in advance that silence constitutes acceptance, or where precedent
Mailbox rule
Acceptance of offer must be conveyed in similar manner to offer itself
Four exceptions to revocation prior to acceptance
Options contract, written offer made by merchant to buy/sell something (UCC), promissory estoppel, unilateral contract w/o substantial performance
Items not considered as consideration
Duties customarily performed by obligation; duties already owed by legal/contractual obligation; past acts
Promissory estoppel
Promise relied upon to detriment may be binding, even without consideration
Laws governing illegal consideration
Blue laws (alcohol), usury laws (interest rates), public policy
Exculpatory clause
Clause stating one party is not liable for damage resulting from negligence
Adhesion contracts
Take it or leave it contract – standardized written contract with no room for negotiation
Enforceability of exculpatory clause
Depends on if business proper for regulation, provides public service, has advantage of bargaining power, adhesion contract, placed property or person subject to risk from negligence
Means of performing contract
Satisfaction of terms and obligations OR mutual rescission
Full performance
Performance of all terms to full accord
Substantial performance
Completion of most terms but not all; usually over half
Payment for substantial performance
Pay for portion performed; deduct costs needed to finish rest of portion
Payment for non-substantial performance
Quantum meruit (“going rate”)
Express conditions of contract
Conditions of contract stated verbally
Implied conditions of contract
Part of deal but not expressly stated
Satisfaction guaranteed
If explicitly stated, is enforceable
Breach of contract
Failure to comply with contract terms
Conditions for claiming breach of contract
Existence of breach; damages suffered
Obligations of plaintiff
Obligated to attempt to mitigate damages prior to making claim of breach
Limitation of scope for breach of contract
Reasonably foreseeable damages
Anticipatory breach
If breach of contract is anticipated, plaintiff need not wait for breach to make claim
Sales contracts (UCC)
Contracts made to sell goods
Goods (UCC)
Tangibles, items tied to land (i.e. NOT services)
Sales (UCC)
Transfer of title (actual ownership) to property
Merchants (UCC)
People who deal in goods sold under sales contracts OR who hold themselves as having skill or knowledge in such goods
Leasing
Transfer of possession/use of property for rental payments
Leasing parties
Lessor, lessee
UCC
Uniform Commercial Code
UCC allows for indefinite terms if
intention to form contract, basis for court to grant remedies in dispute
Requirements contract
Buyer commits to purchasing what is needed
Advent v. Unisys ruling
Unisys failed to maintain good faith estimation of requirements by not seeking to sell computer system to other companies
UCC Statute of Frauds - 3 requirements
Contracts for $500 or more not enforceable unless in writing. Written contracts considered enforceable even if missing important terms. Contracts not enforceable for goods beyond what written.
