Contract Law Flashcards
1
Q
Contract enforceability
A
-
Valid
- Agreement
- Consideration
- Contractual capacity
- Legality
-
Voidable (unenforceable)
- Valid contract can be avoided or rescinded
- Example: contract with a minor
-
Void
- No contract
2
Q
Agreement
A
- Agreement = Offer and Acceptance
- Once an agreement is reached,
- if the other elements of a contract are present,
- a valid contract is formed
3
Q
Cat adoption contract
A
- Julie doesn’t like the format of this contract
- The Lost Dog & Cat Rescue Foundation
- Has all the identifying information at the top
- Gives the contract a name: Cat Adoption Contract
- Two parties
- Lost Dog foundation
- Adopting Party
- Topic or point of the contract: Cat adoption
- Specifics over the content of the contract
- Need to describe all in detail
- Language should be precise
4
Q
Cat adoption contract:
Paragraph 6
A
- Condition subsequent
- Agree not to declaw the cat
- Julie is not sure that this is an enforceable provision
5
Q
Cat adoption contract:
Paragraph 7
A
- Julie does not like this provision
- If not already spayed/neutered, then adopting party should do it
- Changes from a condition precedent to a condition subsequent
6
Q
Condition precedent
A
- before the contract
7
Q
Condition concurrent
A
- along with the contract
8
Q
Condition subsequent
A
- after the contract is executed
- example:
- job contract for after law school
- must graduate and pass bar or contract is voided
9
Q
Requirements of the Offer
A
- Offeror’s serious intention
- Definiteness of terms
- Communication
10
Q
Can you write a contract on a napkin?
A
- Yes
11
Q
Lucy v. Zehmer case
basic
A
- August 18, 1953 ???
- Lucy is the buyer
- Zehmer is the owner and seller of the property
- Ferguson Farm is the property
- Supreme Court of Virginia
- In trial court, Lucy lost the case, but Supreme Court of Virginia reversed their decision (Lucy won)
12
Q
Lucy v. Zehmer case
details
A
- Lucy was a lumberman and farmer
- Lucy knew Zehmer for 15 years
- December 20
- Zehmer operated a restaurant, filling station, and motor court
- Lucy attempted to buy the Ferguson Farm
- “I bet you wouldn’t take $50,000 for that place”—Lucy
- Wrote agreement on the back of a restaurant check
- Re-wrote agreement to include Mrs. Zehmer
- Lucy offered $5, but Zehmer declined the down payment
- “You haven’t got $50,000 in cash.”—Zehmer
- Mrs. Zehmer said “It’s nothing but a joke.”
- Zehmer refused to sell farm to Lucy
- “High as a Georgia pine.” “Nothing but a couple of drunks…”
13
Q
Lucy v. Zehmer case
ruling
A
- Supreme Court of Virginia determined that there was serious intent and that is was a valid contract
- In the field of contracts, we must look to the outward expression of a person, rather than at his secret, hidden intention
- At no time prior to the execution of the contract did Zehmer indicated that he was joking about the execution of the contract
- Whether it was in jest or not, it was still a valid contract
- Awarded specific performance of the contract – must actually sell farm to Lucy, not merely monetary damages
14
Q
Offeror’s Serious Intention
A
NOT OFFERS:
- Offers made in anger, jest, or undue excitement
- Expressions of **opinions **
- Statements of intention or **preliminary negotiations **
-
Advertisements, catalogs, price lists, and auctions
- treated as invitations to negotiate
15
Q
Definiteness of terms (expressed or implied)
A
- Identification of parties
- Object or subject matter of the contract
- Consideration to be paid
- Time of payment, delivery, or performance
16
Q
Communication
A
- An offer must be communicated
17
Q
Termination of the offer
A
- By the offeror
- By the offeree
- By operation of law (NOT TESTABLE)
- lapse of time
- destruction of property
- death or incompetence
- supervening illegality
18
Q
Three ways to terminate an offer
A
- Revocation – by the offeror
- Rejection – by the offeree
- Counteroffer – by the offeree
19
Q
Revocation
A
- Must be communicated
- must express repudiation
- “I revoke the offer”
- Acts inconsistent with offer
- Do it before the offer is accepted
20
Q
Rejection
A
- Done by offeree
- rejected = terminated
- effective when rejection is received by offeror
21
Q
Counteroffer
A
-
offeree simultaneously
- rejects the offer
- makes a new offer
22
Q
Mirror Image Rule
A
- Requires that the terms of the offeree’s acceptance to match exactly the offeror’s offer for a valid contract to be formed
- Common law rule
- Very strict; must match 100%
- Julie says “mirror image rule is the old rule, but isn’t always going to be followed”
23
Q
Acceptance
A
- voluntary act by the offeree that shows
- assent, or agreement, to the terms of an offer
- may consist of words or conduct
-
Unequivocal acceptance
- mirror image rule
-
Communication of acceptance
- bilateral contracts
- unilateral contracts
-
Mode and timeliness
- mailbox rule
- Technology and acceptance rules
24
Q
Mailbox Rule
A
- mode and timeliness of acceptance
- Acceptance is effective on dispatch, providing that authorized means of communication is used
- Offeror specifies (expressly or impliedly) how acceptance should be made
- Effective if properly dispatched (mailed, shipped)
25
Q
consideration
A
- Usually, its all about the $$$$$
- Value in exchange for a promise
- Legal benefit received by one person
- and legal detriment to another person
- Must be something of legally sufficient value
- must be a bargain for exchange
- If you lack consideration, you are not going to have a valid contract
- Courts don’t like to get involved with consideration
26
Q
roots of consideration
A
- Roots in Roman law
- Concept of causa
- Must have both
- a reason for making a promise
- sufficient reason for enforcing a promise
- Without causa, there is no promise
27
Q
consideration as forbearance
A
- Sometimes legally sufficient value can come from forbearance
- (not doing something)
- Sidway case (uncle/nephew case)
- Uncle told his nephew that he would give him $5000 if he didn’t drink, use tobacco, or gamble until he was 21
- Uncle died and estate said they were not going to pay him, claimed no consideration
- Court ruled was consideration because of what he had given up
28
Q
capacity
A
- Minors
- Intoxication
- Mental incompetence
29
Q
legality
A
- Is the contract formed for a legal purpose?
- Can I contract to buy cocaine?—NO
- Can I enter into a contract to hire a hit man?—NO
30
Q
Contracts contrary to public policy
A
- Covenants not to compete
-
Exculpatory clauses
- Limiting liability
31
Q
Statute of Frauds
A
- State statutes that require certain types of contracts to be in writing
- Land
- If contract terms cannot be performed within one year from contract formation
- Promises made in consideration of marriage
- (there are others—not testable)
32
Q
Contract remedies
A
- Law
- Equity
- Rescission
- Restitution
- Specific performance
- Reformation
33
Q
Performance and discharge
A
- A party may be discharged from a valid contract by
- full performance or material breach by the other party
- a condition occurring or not occurring
- agreement of the parties
- operation of law
34
Q
Conditions
A
- Possible future event, the occurrence or nonoccurrence of which will trigger…
- the performance of a legal obligation or…
- terminate an existing obligation…
- …under a contract
- Types:
- Conditions precedent
- Conditions concurrent
- Conditions subsequent
35
Q
Discharge by performance
A
- The contract comes to an end by…
-
Complete performance
- strict performance
-
Substantial performance
- performance does not vary greatly and creates substantial benefit
- other party must pay
36
Q
Material breach of contract
A
- Breach of contract
- The nonperformance of a contractual duty
- failure of consideration
- nonbreaching party is discharged from contract
37
Q
Anticipatory repudiation
A
- If before performance is due,
- one party refuses to perform his or her contractual obligation
- Results in material breach…
- The nonbreaching party should…
- not be required to perform
- have the opportunity to seek a similar contract elsewhere
- Idea of minimizing losses (get another contract)
38
Q
Mitigation of damages
A
- When breach of contract occurs, the innocent injured party is held to a duty to reduce the damages that he or she suffered
- Duty owed depends on the nature of the contract
39
Q
Impossibility, commercial, frustration
A
- Personal contract where one party dies
- contract subject matter destroyed
- Frustration – supervening event makes it impossible to attain point of contract
- RARE!
40
Q
Types of damages
A
-
Compensatory—compensate injured party for damages actually sustained
- Sale of goods—difference between the contract and market price
- Sale of land—same as sale of goods
- Construction contracts—depends on when and who breaches
- Consequential—foreseeable damages as a consequence of the original injury
- Punitive—designed to punish the wrongdoer and deter similar activity in the future.
- Nominal—no financial loss.
41
Q
Liquidated damages vs. penalties
(NOT TESTABLE)
A
-
Liquidated
- amount determined by court order
- enforceable
-
Penalties
- designed to punish the breaching party
- generally not enforceable
42
Q
Specific performance
A
- Equitable remedy calling for the performance of the act promised in the contract
- Remedy where the consideration is…
- unique
- sale of land
- scarce
- not available for personal services
43
Q
Reformation
(NOT TESTABLE)
A
- Equitable remedy allowing a contract to be reformed, or rewritten to reflect the parties true intentions
- Available when an agreement is imperfectly expressed in writing
44
Q
Quasi-contract
(NOT TESTABLE)
A
- Equitable remedy imposed by courts to prevent unjust enrichment
- Requires:
- A benefit was conferred to the other party
- Party conferring did so with the reasonable expectation of being paid
- The benefit was not volunteered
- Retaining benefit without paying for it would result in unjust enrichment of the party receiving the benefit
45
Q
Can you have your cake and eat it too?
A
- No
- Remedy must usually be
- monetary or
- specific performance
- not both
46
Q
Election of remedies
A
- Doctrine created to
- prevent double recovery
- Nonbreaching party must
- choose which remedy to pursue
47
Q
Contract provisions – limiting remedies
A
-
Exculpatory clauses
- Provisions stating that…
- no damages can be recovered
-
Limitation of liability clauses
- Provisions that affect the availability of certain remedies
