Contract Law Flashcards
Under contract law, what is the effect of an acceptance that differs from the terms of the offer?
The requirements of an acceptance means that it has to be clear, unqualified and be accepted by the manner that is specified in the offer. If the acceptance differs from the offer, it is the same as a rejection of the original offer and the making of a new offer. This is called a counteroffer, and can also be called a conditional acceptance or an acceptance that modifies the offer, because this means you add or change the terms in some way.
If the offeree changes the terms and makes a counteroffer, the positions of the offeror and the offeree are switched.
What’s a statute of limitations?
Statute of limitations is when a contract is no longer subject to legal action due to passage of time together with inaction from either parties.
Explain what is a “third-party beneficiary” and which general contractual principle is derogated by it.
A third-party beneficiary is someone who benefits from a contract they are not a party to. The general contractual principle that is derogated from is the privity doctrine, which states that only parties that are directly involved in the contract have enforceable rights and obligations from it.
There are three categories of third-party beneficiaries.
- Creditor beneficiaries, which means that the contract is made to pay a debt to them and that they have the right to enforce the contract to the extent of their benefit
- Donee beneficiaries, who receive a gift under the contract
- Incidental beneficiaries, but they don’t have any enforceable rights under the contract.
What are the cases of discharge by operation of law?
Discharge by operation of law means termination or release of a contractual obligation or legal duty without the need for any action or agreement. The following 4 cases when this can happen are:
Subsequent illegality: This happens when contracts are legal when made, but become illegal when a new law is passed that makes the activities of the contract illegal.
Subsequent impossibility: This happens when the performance becomes objectively impossible beyond the control of the parties. This is called a Force Majeure: something beyond the control of the parties that is unforeseeable and unavoidable that hinders the performance.
Bankruptcy: When a business becomes insolvent and a court declares the business as bankrupt.
Statute of Limitations: With the passage of time the rights to claim performance is lost.
Explain the difference between ratification and express appointment?
This is two of the five ways agency can be created. Express appointment means that the principal expressly appoints an agent before the start (ex ante) of the activity of the agents on behalf of the principal. Ratification is instead when the agent is appointed after the activity (ex post) on behalf of the principal has already been done. Here it is important to be aware that the principle does not have to accept the agent as their agent afterwards, and therefore this is a risque behavior of the agent.
Under contract law what are the requirements to have a valid offer?
To have a valid offer there needs to be a clear intent to make an offer, the offer needs to go sufficiently into details such as price, quality, quantity, time frame etc, and it needs to be communicated to the other party.
To have a valid contract there are four requirements that have to be fulfilled.
Capacity of the parties: meaning that all the parties need to be capable to commit themselves to the contract. Ex you cannot be underaged.
Meeting of the minds: This is core in contracts, and means that the seller and purchaser needs to meet and agree on all elements.
Consideration: Means that there needs to be something of value in exchange, “something for something”.
Legality of the subject matter: The agreement needs to be legal
Briefly explain the concept of meeting of the minds under contract law?
Meeting of the minds is core in contracts, and means that the seller and purchaser needs to meet and agree on all elements.
In what sense is it incorrect to refer to a written document in a contract?
It is incorrect to refer to a written document in a contract because a contract does not have to be written in order to be valid.
Briefly explain what is duress under contract law and how it influences the meeting of the minds?
Duress under contract law means that the offeree is under coercion, either physical or mental, and has been deprived of its free will. This means that they have no other option than to accept the contract terms. If there has been duress during the contract formation, all parties have not actually agreed on the terms, meaning the minds did not really meet.
What is usury and how it may affect the validity of a loan agreement?
In loan agreements, interest is the consideration as that is my “something” I get in return from you for loaning you my money. Usury is an unlawful rate of interest set by statute that is different in each country. Loan contracts which charge interest rates above the usury limit are illegal and, thus, void. Loan agreement = Loan contract.
Usury = Ocker
Menas med att räntesatsen når ocker gränsen = olagligt hög ränta
Briefly explain the difference between compensatory damages and punitive damages?
Compensatory damages is when the court tries to compensate the damaged party with a sum of money for their loss. There are three requirements to receive compensatory damages
- Reasonable certainty: Need to prove that you suffered a loss with reasonable certainty (where I would have been if the damage did not happen)
- Foreseeability: The damages must have been foreseeable at the time of the breach
- Mitigation: The non-breaching party must have used every reasonable effort to mitigate the damages
Punitive damages are used by the court to punish the breaching party and as a sign for others to not behave like that. Is not used to compensate the non-breaching party.
Which elements are needed to claim for damages?
The four essential elements to claim for damages are:
- Proof of the existence of the contract: Beneficial with a written contract since oral contracts are hard to prove
- Proof that the contract was breached by the defendant: You have to compare theory (the contract/written document) to reality (performance)
- Proof that, as a result of the breach, the claimant suffered a loss: There needs to be an economically quantifiable (uppskattad i pengar) loss or injury suffered by the non-breaching party
- Cause-effect: Need to prove the causation between the breach and the loss.
Please explain the concept of material mistakes?
A material mistake is when there has been a genuine misunderstanding regarding the material facts in the agreement. The misunderstanding needs to be mutual, meaning that both parties make the same mistake regarding the material fact. If the mistake is unilateral, then that party cannot benefit from its own ignorance or carelessness. The contracts of this type are generally voidable and can therefore be canceled.
What is required to find a fraud?
There are five concurrent requirements in order for something to be a fraud and they are the following:
- Misrepresentation of material fact
- Made knowlingy: The fraudulent party must do the misrepresentation intentionally
- With the intent to defraud: Need to prove that the seller made it knowingly with witnesses, proof, etc
- Justifiably relied upon: The defrauded party must have genuinely believed the false information and the information has to be reasonable (rimlig)
- Causing injury/damage to the other party: The defrauded party must have suffered an injury as a result
Under contract law what are the requirements to have a valid acceptance?
The requirements to have a valid acceptance are
Clear: The acceptance needs to be clearly communicated
Unqualified: No counteroffer is given, the offer is accepted as it is
Accepted in the manner required by the offer
