Contract Law Flashcards
Four elements of a contract (to be legally enforceable)
Agreement
Capacity to contract
Consideration
Legal purpose
Requirements of a valid offer
Intent to contract
Definite terms
Communication to the other party
Factors considered for duration and termination
Lapse of time
Operation of law
Offeree’s rejection
Counteroffers
Offeror’s revocation
Counteroffer
Proposal that varies in some material way from the original offer
Terminates original offer and constitutes a new offer
Requirements for acceptance
Acceptance made by offeree
Acceptance is unconditional and unequivocal
Offeree must communicate acceptance by appropriate word or act
Forbearance
Act of giving up or the promise to give up a legal right
Substantial performance
Performance of the primary, necessary terms of an agreement
Parties who may lack capacity to contract
Minors
Insane persons
Intoxicated persons
Artificial entities
Conditions to avoid a contract re: insanity/intoxication
Person did not know contract was forming
Person did not understand legal consequences of acts from contract
Ultra vires
An attempted contract not within corporate powers
Contracts “beyond its power”
Consideration necessary to make a promise
A return promice
Act performed
Forbearance from acting
Consideration
Something of value or bargained for and exchanged by the parties to a contract
Five types of consideration
Valuable
Forbearance
Present
Future
Binding promises
Good consideration
Based on love, affection, or moral duty
Not sufficient to support a contract
Valuable consideration
Consideration necessary and sufficient to support a valid contract
Three types of consideration insufficient to form a binding contract
Past consideration
Promises to perform existing obligations
Compromise and release of claims
Promissory estoppel
Permits enforcement of a promise made without consideration in order to prevent injustice
Promissory estoppel application
Party has made a promise expecting another to act
Other party has justifiably relied on the promise to his or her detriment
Only enforcement would achieve justice
Usury
Charging of illegally high interest rate on a loan
Exculpatory clause
Contractual provision purporting to excuse a party from liability resulting from negligence or otherwise wrongful act
In pari delicto
If both parties are equally at fault, contract is not enforceable
Severable contract
Contract that includes two or more promises (court can enforce separately)
Genuine assent
Actual assent to form a contract or their indication of intent by actions or words
Five factors counter to genuine assent
Fraud
Mistake
Duress
Undue influence
Innocent misinterpretation
Six elements of fraud
(1) a false representation of a (2) material fact (3) knowingly made with (4) intent to deceive (5) on which the other party has placed justifiable reliance (6) to his or her detriment
Concealment defense for an insurer (two things)
- Insured knew concealed fact was material
- Insured concealed with intent to defraud
Unilateral mistake
Perception by one party to a contract that does not agree with the facts
Does not ordinarily affect a contract
Statute of Frauds
Law to prevent fraud and perjury by requiring certain contracts be in writing and contain signature of party responsible for performing contract
Situations in which contracts must be written
Sale of land
Will take more than one year
To pay another’s debt
Consideration of marriage
Sale of goods > $500
Sale of real property or legal interests in real property (realty)
Uniform Commercial code
Model code providing contract for sale of goods > $500 must be in writing
Parol evidence rule
Assumption that all prior negotiations, etc, were merged into final, written contract
If there is a written contract, any separate writings (prior to acceptance) are not applicable
Order of importance when determining changes in a printed contract
Handwriting over typewriting
Typewriting over printing
Words over figures
If provision can have more than one reasonable meeting
Courts adopt interpretation least favorable to the party who put the provision into the contract
Creditor beneficiary
Third-party owed a debt to be satisfied by performance of contract
Donee beneficiary
Receives benefit of a contract’s performance as a gift from the promisee
Incidental beneficiary
No contractual rights but benefits from a contract even though it is not the intent of the parties to the contract
Novation
Substitution of a third party for one of the original parties to a contract, releasing the original party from rights and obligations under the contract
Three conditions of contracts for discharge of contractual obligation
Nonfulfillment
Condition concurrent
Condition subsequent
Condition concurrent
Event that must occur at the same time as another condition
Condition subsequent
Event that, if it occurs, discharges a duty of performance
Anticipatory breach
Unequivocal indication before performance is due that he/she will not perform when performance is due
Does not apply to unilateral contracts
Materiality of breach
Extent to which breaching party has performed
Willfulness of the breach
Extent to which nonbreaching party has obtained benefits
