Contract Law terms

Question 1

An “ “ contract occurs when the parties to the contract declare their intention orally or in writing.

This contrasts with an “ “ contract, which is created by actions.

Answer 1

Expressed

Implied

Question 2

A ______ contract results when a promise is exchanged for a promise.

On the other hand, a ________ contract results when a promise is exchanged for performance.

Answer 2

Bilateral

Unilateral

Question 3

A ________ contract meets all the requirements of the law

A ________ contract has no legal effect, and is in fact not a contract at all

A ________ contract bonds one party but not the other

An ________ contract may have once been valid but enforcement is now barred by unreasonable delay or statute of limitations

Answer 3

Valid

Void

Voidable

Unenforceable

Question 4

What is forbearance?

Answer 4

A promise not to act.

Question 5

What are the five essentials of a valid contract?

Answer 5

1. Legally competent parties
2. Mutual agreement
3. Lawful objective
4. Consideration or cause
5. Contract in writing when required by law

Question 6

What is required for competency?

Answer 6

Must have achieved age of majority (not a minor)

Usually, not intoxicated.

Not under duress.

Question 7

What is it called when one person gives another the power to act on her behalf?

Answer 7

Power of attorney.

That person is called an “attorney in fact”

Question 8

What does mutual agreement mean?

Answer 8

Both parties must agree to the provisions of the contract - mutual willingness to enter into it.

Question 9

What happens when an offeree makes a change to an offer?

Answer 9

They become the offeror, and the changed offer is a new offer - a counteroffer.

To accept an offer, one must accept it IN FULL

Question 10

What is fraud?

Answer 10

An act intended to deceive for the purpose of inducing another to part with something of value.

Question 11

What is unintentional fraud called?

Answer 11

Innocent misrepresentation.

The injured party may still cancel the contract.

Question 12

What, in contract law, is a mistake?

Answer 12

Ambiguity of negotiations or mistake of material fact.

I.e. I offer to sell a house, but the person buying gets confused and sees the wrong house.

They can void the contract, as there was a mistake of material fact.

Question 13

What is contractual intent?

Answer 13

Both parties must have desired to make a contract - this disallows jokes.

Question 14

What does the requirement for a lawful objective mean?

Answer 14

You cannot make a valid contract to do something illegal. Makes sense.

Question 15

What does the requirement of “consideration” for a valid contract mean?

Answer 15

An act or promise given in exchange for something.

Question 16

What is an example of a scenario lacking valuable consideration?

Answer 16

If I promise to give you my car, that doesn’t create a contract, as you haven’t promised anything in exchange.

Question 17

What are the three meanings of consideration?

Answer 17

1) legal consideration or cause - what’s required for valid contracts
2) money
3) acknowledgement- I.e. “in consideration of ten dollars means” in acknowledgment of

Question 18

Most states have a “statute of frauds” - what does this do?

Answer 18

It requires all contracts involving land or an interest in land to be in writing.

This excludes month to month leases (and I believe all leases shorter than one year)

Question 19

What is the “parol evidence rule”?

Answer 19

“Under certain narrow circumstances, it permits oral evidence to complete an otherwise incomplete or ambiguous written contract”

Question 20

Executory, executed, execute.

Answer 20

In the process of being done, done, the act of doing.

Question 21

What are the alternatives to completing to contract for each party?

Answer 21

1) Assigning the contract to another - like subcontracting. The original party is ultimately still responsible however.
2) novation - substituting the contract for a new contract.
3) mutual agreement
4) deceased party, if only that party could perform the obligation. However, if something like debts, estate is likely still responsible.

Question 22

What are the potential responses to breach of contract?

Answer 22

1) accept partial performance (because it’s more economical than enforcement in the courts)
2) unilateral rescission - like a rent strike, where one party says “you didn’t do your part so I won’t do mine”
3) a lawsuit for money damages (where the loss is “reasonably expressed in terms of money”
4) where that is not the case (I.e. contracts to sell real estate) a lawsuit can force the party into “specific performance” - that is carrying out the contract as written.

Question 23

What are “liquidated damages”?

Answer 23

Contract parties can agree to damages in advance - like a deposit that the seller retains if the sale contract doesn’t go through.

Question 24

What are implied obligations?

Answer 24

Commonly accepted implications. For instance, if you show a home with a toilet in the bathroom, the implication is that it will work.