Contract Sales and Leases Flashcards
An agreement that can be enforced in court, formed by two or more parties, each of whom agrees to perform or to refrain from performing some act now or in the future
contract
an agreement that can be enforced in court
contract
It is formed by two or more parties who agree to perform or to refrain from performing some act now or in the future
contract
A theory under which the intent to form a contract will be judged by outward, objective facts as interpreted by a reasonable person, rather than by the party’s own secret, subjective intentions
objective theory of contracts
Requirements of a Valid Contract
- Agreement
- Consideration
- Contractual Capacity
- Legality
A person who makes an offer
offeror
A person to whom an offer is made
offeree
A type of contract that arises when a promise is given in exchange for a promise
bilateral contract
“promise for a promise.”
bilateral contract
A contract that results when an offer can be accepted only by the offeree’s performance
unilateral contract
“promise for an act.”
unilateral contract
formed not at the moment when promises are exchanged but at the moment when the contract is performed
unilateral contract
The contract comes into existence at the moment the promises are exchanged
bilateral contract
A contract that by law requires a specific form, such as being executed under seal, to be valid
Formal contracts
A contract that does not require a specified form or formality in order to be valid
Informal contracts
A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written
express contract
A contract formed in whole or in part from the conduct of the parties (as opposed to an express contract)
implied contract
A contract that has been completely performed by both parties
executed contract
A contract that has not yet been fully performed
executory contract
A contract that results when the elements necessary for contract formation (agreement, consideration, contractual capacity, and legality) are present
valid contract
A valid contract rendered unenforceable by some statute or law
unenforceable contract
A contract that may be legally avoided (canceled) at the option of one of the parties
voidable contract
A contract having no legal force or binding effect
void contract
A promise for a promise
Types of Contracts
Bilateral
A promise for an act
Types of Contracts
Unilateral
Requires a special form for creation
Types of Contracts
Formal
Requires no special form for creation
Types of Contracts
Informal
Formed by words, such as oral, written, or a combination
Types of Contracts
Express
Formed by the conduct of the parties
Types of Contracts
Implied
A fully performed contract
Types of Contracts
Executed
A contract not fully performed
Types of Contracts
Executory
The contract has the necessary contractual elements: agreement (offer and acceptance), consideration, legal capacity of the parties, and legal purpose
Types of Contracts
Valid
A contract exists, but it cannot be enforced because of a legal defense
Types of Contracts
Unenforceable
One party has the option of avoiding or enforcing the contractual obligation
Types of Contracts
Voidable
No contract exists, or there is a contract without legal obligations
Types of Contracts
Void
A meeting of two or more minds in regard to the terms of a contract; usually broken down into two events—an offer by one party to form a contract, and an acceptance of the offer by the person to whom the offer is made
agreement
A promise or commitment to perform or refrain from performing some specified act in the future
offer
the withdrawal of an offer by an offeror
revocation
A contract under which the offeror cannot revoke his or her offer for a stipulated time period and the offeree can accept or reject the offer at any time during this period
option contract
An offeree’s response to an offer in which the offeree rejects the original offer and at the same time makes a new offer
counteroffer
A common law rule that requires, for a valid contractual agreement, that the terms of the offeree’s acceptance adhere exactly to the terms of the offeror’s offer
mirror image rule
Name 4
Termination by Operation of Law
- Lapse of Time
- Destruction
- Death, or Incompetence
- Supervening Illegality
Name 3
Termination by Action of the Offeree
- Revocation
- Rejection
- Counteroffer
the offeree’s indication to the offeror that the offeree agrees to be bound by the terms of the offeror’s proposal
Acceptance
A rule providing that an acceptance of an offer becomes effective on dispatch
mailbox rule
also called the deposited acceptance rule
mailbox rule
the value given in return for a promise or a performance. The consideration, which must be present to make the contract legally binding, must be something of legally sufficient value and must be bargained for
Consideration
The refraining from an action that one has a legal right to undertake
forbearance
A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made; may be effected through the mutual consent of the parties, by their conduct, or by court decree
Rescission
Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain
past consideration
when a person already has a legal duty to perform an action, there is no legally sufficient consideration
preexisting duty
when a person makes a promise in return for actions or events that have already taken place, there is no consideration
past consideration
when a person expresses contract terms with such uncertainty that the terms are not definite, the promise is illusory
illusory promises
a firefighter cannot receive a cash reward froma business owner for putting out a fire in a downtoan commercial district
Examples of Agreements That Lack Consideration
preexisting duty
a real estate agent sells a friend’s house without charging a commission, and in return, the friend promises to give the agent $1,000.
Examples of Agreements That Lack Consideration
Past Consideration
A storeowner promises a $500 bonus to each employee who works Christmas Day, as long as the owner feels that they did their jobs well
Examples of Agreements That Lack Consideration
Illusory Promises
An agreement for payment (or other performance) between two parties, one of whom has a right of action against the other
accord and satisfaction
A debt that is due and certain in amount
liquidated debt
A debt that is uncertain in amount
unliquidated debt
A contract in which one party forfeits the right to pursue a legal claim against the other party
release
An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim
covenant not to sue
A doctrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies
promissory estoppel
Barred, impeded, or precluded
estopped
The legal ability to enter into contracts; the threshold mental capacity required by law for a party who enters into a contract to be bound by that contract
contractual capacity
The legal avoidance, or setting aside, of a contractual obligation
disaffirmance
a condition in which a person’s normal capacity to act or think is inhibited by alcohol or some other drug
Intoxication
temporary periods of sufficient intelligence, judgment, and will
lucid intervals
Charging an illegal rate of interest
usury
A contractual promise to refrain from competing with another party for a certain period of time and within a certain geographic area. Although covenants not to compete restrain trade, they are commonly found in partnership agreements, business sale agreements, and employment contracts
covenant not to compete
A court-ordered correction of a written contract so that it reflects the true intentions of the parties
reformation
Describes a contract or clause that is void on the basis of public policy because one party is forced to accept terms that are unfairly burdensome and that unfairly benefit the dominating party
unconscionable
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault
exculpatory clauses
A state statute under which certain types of contracts must be in writing to be enforceable
Statute of Frauds
A contract is a private agreement between the parties who have entered into it, and traditionally these parties alone have rights and liabilities under the contrac
privity of contract
one who is not a direct party to a particular contract—normally does not have rights under that contract
third party
The act of transferring to another all or part of one’s rights arising under a contract
assignment
The transfer of a contractual duty to a third party
delegation
a contract in which the parties to the contract intend that the contract benefit a third party
third party beneficiary contract
the party assigning the rights to a third party
assignor
the party receiving the rights
assignee
One for whose benefit a promise is made in a contract but who is not a party to the contract
third party beneficiary
A third party for whose benefit a contract is formed; an intended beneficiary can sue the promisor if such a contract is breached
intended beneficiary
a third person who receives a benefit from a contract even though that person’s benefit is not the reason the contract was made
incidental beneficiary
A contract for the sale of goods under which the ownership of goods is transferred from a seller to a buyer for a price
sales contracts
Article 2 deals with the sale of _______
goods
“the passing of title [evidence of ownership rights] from the seller to the buyer for a price” [UCC 2–106(1)]
sale
Property that has physical existence and can be distinguished by the senses of touch, sight, and so on
Tangible property
Property that is incapable of being apprehended by the senses (such as by sight or touch)
Intangible property
A test that courts use to determine whether a contract is primarily for the sale of goods or for the sale of services
predominant-factor test
A person who is engaged in the purchase and sale of goods
merchant
covers any transaction that creates a lease of goods or a sublease of goods
Article 2A
An agreement in which a buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires
requirements contract
An agreement in which a seller agrees to sell and a buyer agrees to buy all or up to a stated amount of what the seller produces
output contract
An offer (by a merchant) that is irrevocable without consideration for a period of time (not longer than three months)
firm offer
Within a specified time period. If no period is specified, within a reasonable time
seasonably
In a sale of goods, the express designation of the specific goods provided for in the contract
Identification
Any goods that are not in existence at the time of contracting
future goods
Goods that are alike by physical nature, by agreement, or by trade usage
Fungible goods
contract in which the seller is required to ship the goods by carrier
shipment contract
A contract in which the seller is required to ship the goods by carrier and deliver them at a particular destination
destination contract
A writing exchanged in the regular course of business that evidences the right to possession of goods
document of title
is a receipt for goods that is signed by a carrier and serves as a contract for the transportation of the goods
A bill of lading
a temporary delivery of personal property, without passage of title, into the care of another
bailment
Under the Uniform Commercial Code, the right of a party who tenders nonconforming performance to correct his or her performance within the contract period
cured
A property interest in goods being sold or leased that is sufficiently substantial to permit a party to insure against damage to the goods
insurable interest
The primary source for contract law is
common law
the terms of the agreement are fully and explicitly stated in words, oral or written
express contract
