Contracts Flashcards
Offer
Termination of an Offer
An offer is a manifestation of intent to enter into a K
It is created when there is intent, essential terms, and communication of the offer to the offeree to be accepted. Essential terms include price, quantity and identity of offeree.
An offer lapses after a reasonable time.
A rejection sent through mail is effective when received.
Offeror is the master of the offer and can prescribe the method of acceptance. If not specified, it can be accepted in any manner that is reasonable. [tested 2021].
Acceptance
CONTRACT FORMATION / LACK OF ACCEPTANCE TESTED IN FEB 2021***
Manifestation of assent to the offer. Acceptance must be the mirror image of the offer, or it operates as a rejection.
Acceptance sent through mail is effective when sent
( exception option K)
Consideration***
Consideration is present when there is a legal detriment or a bargained for exchange ( a promise or performance is provided from each side in exchange for a written promise or performance). Courts do not look into the adequacy of consideration.
SOF
- Agreement for 1 year
- Surety
An agreement by its terms which cannot be performed within 1 year from the making of the agreement must be in writing and signed by the party to be charged.
Promise to pay the debt of another if that person doesn’t pay must satisfy SOF
3rd party beneficiaries
The law states that intended third party beneficiaries of contracts between two other parties (a promisor and promisee) may enforce the contract when their rights have vested. Their rights vest when the promise is legally binding on the promisor. An intended third party beneficiary can sue the promisor (the individual who must render performance to the third party beneficiary).
An incidental TPB does not have any legal rights under the K.
Illegal Provision in K
The law states a provision that violates a state statute is void for public policy reasons. If a contract contains an illegal provision which is severable, then that provision is void, but the rest of the contract is still enforceable. An illegal provision is severable if both provisions have different subject matters, and consideration is apportioned between both provisions.
Doctrine of Impossibility
Frustration of Purpose
The doctrine of impossibility states that when an event occurs that renders performance impossible after a contract was made, and it was not reasonably foreseeable at the time the contract was entered into, the non-occurrence was a basic assumption of both parties, and neither party is at fault or bears the risk, both parties are relieved from performing.
Frustration of purpose occurs when the primary purpose of K, known by both parties at time of contracting is substantially frustrated by an unforeseeable event that occurred AFTER the contract was entered into.
Implied in law K
Promissory Estoppel ( consideration sub)
P has conferred a benefit on D
P reasonably expected to be paid AND
D would be unjustly enriched if P is not compensated
PE (if no K)
- a promise
- reliance that is foreseeable and justifiable
- actual reliance, AND
- enforcement is necessary to avoid injustice
entitled to reliance damages*
Modification & NOM clauses
In order to modify a K at common law, consideration is required.
The performance of a pre-existing legal duty is not consideration.
Exceptions:
- settlement
- K becomes impracticable (so ie. one party agrees to pay more for same work)
- Written promise to pay a debt barred by SOL
- good faith payment in full on a due & disputed debt
A party alleging waiver or modification must establish a mutual intention of the parties to waive or modify the original contract. One cannot unilaterally modify a contract
NOM can be modified w/ mutual assent of the parties. This is satisfied where a modification is established through clear and convincing evidence of an oral agreement establishing mutual agreement to waive the terms of the original contract
Damages + Duty to Mitigate
Liquidated damages provision are enforceable if damages are difficult to estimate at time of contracting and they are a reasonable forecast of possible damages
A party will get expectation damages that arise from the breach, which is the loss of value of the breaching party’s performance + ID + CD - expenses saved.
ID = damages related to avoiding loss from breach.
CD = damages that a reasonable party would have foreseen at the time of entry into K
Punitive damages are not available for breach of contract, because the goal is to make the party whole again, not to punish the party that breached the K.
A potential plaintiff must take reasonable actions to minimize the extent of damages arising from the wrongful breach of a contract.
Equitable remedies
Restitution - P recover value of benefit conferred when K is breached or K is unenforceable and a party would be unjustly enriched
Specific performance for land/unique goods
Rescission if K is void/voidable or is impossible to perform
Reformation - when K does not state what the parties agreed to, either party can seek to reform it
PER
Parole evidence rule bars the addition of a term from preliminary negotiations or a contemporaneous oral term to a K, when the K is a final integrated written agreement ( when parties intend for agreement to be final as to all terms in it, and also to be their complete agreement). When the K is a partial integration ( does not contain all the terms of the actual agreement), consistent additional terms are permitted into evidence
- doesn’t apply for post contractual modifications/ subsequent negotiations
- doesn’t apply if party trying to argue K never formed or K not effective until condition precedent occured
- or when parties are using to interpret ambiguous terms in K
Conditions & Waiver
When a condition is in a K, the other party only has to perform if that condition is satisfied. One cannot purposely put an obstacle in the way of a condition occurring.
Condition precedent is a condition which must occur before a duty arises in the other party.
Waiver of a condition:
Where the promisor waives the performance of a condition precedent, the performance of a condition precedent is discharged or excused, and the conditional promise becomes absolute.
Anticipatory Repudiation
Under the doctrine of anticipatory breach, if a party to a contract, prior to the time of performance, unequivocally declares the intent not to perform, the innocent party has the option to either sue immediately for the breach of contract or wait until the time of performance. A party may cease performance under a contract when the other party is in material anticipatory repudiation.
Performance Obligations
One needs to substantially perform. If one substantially performs, the other party must perform their obligations. If a part commits a major breach, then the other party is excused from performing. Exact performance is required when there is an express condition in the K that makes it clear that the condition must be complied with exactly (ie. conditions based on approval/ satisfaction condition).
