Contracts Flashcards
Misunderstanding
Occurs when the parties attach different meanings to the same material term. Whether a valid contract was formed depends on who knew or had reason to know about the misunderstanding.
Neither Party = NO CONTRACT
One Party = Valid Contract
Both Parties = NO CONTRACT
Ways to Discharge Contractual Obligations
FIRMSCAN
(1) Full Performance
(2) Impossibility, Impracticability, or Frustration of Purpose
(3) Release
(4) Mutual Recission
(5) Substitutwd Contract
(6) Contract or Covenant Not To Sue
(7) Accord and Satisfaction
(8) Novation
Meeting Condition of Satisfaction
Objective Standard: whether a reasonable person would be satisfied with the performance
Subjective Standard: Whether the promisir is personally satisfied with the performance (provided that dissatisfaction is honest and in good faith)
*Aesthetic taste is measured subjectively
Parol Evidence - Completly Integrated Contract
Complete integration = contract sets forth parties’ FINAL agreement about ALL terms.
Parol evidence inadmissible (to both supplement (ie, add to) or contradict contract).
Parol Evidence - Partially Integrated Contract
Partial Integration = writing sets forth parties’ final agreement anout SOME terms, but not all.
Parol evidence is admissible to supplement (but not contradict) terms in the contract.
Ways to Discharge Contractual Obligations
“FIRMSCAN”
(1) Full performance
(2) Impossibility, impracticability, or frustration of purpose
(3) Release
(4) Mutual recission
(5) Substituted contract
(6) Covenant/contract not to sue
(7) Accord and Satisfaction
(8) Novation
Elements of Valuable Consideration
(1) Bargained-For Exchange:
Each pary’s willingness to enter into an agreement must be induced by the other party’s act or promise to act.
(2) Legal Detriment:
Each party must relinquish a legal right by either
performing (or promising to perform) act that is not legally required of them, OR
refraining (or promising to refrain) from performing a legally permissible act.
Accord and Satisfaction
= the “A” in “FIRMSCAN” Ways to Discharge a Contract
Accord is created when parties to a contract agree to give and accept something different in satisfaction of their existing contractual obligations. Satisfaction is the performance of that new contract.
Since it is a new contract, an accord must be supported by consideration.
When the considerstion is worth less than what was agreed in the original contract, it will only be sufficient if:
(1) There is a good faith dispute as to the amount owed, OR
(2) The new consideration is of a different type (eg, goods in lieu of cash)
Unconscionability
Defense to contract formation;
= unfair bargaining process, or unfair contract terms (either one-sides terms or an unfair surprise)
Misrepresentation
An untrue assertion of favt that makes a contract voidable by the adversely affected party.
(1) Fradulent
(knowingly or recklessly made with the intent to induce assent)
or material
(likely to induce a reasonable person’s assent);
(2) Induced assent; and
(3) Justifiable reliance by adversely affected party
