Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business Law > Contracts > Flashcards

Contracts Flashcards

You may prefer our related Brainscape-certified flashcards:
Civil Procedure 1L flashcards MBE flashcards MPRE flashcards
1
Q

What are the required 3 elements to form a contract?

A

Offer, acceptance, and consideration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is the difference between an offer an an invitation to treat?

A

An offer is a promise made by one party to another subject to a condition or containing a request. Offers are binding on both parties once accepted
An invitation to treat is simply an invitation for people to create an offer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What does an offer need to be in order to be valid?

A

It must be definite, certain, and communicated to the intended recipient

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is a standard form contract?

A

A take it or leave it offer with no room for negotiation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the advantages and disadvantages of standard form contracts?

A

Advantage: Highly efficient
Disadvantage: Inequality of bargaining power and no room to negotiate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is contra proferentem?

A

It means that if there is ambiguity in the contract, it will be construed against the party that put it forward and seeks to rely on it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is a counter-offer?

A

A counter-offer is a rejection of the original offer and the formation of a new offer with different terms. The new offer can then be accepted or rejected by the other party

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is acceptance of an offer?

A

Final, unqualified consent to the terms of the offer communicate by the offeree to the offeror by word or conduct

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

When can an offer not be revoked?

A

When an offeree has paid money to keep the offer open. When the offer was made under seal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When must an offer be accepted by?

A

By the time stated within the contract. If one is not stated then the court decides a reasonable amount of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What happens when an offer is not accepted in time?

A

It is considered revoked

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What methods are acceptable for communicating acceptance?

A

Any method that is reasonable within the circumstances. Typically verbal, phone, email, text

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

When is the contract considered to be formed?

A

Typically, when the offeror has received the acceptance from the offeree. Although in some cases it can be earlier as dictated by the postal rule that says the acceptance by mail is when the acceptance is placed in the mailbox. However, for instant forms of communication acceptance is still on receival

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the jurisdiction of a contract?

A

It is the place where the contract is formed. The contract will abide by the laws of its jurisdiction and any disputes will be settled by courts within the jurisdiction.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is consideration?

A

The price paid for the contract required to make the contract binding. It could be money, performance, or goods/services in trade

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the difference between a gratuitous promise and a contract?

A

A gratuitous promise is a promise made without consideration cannot be legally binding whereas a contract has consideration and is legally binding.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is an exception to the nonenforcement of gratuitous promises?

A

If some project was undertaken as a result of the promise and there is a duty of care owed to the plaintiff by the defendant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is past consideration?

A

When a person promises to reward another for a gratuitous act done in the past. The promise is non-binding

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the Debtor/Creditor Rule (Mercantile Law Amendment Act)?

A

States that when a creditor accepts part performance in settlement of a debt the entire debt is then extinguished. Also, a contract is not formed when a debtor promises to reduce their debt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is the relation between seals and consideration?

A

A promise made by the seal of promisor doesn’t require consideration to be legally binding. The seal must be affixed at the time the party signs it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

How do we determine intent to create legal relations?

A

We use the reasonable bystander test to determine if the conduct of the parties conveyed serious intention to create legal obligations either by word or conduct

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is the difference between a void and voidable contract?

A

A void contract is considered to have never existed due to a failed formation whereas a voidable contract has been formed correctly but can be made void at the option of one of the parties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What are the rules for capacity of a minor?

A

Minors are bound by contracts for supply of necessary goods and services or beneficial contracts of service like employment

When you reach the age of majority on a voidable contract you must back out immediately

When you reach the age of majority on a ratified contract the contract is ratified if paid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

How can a contract be considered illegal?

A

If the terms within the contract violate the criminal code, income tax act, competitions act, or law society act. Can also be illegal on the grounds that they are immoral, a perversion of justice, or prejudicial to the interests of the public

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What can happen if terms of the contract are uncertain?

A

The court can deem the contract to be entirely void so it’s as if one never existed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What is equitable estoppel?

A

It is a way for the courts to enforce a gratuitous promise if the plaintiff relies on the promise to the extent that they incur expenses that they wouldn’t otherwise have made.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What is repudiation?

A

One party to a contract wants to terminate it. The other party can then agree and terminate the contract or choose to continue the contract.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What is recission?

A

A remedy awarded by the court to undo the contract. This usually occurs when the circumstances for the contract were unfair due to misrepresentation, duress, or error

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What is rectification?

A

When changes are made to the contract to fix errors and get both parties in the position they agreed to

30
Q

What are the requirements for rectification to occur?

A
  1. Common intention to terms different than the contract
  2. Parties seeking relief are ignorant at the time the contract is made
  3. Parties seeking relief must satisfy a high standard of proof
31
Q

Under what grounds can a contract be set aside?

A

Mistake or misrepresentation

32
Q

What are the different types of mistakes?

A

Mistake in terms of the contract, mistake in assumption about subject matter of the contract, mistake about the identity of a party to a contract, and mistake about the nature of a signed document

33
Q

How can typographical errors in the contract be resolved?

A

The parties must show that they were in complete agreement about the original terms but failed to write them down correctly

34
Q

What happens if a party uses the wrong words in creating the contract?

A

This is an example of a unilateral mistake since the other party was not involved. If it is clear to an objective observer that it was an obvious mistake the contract may be voidable

35
Q

What happens when two parties have different interpretations of words in the contract?

A

When both parties agree to the words used but disagree as to their interpretation, the court will decide which is more reasonable in light of the circumstances.

36
Q

What happens when both parties have an equally reasonable interpretation of a contested contract?

A

In this case, a mutual mistake is considered to have been made and the contract is void

37
Q

What happens if there is a mistake about the existence of the subject matter?

A

If neither party knows about the mistake beforehand the contract will be made void. However, if one party knew before the signing of the contract they can be sued in tort for deceit

38
Q

What happens if two parties disagree as to the value of the subject matter of the contract?

A

If the subject matter is something that’s value is inherently volatile there is expected to be difference in opinion of value. However, if the subject matter has clearly defined aspects of value in the contract the contract will be rescinded and one party may receive relief

39
Q

What happens if a corporation exists but a fraudster lies about working for the corporation to initiate a contract?

A

The contract will be made void. If the property has already been transferred to a third party by a valid contract then the third party will have to return the property or its equal value

40
Q

What happens if a fraudster makes up a non-existent corporation in order to initiate a contract?

A

In this case, the vendor could only have been meaning to engage with the fraudster since the corporation doesn’t exist. If the property has already been transferred to a third party the promisor cannot get it back.

41
Q

What is a bona fide purchaser?

A

An innocent purchaser who purchases property from a fraudster without notice of any other claim against the property. As long as the transaction is properly recorded they hold title to the property despite competing claims

42
Q

What is Non-Est Factum

A

A mistake about the nature of a signed document. In this case, the contract is only set aside if found not to be negligent as remedy will not be provided to those who have carelessly signed a contract.

43
Q

What is misrepresentation?

A

Any representation made during the negotiation of a contract that turns out to be false

44
Q

What are the 3 types of misrepresentation?

A

Fraudulent, negligent, and innocent

45
Q

What is fraudulent misrepresentation?

A

When a false statement is made knowingly or with reckless disregard to the truth

46
Q

What is negligent misrepresentation?

A

When a false statement is made when a duty of care is owed and the making of the statement falls below the standard of care.

47
Q

What is innocent misrepresentation?

A

Any misrepresentation that does not fall under fraudulent or negligent

48
Q

What is undue influence?

A

The domination of one party over the mind of another so they do not have the will to make an independent decision

49
Q

What occurs if undue influence has been exerted?

A

The contract is voidable at the option of the victim

50
Q

What is the test for demonstrating undue influence?

A
  1. There must have been domination by the other party
    a. Because of a fiduciary relationship
    b. There were dire circumstances
    c. There was threat of prosecution
    d. The contract was unconscionable
  2. The contract must be unfair to the weaker party
51
Q

What is duress?

A

Actual or threatened violence or imprisonment to make a party enter a contract

52
Q

What happens if a contract has been signed under duress?

A

The contract is made voidable at the option of the victim

53
Q

What is the 5 prong test for duress?

A
  1. Did the victim protest at the time of coercion
  2. Did the victim have an alternative to submit?
  3. Was the victim independently advised?
  4. After entering into the contract did the victim take steps to avoid it?
  5. Was the duress justifiable?
54
Q

What information is required for a contract to properly be made in writing?

A

Names of the parties, subject matter, consideration, payment details, and signature of the paying party. If any are missing the contract is unenforceable

55
Q

What is the Statute of Frauds?

A

A statute enacted in the UK still in use in BC and Ontario that states certain contracts must be reduced to writing

56
Q

What does the Statute of Frauds apply to?

A

Guarantees, contracts in consideration of marriage, contracts concerning land, ratification of a minor’s contract, agreements not to be performed within 1 year

57
Q

What is a guarantee?

A

A conditional promise to pay the debt of another person if the debtor defaults. Ex; Co-signer on a lease

58
Q

What is an agreement made in consideration of marriage?

A

Things like marriage contracts and dowry agreements that must be reduced to writing

59
Q

How does a minor ratify their own contract?

A

Upon reaching the age of majority they ratify their contract in writing according to the Statute of Frauds

60
Q

What is part performance?

A

Performance begun in relying on an oral contract for an interest in land. It is accepted as evidence of a contract in place of a written one

61
Q

What is the test for part performance?

A
  1. Must be a contract concerning land
  2. Acts of performance must indicate the existence of a contract respecting the land
  3. Acts have to have been performed by the plaintiff
62
Q

What is the Sale of Goods Act?

A

Used by provinces other than BC and Ontario that states the sale of goods has to be evidenced by some note signed to the party to be charged or they are unenforceable

63
Q

What is the Consumer Protection Act?

A

States that writing must include detailed description of goods/services, an itemized purchase price, name, and address, and contact information of the vendor, and a notice of statutory cancellation right. A copy must be provided to the consumer and it only applies in business-to-consumer contracts

64
Q

What is privity of contract?

A

Means that the contract applies only to the two parties involved in the contract. It cannot impose obligations or give benefits to third parties

65
Q

What is novation?

A

An exemption to privity of contract where one party terminates the first contract and creates a new contract with a 3rd party. This releases the original party from the contract and requires approval of all 3 parties

66
Q

What is vicarious performance?

A

An exception to privity of contract where a third party performs on behalf of the promisor like a subcontractor. The promisor remains responsible for proper performance

67
Q

What are trusts?

A

Any property that is transferred to a person who then administers the property for the benefit of another. The trustee becomes the legal owner of the trust but the third party beneficiary has claim to the property though they are not in the contract.

68
Q

What are some other exceptions to privity of contract?

A

Insurance: Beneficiaries can sue for performance, not just the policy holder
Undisclosed principal: An agent can enter an agreement on behalf of an undisclosed principal and that undisclosed person can sue
Contracts concerning land: A new owner must respect previous lease agreements and the lease holder must respect promises made to previous owner even though a contract doesn’t exist
7. Enurement clause: extends the right to those inheriting from a party, succeeding a party, or taking an assignment from a party

69
Q

What does it mean to assign a contract?

A

The rights of a contract can be assigned to a third party by a promisee. The promisee is called the assignor and the third-party is the assignee

70
Q

What happens when a contract is assigned?

A

The original promisor must be notified but they do not have to consent unless there was a specific clause in the contract prohibiting assignment of the contract.

71
Q

What happens if a promisor ignores the notice of contract assignment?

A

If the promisor chooses to still pay the original promisee instead of the assignee then the promisor will be found in breach of contract and must pay again to the assignee

Business Law (19 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions