Contracts Flashcards
What is the name of the statute that overrules the common law rule?
Tortfeasors and contributory negligence act
What is the tortfeasors and contributory negligence act?
A judge can portion out the blame
What is a tortfeasor?
A person who commits a tort
What is subrogation?
when the insurance company gains the right to sue on your behalf
ex: when an insurance company pays out, they can then act in your name and sue the person at fault
Explain professional liability.
- liability of professions
- professionals and areas they can be sued in
ex: professionals who do something (advice or service) and now the client is suing because they have harmed them by professional negligence
What are the 3 areas a professional can be sued?
- duty in contract
- duty in tort
- fiduciary duty
Explain duty in contract as part of professional liability.
- contracts do not have to be written
- a professional promises to provide service it has to be done with due care (due care = meeting a professional standard)
- due care is implied even if it is not explicitly said
- sometimes there is no contract
ex: providing a service for free but you mess up - do not need a contract to sue someone for negligence
Explain duty in tort as part of professional liability.
- tort law/negligence law
ex: when a lawyer gives legal advice, a lawyer is liable if they gave bad advice harming the client - can’t double collect
if you can’t sue a lawyer in contract law, you still can in negligence
Explain fiduciary duty as part of professional liability.
- when you owe a fiduciary duty, you must act in the best interest of the person I am acting on behalf of
- Problem of loyalty
- being sued for a fiduciary duty can ruin your career
General Rule: a fiduciary duty is owed typically by the dominant party in a special relationship to trust
* dominant party is often the professional because they are knowledgeable
Explain contract law.
- different than substantive law because it is facilitating in nature
- facilitates business
- contracts are voluntary (you enter a contract because you want to unless you need it, then you have to)
What are the 6 elements of a contract?
- offer
- acceptance
- consideration
- intention to create legal relations
- capacity to contract
- legality of contract
Explain offer as an element of a contract
- must be communicated
- 3 main rules about lapse of an offer
- standard form offers
- you can revoke an offer
What is the general rule of standard from offers?
unconditional acceptance of an offer is deemed to be acceptance of each and every term in that offer
- if you agree to it, it doesn’t matter if you read or understood the terms *
What are the 3 types of situations that lapse an offer?
- an offer will lapse if the time set out for acceptance has expired and there has been no acceptance
- if the offer does not suggest when it must be accepted by, then the offer will lapse if a reasonable period of time has passed and there is no acceptance
- an offer will lapse (assume only 2 parties in a contract) if any of the parties die or become insane PRIOR TO ACCEPTANCE
What are the 4 possible responses to an offer?
- rejection (when you reject the offer, you kill it)
- counter offer (either the rejection of the offer and making of another offer)
- request for more information (making it clear what is and is not included) - does not kill the offer
- acceptance (after acceptance there will be a binding agreement)
COMMON EXAM QUESTION!!! define acceptance
when the offeree agrees to be legally bound by the offer
what is an offeror?
person who makes the offer
What is an offeree?
person who receives the offer.
What a 2 ways can acceptance occur?
words or conduct
What is the exception to words or conduct?
if the parties have been using no words or conduct over time.
ex: if i don’t cancel my delivery by friday then I will accept the delivery for monday
Explain acceptance
- usually communicated (bilateral contract)
- some situations where unilateral contract is acceptable (ex: no need to call and say I saw your flyer for your lost dog and I accept your offer. I will start looking for your dog now)
When and where is acceptance complete?
- fall back for what law will govern is when the acceptance was complete which is when it reaches the person who made the offer
- where it is received (general rule)
Explain the postal rule of acceptance
if mail is allowed as a mode of acceptance, the postal rule says “acceptance will be complete when and where the offered puts the envelope containing the acceptance in it into a public mailbox as long as the envelope is properly addressed and stamped”
downside is there is a binding contract the person who made the offer is not aware of yet
What are some acceptance rule cons?
- postal rule of acceptance
- a vaguely worded agreement that is not enforceable by a court
- law does not recognize a “contract to enter into a contract”
Define consideration
the price for which the promise of the other person is bought
Explain consideration as part of a contract
- court doesn’t care about the amount if consideration and if it was fair or not as long as each party promised something of economic value
What are the 3 instances when consideration is NOT valid?
- gratuitous promise
- past consideration
- where there is an already existing legal duty
Explain gratuitous promise.
promise of a gift. Consideration is missing because there is no economic value from each party
Explain past consideration
a type of gratuitous promise
it was done in the past
ex: someone watching your house while you are away and once you get back saying you will pay them because the person took care of your house in the past
Explain where there is an already existing legal duty.
- type of gratuitous promise
- nothing is negotiated on the other side
ex: bidding in a project and realizing you under bid
What can replace the need for consideration?
a gratuitous promise but a person making a promise in writing UNDER SEAL is a legally binding contract because of its formaility
Explain intention to create legal relations
- test of the bystander
- rebuttable presumption
Explain capacity to contract.
- one party is not competent so they could not enter a legally binding contract
What is the general rule for people under the age of majority and their capacity to enter a contract.
- if the contract is executory, the general rule is that the contract is ENFORCEABLE by the minor against the adult
- the contract is UNENFORCEABLE by the adult if the minor choose to opt out of the contract
(example: a 17 year old buys a car and they can take it back if he hasn’t paid for it yet and the car is in the same condition)
What are the 2 exceptions when a minor can NOT get out of their contract?
- necessaries (i.e., housing, food, etc.)
but they only need to pay a reasonable price but they can’t opt out entirely - beneficial contract of service
particularly beneficial employment contract (i.e., a minor can’t walk out halfway through filming a movie)
What is the general rule for capacity to contract of persons of diminished capacity?
if it is executory the person with diminished capacity (once they have capacity) can choose not to go through with the contract
What is the one exception to the general rule for persons of diminished capacity?
necessaries
What is considered a person of diminished capacity?
- incapacitated because of drugs or alcohol (to the point you were incapable of rational thought)
- diminished mental capacity
What is an executed contract?
- each party has done what is obliged to do and contract is done
What is an executory contract?
- at least ONE person has not yet fulfilled their obligations
What happens if the object of the contract is illegal?
the contract is NOT enforceable
What happens if only part of the contract is illegal?
The illegal part is just thrown out and focus on the rest of the contract
What is a void contract?
- there is no legal contract
- there was never a legally formed contract
- when a void contract (but not illegal) they will help parties get back to square one because there was never a legally binding contract
- all illegal contracts are void contracts
When is a contract voidable?
an existing contract that can be undone at someone’s option if it is executory
Can silence imply acceptance?
No! Except for that one excpetion
What is privity of contract?
relationship that exists between parties to a contract
only parties in a contract can enforce it
contract between 2 parties cannot impose on a 3rd party because the contract is only between the 2 parties
What are the 4 ways you can discharge of a contract?
- by performance
- by agreement
- by frustration
- by operation of law
Explain by performance as a way to discharge a contract.
- each party fulfills their obligations/promises
- nothing left to do
What ways can a contract be discharged by agreement?
- waiver (agreement not to proceed with the performance of an existing contract - both parties have not fulfilled their obligations)
- substituted agreement
etc.
pg 885 ish of text
What is condition subsequent?
a future event, that if it happens, brings promisors liability to an end
Explain by frustration as a discharge of a contract.
a situation where what the parties have promised has become impossible to do
Explain by operation of law as a way to discharge a contract
somethings in the law cause a contract to come to an end.
ex: bankruptcy
What types are remedies are there?
- damages
- equitable remedies
What are damages in contract law?
mitigation
if you breach a contract, you must try to mitigate (minimize) your damages
judge will not help you if you do NOT try to mitigate damages
