Contracts Flashcards
What must a contract contain?
3 required element
- Offer
- Acceptance
- **Consideration **
What forms may acceptance of a contract take?
- Can be written or oral
- Must be in the form/method required by offeror
- Must be mirror image - i.e. no changes in terms → modification is a counteroffer
Who can accept an offer?
- Must be accepted by intended party (offeree)
- Acceptance can only be made by a party who knows an offer has been made and has all of the facts - AKA a meeting of the minds
- They must intend to accept
What happens if an offeree accepts a contract but puts added stipulations?
It is not acceptance; but instead becomes a counter-offer and the original offeror is now the offeree
Mailbox rule
- An acceptance is effective to create a contract at the time of dispatch
- If the offeree rejects; then accepts - whatever gets to the offeror first is what is binding
What will void an offer?
- offeror dies
- offeror becomes insane before acceptance
- subject matter is destroyed
- contract become illegal
What is an Option?
Some amount of consideration (like money) is put forth by offeror to keep the offer open for a stated period of time
What is promissory estoppel?
- Promises to donate are legally enforceable
- Basically; you can’t tell a charity; Hey; if you buy this $100;000 piece of land; I’ll pay for the building that will go on it; and then renege on your promise
What can make a contract VOID?
4 cases
- Fraud in the execution
- Formed under extreme duress
- Illegal
- Incompetent person
What can make a contract VOIDABLE ?
5 cases
- Fraud in the inducement -Misrepresentation of a material facts
- Capacity - age, intoxication, incompetence
- SIMPLE duress
- Undue influence
- Mistake
What is the result of a clerical error in a contract?
the contract is unenforceable
Example: Person signs a contract to pay $500.00 to have their lawn re-seeded but due to clerical error; it actually reads $5000.00
Contracts under the Statute of Frauds must be in what form to be valid?
They must be in writing
What makes a contract subject to the Statute of Frauds?
GROSS
- Sale of Goods for $500 or >
- Real estate sale
- Cannot be completed within One year
- Suretyship - Co-signing and guaranteeing the debt of another
- Statement in consideration of marriage
What is the parol evidence rule?
Prevents one party to a written contract from coming in after the fact and claiming that a certain conversation took place prior or contemporaneous to the written contract - that conflicts with what is agreed upon in the written contract
It also prevents using an oral argument to read into the meaning of what is written on paper If it’s on paper;
Note: does not negate oral agreements made AFTER the contract or disallow oral words from clarifying ambiguous contract language
What are the requirements for the assignment of a contract?
- Contracts are assignable to a third party beneficiary - but must be done so in good faith
- Assignor is still liable
- Assignor may be released from liability if other party grants a novation
- contract involving personal service, trust or confidence are NOT assignable
When can contracts be discharged by law?
- Party under contract is bankrupt
- Party under contract dies or is incapacitated
- Party cannot physically complete the contract - death or incapacity (i.e. They are in prison so can’t finish building your house)
- Illegality of the obligation
an Offer
- An offer is an expresses intent to enter in to a contract
- to be effective the offer must be definite and certain as to terms and received by the offeree
- definite = if a reasonable person could determine them ( price , subject matter, time of performance)
Offer revocability
offer can be revoked anytime before acceptance unless supported by consideration
Consideration
- Under Common Law a contract can be modified if both parties agree and give additional or different consideration
- **a bargain for exchanged of significant legal value **
- does not have to have the same value
- **NO pre-existing obligation, gift, past consideration **
- Expetion: promissory estoppel, detrimental reliance
Creditor / Donee beneficiary
- Creditor beneficiary = to whom the promisee owes a debt
- Donee beneficiary = to whom the promisse wishes to give a gift or create a right
Remedies for breach of contracts
- Monetary damage - not punitive; compensatory/consequential/liquidated
- Specific performance - when monetary damage does not suffice- not available for breach of a personal service contract.
- Rescind - cancellation and put the parties in same position before contract
