Contracts Flashcards
What are contracts?
- Contracts are sources of legal obligations
- Contracts are not only documents, if you buy something at the store without talking to the clerk you enter into a contract
What are the four essential elements of a contract and their meaning? Tip: CMCL
- Capacity (of the parties) - If the parties are capable of committing to the contract, i.e are in their right mind and have the authority required
- Meeting of the Minds (Mutual Agreement) - All crucial elements of the agreement need to be settled and only what is written is decided for
- Consideration (Something for something) - There needs to be a value of exchange (monetary/knowledge etc). Donations are therefore not contracts
- Legality (of the subject matter) - All illegal aspects of a contract are not enforceable, e.g I can not write a contract for an assasination
What are the three ways in which a contract can be formed?
- Expressed contract - Oral/writing
- Implied-In-Fact - Through actions, e.g buying at a store
- Implied by law - Automatic bindings as per law, e.g if a doctor saves my life I may owe him money
What is the difference between bilateral performance and unilaterai?
- Bilateral - Mutual agreement between parties
- Unilateral - A promise made by one party in exchange for the act of another
In the context of enforceability, what is the difference between a unenforceable, void and voidable contract?
- Unenforcable - The contract cannot be enforced due to legal technicalities
- Void - The contract is non-valid and has no effect
- Voidable - The contract can be made void by one or more parties
What is negotiation and what is important to consider?
Negotiation is the view to an agreement, done with the purpose of meeting minds. Parties need to have a willingness as acting in bad faith can have legal consequences
What is the step-by-step process for contract negotiation?
- Non-disclosure agreement (NDA)
- Exclusivity
- Memorandum of Understanding (MoU)
- Letter of Intent (LOI)
- Binding/non-binding offers
- Preliminary agreements
- Final contract
What are NDAs?
NDA stands for Non-disclosure agreement and is a document signed to protect sensitive information in a negotiation process
What is a Memorandum Of Understanding (MoU)?
MoU are snapshots of the current stage of negotiation that are not legally binding. An bilateral understanding rather than an agreement
What is a Letter of Intent (LOI)?
LOI are unilateral (one-sided) and have the purpose of showing the seriousness in ones intentions
For contracts, what are the requirements of acceptance?
- Clear - There can be no ambiguous understanding of the acceptance
- Unqualified - The acceptance has to be unconditional. A conditional acceptance is treated as a counteroffer, which counts as a rejection of the initial offer
- Made in the required manner - The acceptance must be made in the manner specified in the offer, e.g via mail or over the phone. When there are no specific manners, the receiver should act in accordance to reasonable manners or industry standards
What is important to consider if one is not happy with an offer?
The wording of your dissatisfaction is crucial. Saying that you will accept an offer if the terms are changed count as a counteroffer in contract to if you say that you accept and ask that the terms are altered
Does silence constitute acceptance?
It depends, but mostly no since it is not a clear manifestation of acceptance. It would constitute acceptance if you did not cancel a free trial period, in which it becomes a paid subscription
Does beginning to perform the act requested qualify as acceptance?
Only if the offeror is satisfied with the way in which the offeree acts
What is the statute of limitations?
States that a contract may no longer be enforceable due to the passing of time, e.g if a party sets a time limit. The contract is not invalidated