Contracts Flashcards
True or False: an incidental beneficiary has the right to enforce a contract?
FALSE!!!
Define Intended Beneficiary
He is an intended beneficiary if the contracting parties clearly intended for him to benefit from the contract
Can an intended beneficiary enforce a contract?
Yes, an intended beneficiaries can enforce once there rights have vested.
When do intended beneficiaries rights vest?
rights vest 1) when the beneficiary reasonably and detrimentally relies on the rights created, 2) consents to the contract at a parties request, or 3) sues to enforce the contract.
Define Earnest Money
A deposit paid by a buyer to show a good faith intent to complete the transaction
Once accepted the seller cannot recover other damages for breach
Define Earnest Money
A deposit paid by a buyer to show a good faith intent to complete the transaction
Once accepted the seller cannot recover other damages for breach
Does earnest money constitute liquidated damages? 
Yes
Define liquidated damages
Liquidated damages is an amount agreed-upon during good faith negotiations to reasonably compensate the injured party. These damages are recoverable unless they constitute a penalty then the seller can only recover actual damages.
True or false a contract entered into by someone under the age of 18 is voidable by the minor but not voidable by the other contracting party
True
Once a minor has reached the age of 18 they can ratify the contract by
Ratify the contract by failing to timely void the contract or otherwise agreeing to be bound
An intended beneficiary will not be able to recover under a contract when the original contracting parties each make a promise to each other because
Each parties performance of its own promise is a constructive condition precedent to the original parties duty to perform, and if either party fails to substantially, perform the other parties duty as excused.
NOTE: in contrast - express conditions (ones appearing in the contract) require strict compliance
Is a difference in economic value between the items exchanged grounds for finding that a contract did not exist due to inadequate consideration?
No
A contract is divisible if
1) the parties’ duties can be broken down into at least two corresponding pairs of performance
AND
2) those pairs of performances can fairly be regarded as agreed equivalents (bargained-for)
NOTE: Although courts prefer to interpret contracts as divisible for fairness reasons, they will not do so in contradiction of the express terms of the contract
Consequential damages are appropriate against the breaching party if
1) the breaching party KNEW about the special circumstances
OR
2) could have reasonably foreseen the harm, in light of the special circumstances, that would result from from a breach
When is acceptance by mail permitted?
1) permitted if mail is reasonable method of communicating acceptance (offer was communicated by mail)
and
2) would be effective upon dispatch (when the acceptance is properly addressed and placed with the postal service with paid postage)
Contracts for exclusive dealing (output and requirement contracts) carry with them an implied obligation. What is the obligation?
Contracts for exclusive dealing in the types of goods concerned carry with them an implied obligation by the SELLER to use its best efforts to supply the good and by the BUYER to promote their sale.
True or False: Letterhead or Logos on a written offer can count as a signature.
True.
Generally, a contract for the comission of a tort is unenforceable as against public policy. When can a party to the contract for the tort still recover under the contract?
when the party was unaware of the facts that make the performance of the contract tortious.
(Example: landowner contracts with tree service to cut down tree on neighbors yard. Tree service did not know the tree was not landowners property. Tree service can recover)
