Contracts Flashcards
Everyday Contract
Exchange of things of value
Elements of a contract
Offer, Acceptance, Consideration
Bilateral Contracts
A promise for a promise
Unilateral Contracts
Promise for an act, acceptance by completion of requested act, if act isn’t fully completed promise can be pulled out of at any time, most courts will uphold contracts that have substantial completion
Void Contracts
Without legal effect from the start, ex. agreement to commit crime
Voidable Contracts
One or both parties may elect to void or ratify contract, ex. sign at 17 but void or ratify once 18
Unenforceable Contract
Otherwise valid, but not enforceable due to various defenses (Some contracts need to be in writing)
Creation of a Contract (3 Questions)
Was there mutual assent (offer and acceptance)?
Was there consideration (value)?
Are there any defenses?
Meeting of the minds
Agree to the same terms of a contract at the same time
Objective Measure
What would a reasonable person believe the offer and acceptance is, required when forming a contract
Offeree
Power of acceptance
Offeror
Corresponding Liability
Intent
Language, circumstances, prior practice
Legal Offer Requires
Definite terms, identity of offeror/offeree and the subject matter, price, time of payment, delivery or performance, quantity, nature of the work, communication to the offeree
Acceptance
Reasonable and unequivocal (strong yes or no), action can be acceptance
Mirror Image Rule
Terms of the acceptance must perfectly match the terms of the offer (any change of terms is rejection and a counter-offer)
Termination by Offeror
Revocation (terminates power of acceptance), taking back offer, effective when received
Termination by Offeree
Rejections (counter-offer or express), lapse of time (specified time period or reasonable time
When does termination happen?
Before acceptance
Termination by Operation of Law
Death or adjudicated incompetent terminates, subject matter of contract is destroyed, legislation makes contract illegal
Consideration
Needs offer and acceptance beforehand
Valuable consideration
Change in legal position between the parties (agreeing to do or not do something) (Giving up legal right)
Elements of Consideration
1) Bargained for exchange between the parties (promise and detriment)
2) Must have legal value (mutual benefit, economic value not required, past or moral acts are insufficient)
Contract Defenses
Void or voidable, fraud, undue influence, duress, statue of frauds
Void or Voidable if
Illegal subject matter, lacked capacity (minors, incompetent), mistake of material fact (If both parties made a mistake then voidable, can’t void if only one party was mistaken)
Fraud
Saying something knowingly false to get them to agree to contract, makes it so you aren’t engaging in the same contract (no meeting of the minds)
Undue Influence
Violating position of trust, forcing into agreement
Statue of Frauds
Contracts that must be in writing
Agreements that must be in writing
Sale of real property or land
Collateral promises to pay the debt of another
Sale of goods $500+
Contract which by its terms cannot be performed within one year
Essential Terms in Written Contracts
Identity of the party against whom enforcement is sought
subject matter
terms and conditions
consideration
signature of the party to be charged
Discharged
Contract has been forgiven or completed
Failure of a Condition
Can’t meet a condition of the contract, the contract goes away
Discharge by supervening Illegality
Contract becomes illegal by new law
Impossibility in Contract
Unanticipated event happens after contract is finalized that makes it impossible to complete (can’t pain house if it burns down)
Impossibility if someone dies
If dies or is incapacitated contract is discharged only if person is necessary to contract, if not contract stands
Objective Test
Reasonable person standard
Discharge by Impracticability or Frustration
Unanticipated events, performance becomes extremely difficult or expensive, purpose of K is nearly or is destroyed
Discharge by Rescission
Legally terminated through mutual agreement
Breach of Contract
1) Duty to perform
2) failure to perform in accordance with contractual terms
Material Breach
Something of significance
Breach Remedies
Compensatory Damages, Expectation Damages, Reliance Damages, Consequential Damages
Compensatory Damages
Money
Expectation Damages
Standard measure of, place plaintiff in the position they would have been in if defendant have performed
Reliance Damages
Place plaintiff in the position they would have been in had K never been formed
Consequential Damages
damages, losses, or injuries that result naturally, but not necessarily directly from the contract
Equitable Remedies
When legal remedy is inadequate, Specific Performance, Recission and Restitution
Specific Performance
Court order to perform K, subject matter of the K is rare or unique (land is unique), not for service contracts
Recission and Restitution
The non-breacher may cancel the K, appropriate where the non-breacher has attempted to perform or transferred a benefit (want full money back)
Quasi- Contract
K was never created but court created K in the interest of fairness
For Quasi-contract must show…
Plaintiff conferred a benefit to defendant
Plaintiff has a reasonable expectation of compensation
Defendant will be unjustly enriched
(Doctor treating unconscious patient)
Exception to the Privity of Contract Doctrine
The K is private or exclusive to the people that entered into it, explicitly states who is to be beneficiary
Intended Beneficiary
One or more of the below
1) Performance rendered to beneficiary
2) Beneficiary can control details of performance
3) Beneficiary is expressly designated in the K
Can a 3rd Party Beneficiary sue over K?
Yes, if in case of breach 3rd party can sue the party who made the promise that benefits the 3rd party
