Contracts Flashcards
REG CPA Notes
What must a contract contain?
Offer, Acceptance, Consideration, Proper form (oral or written), Legal subject matter, 2 Competent parties
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
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
When is an offeror bound by a contract?
When they RECEIVE the acceptance.
If the offeree rejects; then accepts - whatever gets to the offeror first is what is binding.
What will void an offer?
If offeror dies or becomes insane before acceptance; offer is void.
Contract is binding if acceptance occurs before death/insanity.
What actions or circumstances will revoke a contract?
Offeror revokes and offeree receives revocation
Offeree finds out prior to acceptance that offeror has sold the item
In the case of an Option; offeror cannot revoke until the time of the option has elapsed
Initial rejection by offeree doesn’t void the option.
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 a Requirements Contract? How are they limited?
These are contracts where someone becomes the exclusive provider of something in exchange for
consideration
Companies can’t get locked in to one and then have market conditions force them to sell something at
what has become an unreasonable price
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?
Fraud in the execution
Formed under extreme duress - extreme
Illegal
What can make a contract VOIDABLE?
Fraud in the inducement
Party not competent to contract
Formed under SIMPLE duress
Undue influence
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?
o Cannot be completed within one year
o Involves the purchase of real estate
o $500+ Sale of Goods
o Co-signing and guaranteeing the debt of another
