Contracts

Question 1

acceptance

Answer 1

expression to enter a contract based on the terms of the offer - when an offeree agrees to offeror’s terms

offer must be accepted only by person to whom it was directed

wording must match that in offer (usually)

valid when sent

Question 2

Capacity

Answer 2

mental capacity to understand the nature and terms of the contract

Question 3

Compensatory damages

Answer 3

most common remedy for breach of contract. designed to pay the nonbreaching party for the amount of loss that has been suffered.

Question 4

Contract

Answer 4

promises that the court will enforce

Elements: 1. Offer 2. Acceptance 3. Consideration 4. Legal capacity 5. Legality

Types: 1. Express (specifically stated) 2. Implied 3. Executed (fulfilled) 4. Executory (terms not fully performed) 5. Unilateral (one party may choose whether or not to perform) 6. Bilateral 7. Voidable 8. Void

Question 5

Formation defenses

Answer 5

actions that invalidate what otherwise would be mutual assent (duress, fraud, mistake, undue influence).

Question 6

Minor

Answer 6

person younger than the legal age to enter a binding contract. a minor’s contract is voidable by the minor

Question 7

Mirror Image Rule

Answer 7

an acceptance must precisely reflect the offer to be a valid acceptance

Question 8

Mitigation of damages

Answer 8

nonbreaching party has the obligation to keep losses as low as possible

Question 9

Mutual assent

Answer 9

parties have voluntarily come to a common understanding of the terms of the bargain. combination of a valid offer and valid acception

Question 10

offer

Answer 10

expression of party’s willingness to enter into a contract (valid when received)

A. Intent: objective (reasonable) standard, subjective intent or promises made in jest are not considered

B. Definite and/or Certain: sufficient specific terms so both parties know what their obligations are

C. Communicated: offer is effective as transmitted (mistakes in transmission are offerers’ risk

Question 11

Parol evidence rule

Answer 11

prevents introduction of evidence that contradicts the language of a written contract

Question 12

Promissory estoppel

Answer 12

implied contract at law, where a court rules that a contract exists even though an element of the contract is missing

Question 13

Specific performance

Answer 13

a remedy that is available where money damages would not be adequate to compensate the nonbreaching party. (breaching party must perform the original promise under contract)

Question 14

Statute of Frauds

Answer 14

Requires certain contracts be in writing or have written evidence to support the contracts’ existence (real estate transactions, contracts that cannot be performed in under one year, answer for debts of another party, sales of goods for $500 or more)

Contract must be signed by the party charged (party we are seeking to hold liable)

Part performance typically satisfies Statue of Frauds

Exceptions: specially manufactured goods, if a party admits contract agreement in court, goods that have been paid for or accepted

Question 15

Void

Answer 15

contracts not enforceable by law

Question 16

Voidable

Answer 16

contracts are valid unless the party, with option to do so, chooses to make the contract void

Question 17

Unilateral Contract

Answer 17

One party gives promise for completion of requested act

No legal oblication unless promisee undertakes the action

Question 18

Option

Answer 18

offer supported by consideration and cannot be revoked before state time

Question 19

Modification

Answer 19

Common law requires new consideration on both sides of a modified contract

UCC does not require new consideration from both parties, if modification is made in good faith

UCC requires modification in writing for goods over $500

UCC requires writen agreements for sale of intangibles over $5,000

Question 20

Accord

Answer 20

Agreement to subsitute new performance for the original performance

Question 21

Unilateral

Answer 21

unilateral offer: when an offeror expects acceptance of an offer by action of the offeree

unilateral contract: when oferee accepts the contract through performance of the offeror’s required action

Question 22

Quasi contract

Answer 22

implied-in-law agreement resulting when one party has been unjustly enriched at the expense of another. Law creates such contract when there is no binding agreement present to keep the unjust enrichment from occuring.

Question 23

Terminiation

Answer 23

By offeror action: Revocation

By offeree action: Rejection, Counteroffer

By operation of law: Death, incapacity, destruction of subject matter, illegal activities

Question 24

Assignment

Answer 24

transfer of a right under contract

Delegation: transfer of duties

Assignment of a contract is generally taken to mean both assignment of rights and delegation of duties