Contracts Flashcards
Express Contract
Oral or Written
Implied-in-Fact Contract
Formed by CONDUCT
Implied-in-Law Contract
NOT a Contract but a REMEDY
Unilateral Contract
One Promise (K is not formed until performance is completed)
Bilateral Contract
Two Promises (K is formed as soon as promises are exchanged)
Stage of Performance - Executory Contract
If duties REMAIN to be performed under the K. Can be wholly Executory (neither party has performed) OR Partially Executory (one party has not performed)
Stage of Performance - Executed Contract
ALL of the duties under the K have been performed.
SOURCES OF CONTRACT LAW - COMMON LAW
Remember RISE
R) Real Estate
I) Insurance
S) Services
E) Employment
UNIFORM COMMERCIAL CODE (UCC)SALES ARTICLE
UCC is Statutory Law, widely adopted throughout the US.
Its Sales Article (Article 2) governs contracts for the sale of GOODS (moveable things).
3 Required General Elements of a Contract
MEMORIZE THESE
My own Tip (OCD)
1) Offer & Acceptance (Mutual Assent)-Meeting of the mInds
2) Consideration Exchanged (Something of legal value)
3) A Lack of Defense
For a valid offer 3 Questions Shd Be Considered
MEMORIZE THESE
1) Was there a manifestation of INTENT to contract?
2) Was there DEFINITENESS AND CERTAINTY in the essential terms?
3) Was there COMMUNICATION of the above to the offeree?
RE: Intent
1) Must be Obvious and NOT A JOKE. (Remember the flat time example - “I’d sell this car for $100”) Objective Theory - Would a reasonable person believe the offer was serious??
RE: Intent of Advertisements
Generally Advertisements are NOT an Offer.
Exception - When it’s a REWARD specifies the offeree(The 1st 5 customers can buy this coffeemaker for only $1)
RE: Definiteness & Certainty
NOTE UCC & CL DIFF
An offer to create a K under Common Law must include:
- Identity of the Parties
- Price to be paid
- Time of Performance
- Quantity involved
- The Nature of the work to be performed.
DIFFERENCES:
UCC = Quantity only needs to be specified
CL = ALL Terms must be specified
(Parties, Price, Time, Quantity & the Type)
Communication to Offeree
No Knowledge then No Acceptance. To have the power to accept, the offeree must have KNOWLEDGE of the offer.
Ex. Lost dog is found, didn’t know there was a reward offered, therefore can’t sue to get the reward.
To Create a Contract -
The offer must be Accepted before it is Terminated.
Termination of Offer (3 ways - memorize them)
- Revoke
- Reject
- Automatic
Revocation by Offeror
As a General Rule, an offeror can revoke an offer ANY TIME BEFORE acceptance by communicating the revocation to the offeree.
This is true Even when the offeror Promises he will keep the offer open.
The communication can be direct or indirect. Oral/Written OR by conduct (you sell it to someone else).
Revocation by Publication
Offers made by publication my be terminated by publication or revocation thru comparable means.
Revocation is effective
When Received or if by publication, when published.
Limitations on Offeror’s Power to Revoke (3-Memorize)
MOST LIKELY TO BE TESTED
1) Option Contract - they paid $ to buy time
2) Unilateral Contracts - promise in exchange for an act
and the offeree begins to perform.
3) Merchant’s Firm Offers und UCC Sales
Pass Key - about offers
The key point to remember is :
If Consideration was not given to keep the offer open, it is NOT an option. Forbearance to do something is Valid Consideration.
Novation
Occurs when parties to a contract agree to replace one party to the contract with a new party. The parties agree to release or discharge the old party and look only to the new party for performance. ONE PARTY IS RELEASED
Substituted Contract,
The original parties are both released from the original agreement but are both bound by a new agreement.
BOTH PARTIES ARE RELEASED
Monetary damages recoverable by the nonbreaching party when a contract is breached must take into consideration?
to the extent they are FORESEEABLE. And in every case, a nonbreaching party HAS A DUTY TO MITIGATE DAMAGES-a duty to make reasonable efforts to cut down on losses resulting from the breach. Failure to do so will preclude the party from collecting damages that might have been avoided.
An Acceptance is Generally effective when?
when SENT (MAILBOX RULE ) - unless otherwise specified in contract.
Offers, Rejections, Revocations & Counteroffers are effective
On Date RECEIVED (or given information).
Innocent Misrepresentation (No Punitive Damages
MAID (NO S) no scienter, no intent.
Unilateral mistake is a defense to a contract if the nonmistaken party
knew or should have known of the mistake.
The parole evidence rule prohibits
introduction of prior written statements or oral statements made contemporaneous with the contract to vary the terms of a fully integrated contract, but it does not bar the introduction of subsequent oral agreements.
Condition Precedent -Example
Condition Concurrent-Example
Condition Subsequent-Example
Qualifying for a mortgage
Store transaction - occur simultaneously
Engagement Ring
Past consideration is
no consideration in a contract to perform. If the act has already been performed prior to the contract, it is not real consideration.
As A General Rule, all contract rights are assignable unless the assignment would result in a change in the
obligor’s risk.
Accord and Satisfaction
An accord is an agreement to substitute one (K) obligation for another. Satisfaction is the performance of the accord. The original contractual duties are not discharged until the accord is satisfied.
A rescission
“undoes” a contract and restores the parties to the positions they would have been in if no contract were made
a release
simply discharges a party. It does not restore the party to their original position.
A revocation
refers to the withdrawal of an offer. A contract may not be revoked.
a novation,
the original parties enter into a new contract that releases at least one of the original parties and substitutes at least one new party. All involved parties must agree.
When a contract for the sale of real property is breached, the nonbreaching party can either
1) recover compensatory damages (damages that compensate for the breach) or
2) obtain specific performance (forced performance).
In determining whether the consideration requirement to form a contract has been satisfied, the consideration exchanged by the parties to the contract must be:
legally sufficient, which means something that the law recognizes as consideration.
A minor may disaffirm a contract within
a reasonable time after reaching majority, and two days is certainly a reasonable time
6 Contracts that REQUIRE A WRITING
(Statute of Frauds) MYLEGS
M. (k)’s where the consideration is Marriage
Y. (k)’s that cannot be performed within a Year.
L. (k)’s involving Land (Real Property) or leases of Real Property of more than a year.
E. (k)’s by Executors or similar rep’s to pay estate debts out of personal funds
G.(k)’s for the sale of Goods > or = $500
S. (k)’s to act as Surity (i.e.-to pay the debt of another)
NOTE: Does Not have to be in a Single Writing
NOTE: (K)’s for SERVICES can be oral or written as long as they can be completed in one year.
Assigning a (K) and Delegating a Duty are
As a GENERAL RULE - okay. Except: If the assignment will change the OBLIGOR’S RISK or if the delegated duty involves SPECIALIZED PERSONAL SERVICES.
In a transaction involving a minor - who has the right to disaffirm the (k)?
Just the minor.
When I lie about the terms (car has never been in a wreck, house has a new roof) = Fraud in the Inducement
(K) is VOIDABLE
Innocent Misrepresentation (No Scienter)
No Intent - therefore no punitive damages still have compensatory damages (MAID without the S)
Mutual Mistake (BOTH Parties make a mistake)
The party that is negatively effected by the deal can get out of the deal. HOWEVER, can’t involve value (opinion)
Specific performance is available only to enforce a contract involving unique or rare property. It is not available to enforce a contract for fungible items. Stock traded on a national securities exchange is fungible.
unique or rare property. Not something “Fungible” i.e. interchangeable, like stock.
a merchant’s firm offer―an offer made by a merchant in writing giving assurances that it will be kept open. Such offers are
irrevocable for the time stated, or if no time is stated for a reasonable time, but in no event longer than three months.
A rescission of a (k)
“undoes” a contract and restores the parties to the positions they would have been in if no contract were made.
