Contracts Flashcards
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
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
What is the parol evidence rule?
Prevents one party to a written contract from coming in after the fact and claiming that a certain
conversation took place that conflicts with what is agreed upon in the written contract
It also prevents using an oral argument to read into the meaning of what is written on paper
If it’s on paper; it trumps what was agreed-upon orally prior to the written contract
Note: does not negate oral agreements made AFTER the contract or disallow oral words from clarifying ambiguous contract language.
What are the requirements for the assignment of a contract?
Contracts are assignable to a third party beneficiary; but must be done so in good faith
Obligations may be assignable- Assignor is still liable
Assignor may be released from liability if other party grants a novation
When can contracts be discharged by law?
Party under contract is bankrupt
Party under contract dies or is incapacitated
Party cannot physically complete the contract (i.e. They are in prison so can’t finish building your house)
What are the two elements that must be present to satisfy the consideration requirement?
1) Legal sufficiency
2) A bargained-for exchange (mutuality of consideration)
What items are not sufficient consideration?
1) Past consideration
2) Moral consideration
3) Pre-existing legal duty
4) partial payment of a liquidated debt
What are the substitution for consideration?
1) promissory estoppel
2) Quasi-constract
Terms:
- Unilateral Contract: A contract that is formed when, by the terms of the offer, acceptance is given by performance. That is exactly what happened in this problem. An offer was made to pay for post-graduate education if the prospective student did an act (obtained artifacts within two weeks). When performance was rendered, the contract was accepted, and therefore, is enforceable.
- Unjust Enrichment: Refers to a theory that permits a court to redress a situation where one party has performed some act for the benefit of another and should receive compensation in the name of justice.
- Public Policy: Refers to a justification that courts will sometimes use when there is no specific law or prior case dealing with the same set of facts, but where court action can be justified on the basis of common sense interpretation of what the general consensus might be over what a court should do.
- Quasi Contract: A theory under which courts will apply a contractual remedy when there was actually no formal offer or acceptance (and, therefore, no legal contract).
Yes
What are the contracts within the Statute of fraud?
MY LEGS
- Marriage
- Year
- Land
- Executor
- Goods
- Surety
What type of conditions affecting performance may be present in contracts?
In some cases, performance under a contract is subject to a stated “condition.” A condition may be “precedent” (there is no contract until the condition is satisfied), “subsequent” (the contract is valid until the condition occurs, which invalidates the agreement), or “concurrent” (there are two conditions, one within the control of each party). All three kinds of conditions are recognized by the common law contracts.
