Contracts Flashcards
What are the 6 elements of a contract?
Only Accuracy Can Pass Law Candidates
an Offer an Acceptance Consideration Proper form (sometimes writing is required) a Lawful object two or more Competent parties
What are the three elements an offer must have?
Must be:
1) seriously intended
2) communicated
3) definite in its terms (must include price)
T/F
Advertisements & Price Quotes are considered offers?
FALSE
They are invitations to deal
What are the three elements of acceptance?
Must be:
1) unconditional
2) communicated by words or actions
3) accepted only by the party to whom the offer was made
What ends an offer?
1) when counteroffers are received/communicated
2) when rejections are received/communicated
3) when revocations (annulments) are received/communicated
4) death/insanity
5) at the time stated in the offer. if no time stated, after a reasonable time
6) destruction/sale of the subject matter
This is a promise for a promise contract
a bilateral contract
This is a promise for an act contract
a unilateral contract
This is a contract that is unenforceable by either party, basically an illegal contract
a void contract
this is a legal contract but one party can rescind, cancel, or disaffirm
a voidable contract
this is giving up of a legal right
Consideration
T/F
In a contractual setting, consideration must be present for one of the two parties
FALSE
It must be present for both parties
Consideration must be ____ for and _____
Mutually Bargained
Legally Sufficient
T/F
Consideration between two parties for a contract must be of equal value
FALSE
There is no requirement that the consideration be of equal value
T/F
No consideration is needed on a promise to donate to charity
TRUE
T/F
Past consideration is no good (if you find out about a promise for a reward after doing an action, you can’t enforce that promise)
TRUE
T/F
Failure to have a required license makes all contracts void, unless the license was a mere revenue raising measure
TRUE
What 6 contracts require writing to be enforceable? (GRIPE + M)
1) Goods ($500 or more, must state quantity)
2) Real estate contracts
3) Impossible to perform contracts in 1 year
4) Promise to answer the debt of another
5) Executor’s promise to be liable for the debt of an estate
6) Marriage
What are the three exceptions to the Statute of Frauds (the 6 contracts required to be in writing)
1) the contract is fully performed by both parties
2) contract impossible to perform in one year but one party has already fully performed
3) oral real estate deals when the buyer is in possession and has made a substantial down payment or made substantial improvements
When can drunks disaffirm a contract?
Only if they are incapable of understanding what they did
When can the insane disaffirm a contract? Does this have any consequences?
Insane can usually disaffirm, but once adjudicated insane, all future contracts are void
T/F
A minor can disaffirm real estate contracts or necessary contracts
FALSE
T/F
A minor can ratify a portion of a contract after becoming an adult
FALSE
They can ratify the contract but must ratify the entire contract
T/F
Minors can disaffirm a contract even if they lied about their age when getting into it - the other party should have double checked
FALSE
Minors are still liable for torts (fraud) and this includes lying about their age to get into a contract. They can disaffirm the contract but they are liable for their torts.
Mutual mistakes of a material fact result in what kind of contract?
A void contract - no meeting of the minds
A unilateral material mistake will result in what kind of contract?
A voidable contract, one can disaffirm if the other party knew or should have known a mistake was being made
This is forcing someone into a contract by the threat of violence, economic destruction, or criminal action
Duress
Duress in which the parties knew what they were entering into results in what kind of contract?
Voidable
Duress in which (one of) the parties did not know what they were entering into results in what kind of contract?
Void
This is using a position of love, confidence, or affection to overcome another’s free will in a contract
Undue influence
Undue influence results in what kind of a contract?
Voidable
Common Law Fraud is another term for what?
Actual Fraud
Fraud in the inducement is another term for what?
Actual Fraud
Actual Fraud has what 5 elements? (MS RID)
M - Material Misrepresentation S - Scienter (intent to deceive) R - Reasonable Reliance I - Intent to rely D - Damages
Constructive Fraud/Gross Negligence has what 5 elements? (MR RID)
M - Material Misrepresentation R - Reckless disregard for the truth R - Reasonable Reliance I - Intent to rely D - Damages
This is when the injured party does not know a contract was being made
Fraud in the Execution
Fraud in the Execution causes which kind of contract?
a Void contract. No meeting of the minds
This is when the injured party knows they made a contract, but one or more terms are misrepresented
Fraud in the Inducement
Fraud in the Inducement causes what kind of contract?
Voidable
What are the 4 elements of Innocent Misrepresentation? (MR ID)
M - Material Misrepresentation
R - Reasonable Reliance
I - Intent to Rely
D - Damages
T/F
If an injured party suffered innocent misrepresentation, they can rescind or sue for monetary damages
FALSE
They can rescind but they cannot sue for monetary damages
When is evidence admissible under the parol evidence rule? (FAME)
F - Fraud or Illegality is evidenced
A - After the writing of the contract took place evidence
M - Mistakes
E - Explanations of the writing to clear up ambiguities
When is evidence inabmissible under the parol evidence rule?
1) Evidence contradicting the written contract
2) Evidence that occurred before the writing of the contract
This is a beneficiary that you make a gift to that is directly mentioned in the contract
Donee Beneficiary
This is a beneficiary that may receive a benefit from the contract, but is not specifically mentioned or intended to benefit from the contract
Incidental Beneficiary
T/F
The Donee Beneficiary can sue either party for breach of contract
FALSE
The donee beneficiary can only sue the original promisor for breach of contract
T/F
The Creditor Beneficiary can sue either party if there is a breach in a contract
TRUE
T/F
The incidental beneficiary can sue for breach of contract
FALSE
The incidental beneficiary gets no rights under the contract
T/F
Assignments and delegations are the same thing
TRUE
What contracts cannot be assigned or delegated? (PIPI)
P - Personal service contracts calling for special skills
I - increased risk or materially altered performance if assigned/delegated
P - prohibited by contract or law
I - insurance contracts
T/F
You can assign your rights to receive money even if it is prohibited by the contract
TRUE
T/F
An assignee gains all of the assignor’s rights and all of his liability
TRUE
T/F
When an assignor assigns their rights and liabilities to an assignee, they are released of liability
FALSE
If there is a breach, BOTH the assignor and the assignee are liable
What is the difference between assuming a mortgage and buying subject to a mortgage?
When assuming a mortgage, the buyer purchases land that already has a mortgage and the buyer agrees to take over the mortgage and be liable for it. The seller is still liable for the mortgage, though, if the buyer defaults.
When buying subject to a mortgage, the buyer purchases land that already has a mortgage but the buyer doesn’t agree to take over the mortgage and is not liable for it. The seller is the only one liable for the mortgage; however, the buyer runs the risk of foreclosure if the seller doesn’t pay
This is when parties agree to replace 1 side of a contract with a new party. The creditor agrees to release the old party and to only look to the new party for performance
Discharge by Novation
This is when one party, before the time of performance, says “I’m not going to perform”
Anticipatory Repudiation
This is the agreement to change performance (usually to pay a lesser amount)
Accord
T/F
Punitive damages may be rewarded in common law contracts or in sales
FALSE
Punitive damages are rarely rewarded in these cases
T/F
A party can sue for specific performance in personal service contracts
FALSE
You can NEVER sue for specific performance in a personal service contract
T/F
A party can sue for specific performance for many reasons, one of which relating to unique property
FALSE
A party CAN sue for specific performance relating to unique property, however this is usually the only reason
These are spelled out in the contract in advance to specify what should be done if there is a breach
Liquidating Damages
This is when you cancel the contract and restore the parties to their former position
Rescission
A ______ offer exists when the offeror expects acceptance of an offer by action of the offeree. This forms a _____ contract when the offeree acceps the contract through performance of the offeror’s required action
a Unilateral Contract (both)
This is an implied-in-law contract, rather than express agreement, which results when one of the parties has been unjustly enriched at the expense of the other. This law creates such a contract when there is no binding agreement present to keep the unjust enrichment from occurring
Quasi Contract
T/F
A contract for services, rather than a sale of goods, is embodied by common law
TRUE
Under common law, modification of an existing contracts needs ______ to be legally binding
New Consideration by both parties
T/F
Under UCC, modication of an existing contract needs new consideration by both parties to be enforceable
FALSE
Under UCC, a contract for the sale of goods can be modified orally or in writing without new consideration if done in good faith.
T/F
If a buyer accepts an offer containing an immaterial unilateral mistake, the resulting contract will be void as a matter of law
FALSE
Immaterial Unilateral Mistakes are valid as to both parties
T/F
If a buyer accepts an offer containing an immaterial unilateral mistake, the resulting contract will be void at the election of the buyer
FALSE
Immaterial Unilateral Mistakes are valid as to both parties
T/F
A guarantor is only liable if they themselves agreed to the guarantee in writing
TRUE
T/F
Under the Statute of Frauds, all contracts involving consideration of more than $500 must be in writing
FALSE
It must be contracts relating to sales of goods for this statement to be correct. Contracts under common law are not included in this requirement
T/F
Under the Statute of Frauds, the written contract must be signed by all parties
FALSE
Only the party to be charged must sign, not all parties
T/F
The Statute of Frauds applies to contracts that can be fully performed within one year from the date they are made
FALSE
The Statute of Frauds applies to contracts that CANNOT be fully performed within one year from the date they are made
T/F
Under the Statute of Frauds, the contract terms may be stated in more than one document
TRUE
This entails canceling a contract and placing the parties in the position they were in before the contract was formed
Rescission
This is an agreement between three parties whereby a previous agreement is discharged by the creation of a new agreement
Novation
This is a means of discharging (abandoning) a contract but it does not place the parties in the same position as before the contract
Release
This is used by an offeror to terminate an offer
Revocation
How does the Statute of Frauds relate to Common Law & UCC?
The Statute of Frauds requires that certain contracts be in writing. Some of these contracts may be under Common Law while others may fall under the UCC
Contracts involving the sale or transfer of land are covered under _____
The Statute of Frauds
Contracts to answer for the debt or duty of another are covered under _____
The Statute of Frauds
Contracts cannot be completed within one year are covered under ______
The Statute of Frauds
Certain contracts (those over $500) for the sale of goods are covered under the UCC and under ____
The Statute of Frauds
