Contracts Flashcards
1
Q
What are the 6 Basic Requirements of a Contract?
A
- Agreement
- Between Competent Parties
- Genuineness of Assent
- Consideration
- Legal
- In Proper Legal Form, if any
2
Q
What is a Bilateral Contract?
A
An exchange of promises.
3
Q
What is a Unilateral Contract?
A
Promise for an act.
General Rule: You have a contract when the act is completed.
4
Q
A Promise Can Be…
A
- Written
- Verbal
- Implied
5
Q
Consideration
A
A bargained-for legal detriment
6
Q
Express Contract
A
An oral or written contract.
7
Q
Implied Contract
A
Based on the conduct of the parties.
8
Q
Quasi-Contract
A
Not a contract. Based on unjust enrichment.
9
Q
Defense to Quasi-Contract
A
Volunteer
10
Q
Measure of Damages
A
Quantum Meruit: Reasonable value
11
Q
Valid Contract
Void Contract
A
Good, binding contract
Not a contract. Usually illegal
12
Q
Voidable Contract
A
- Fraud: If the plaintiff can prove the first 5 measures of fraud, they are entitled to the equitable remedy. If they can also prove injury, they are also entitled to damages.
13
Q
Recission
A
Disaffirming (avoiding) the contract (outside of court)
14
Q
Status Quo Ante
A
An equitable remedy, restores both parties to their original value.
15
Q
Implied Ratification
A
If you don’t act within a reasonable amount of time after discovering fraud, you agree to the contract even if there was fraud.
16
Q
Executory Contract
A
Neither party has performed their part of the agreement
17
Q
Executed Contract
A
Both parties have completed their part of the agreement.
18
Q
Partially Executed Contract
A
One party has performed their part of the agreement, but the other has not.
19
Q
Offer
A
- Present, serious contractual intent
- Definiteness
- Communicated to the offeree
20
Q
Things (Situations) That are Not Offers
A
- Future Offers
- Offers made in jest
- Preliminary negotiations
- Invitations
- Invitations to offer
- Inquiries
- Answers to inquiries
21
Q
What Can Happen to an Offer?
A
- Accept
- Reject
- Revocation (General Rule: An offer can be revoked at any time prior to acceptance)(Exceptions: Irrevocable Offers 1. Option contracts 2. Firm offers)
22
Q
Sales Contract
A
Present transfer of title to goods.
23
Q
Title
A
Ownership
24
Q
Goods
A
Tangible personal property
25
Common Law Contracts
1. Contracts for sale of real property
2. Contracts for sale of intangible goods.
3. Contracts for services (Think sales vs. Service)
4. Contracts for sale of business
26
Option Contracts
One party makes an offer and promises to keep that offer open for a certain period of time. Return consideration is required.
27
Firm Offer
1. Offer
2. Promise to keep offer open
3. Made by a merchant
4. In writing
5. For 3 months or less
28
Types of Rejection (rejection terminates an offer)
A) Flat Rejection
B) Counter Offer
C) Qualified Acceptance (in a common law contract, this is a counter is a form of rejection).
29
Ways an offer can be Terminated
a) Revocation
b) Rejection
c) Death of the offeror or offered
d) Lapse of Time
e) Condition Subsequent
f) Destruction of Subject Matter (say a house burns down or an animal dies)
g) Subsequent Illegality
30
When Effective
1. Offer: when received
2. Rejection: when received
3. Revocation: when received
4. Acceptance: when sent/ post deposited
Exceptions to acceptance:
1. The offer states otherwise
2. Implied Agency Rule (In a common law contract, acceptance to an offer must be sent through the same means or faster than the offer was sent. Otherwise, acceptance is not effective, until received.
3. Acceptance following a prior rejection if the acceptance gets there first.
31
When getting rid of them:
Contracts are
Offers are
Contracts are discharged
Offers are terminated
32
Doctrine of Legal Consideration:
A promise is NOT binding, unless it is supported by consideration.
33
What are the exceptions to the doctrine of legal consideration?
1. Promissory Estoppel: ex: If after a man receives a job offer, he sells his house and moves, only to find that the job has been rescinded, this would be "substantial detrimental reliance". Estoppel would prevent such an inequitable result.
2. Promises Made to Charitable Institutions: If you pledge to a charity or church, they can enforce that pledge, without giving any consideration in return.
3. Composition Agreement: If a debtor has multiple creditors, they can make a group deal to pay each creditor only part of what is owed. If there is only one creditor, they can make the deal and still come back for the rest, but they cannot in a group deal.
4. Promises Made After the Statute of Limitations
5. Promises Made After a Discharge in Bankruptcy
6. Unforeseeable Difficulties Rule (must happen in this order):
a) must be a construction contract
b) Unforeseeable event
c) Promise to pay
7. Modification of a Sales Contract:
a) Both parties must agree
b) But only one party needs to give new consideration
34
Statute of Limitations (how long you have to sue)
```
Negligence: 2 years
Intentional Torts: 1 year
Malpractice notice: 1 year. In Ohio, if you give notice, that can be extended 180 days
Written Contract: 15 years
Oral Contract: 6 years
Sales Contract: 4 years
```
35
Forbearance
A promise to do nothing or a promise to refrain from doing something.
36
To Modify a Common Law contract
a) Both parties must agree
| b) Both parties must give new consideration
37
Pre-Existing Duty Rule
Performing a pre-existing duty is not consideration.
38
Things (situations) That are not Consideration:
1. Pre-existing duty rule
2. Illusory Promises
3. Past Consideration: Someone offering to pay for a deed already done ( it wasn't bargained for ahead of time)
39
Illusory Promises
A promise that is unenforceable due to indefiniteness or lack of mutuality. For example, promises that say that I "may" or "might" do something or "I promise to sell all the ice cream I want to".
40
How to Analyze Contracts
1. Identify the Courts
2. Identify the Parties
3. Consideration
4. Identify the plaintiff and defendant
5. Common Law Contract vs. Sales Contract
41
Privity of Contract
The relationship between members of a contract. They are "in privity of contract".
42
Disputed Debt
Unliquidated Debt: A debt where the amount owed is disputed.
43
Undisputed Debt
Liquidated Debt: A debt whose dollar amount is fixed and undisputed.
44
Defenses for Genuineness of Assent
1. Mistake
2. Misrepresentation
3. Concealment
4. Fraud
5. Duress
6. Undue Influence
7. Unconscionability
45
What is "Mistake" as a Genuineness of Assent Defense
a) Mistakes of fact
b) Mistakes of law
c) Mistakes of expectation
46
Effect of a Unilateral Mistake of Fact:
General Rule: No effect
| Exception: One party knows of the mistake and says or does nothing
47
Effect of a Unilateral Mistake of Law
General Rule: No effect on contract (ignorance of the law is no excuse).
Exception: Rare cases where the law is obscure.
48
Effect of a Unilateral Mistake of Expectation
General Rule: No effect
49
Effect of (innocent) Misrepresentation as a Genuineness of Assent Defense:
General Rule:
- Contract is voidable
- Plaintiff is entitled to the equitable remedy, but not damages.
50
Effect of Concealment as a Genuineness of Assent Defense
General Rule: No duty to disclose information regarding the contract.
Exception:
1. By statute
2. One party knows the other party is walking into a trap
3. Confidential Relationship: a) Dr./patient b) Attorney/client C) Parent/child
51
Effect of Fraud as a Genuineness of Assent Defense
Remedy: rescission
52
Effect of Duress as a Genuineness of Assent Defense
Threats:
a) Extreme (gun to your head) = Contract is void
b) Mild (Threat to call the cops) = Contract is voidable
c) No Effect: (threat of civil suit or economic duress)
53
Undue Influence as a Genuineness of Assent Defense
The contract is voidable
There is undue influence if there is:
a) Confidential Relationship
b) One party is in a dominating position and takes advantage of a person in an inferior position.
c) Unequal bargaining power (extreme)
54
Unconscionability as a Genuineness of Assent Defense
Contract is void.
A contract is unconscionable if it:
1. Is fundamentally unfair
2. "shocks the conscience of the court"
3. Extreme unequal bargaining power
55
Explain Lack of Capacity
Includes: 1. Minors 2. Insane 3. Too Intoxicated
Total Incapacity: Contract is void
Partial Incapacity: Contract is Voidable
Minors with total incapacity: Less than 7 years old
Minors with partial incapacity: 7-17 years old
Insane with total incapacity: Those previously declared insane
Insane with partial incapacity: Insane, but not declared
Intoxicated with total incapacity: Not possible
Intoxicated with partial incapacity: drunk
56
Void vs. Voidable
Void: The contract never existed
Voidable: A contract that you can get out of. Return what you can to get your money back (must act within a reasonable amount of time). If there is nothing to return, minors may still void the contract. Insane must return something. Too Intoxicated have the "duty of restitution".
57
If a minor is sold a non-necessary item, how can he get out of the contract?
Any reason will do. If it is a necessary item, the seller can sue for the reasonable value under "unjust enrichment" because it is a quasi contract.
58
Disaffirm is the same as
void
59
A voidable contract is made void by
Disaffirming the contract
60
Who can disaffirm if the minor lied about their age?
States are divided into three camps:
1. Minors can still disaffirm
2. Adults can disaffirm
3. Minors can disaffirm, but has the duty of restitution (majority view)
61
Illegality as a Genuineness of Assent Defense
General Rule: Illegal contracts are void
Ex. Gambling contracts
62
What is a lottery?
To be a lottery there must be:
1. Prize
2. Chance (to win that prize)
3. Consideration.
63
Effect of a Bilateral Mistake of Fact
General Rule: Voidable
64
Effect of a Bilateral Mistake of Law
General Rule: no effect
Exception: If it is treated as a mistake of fact
65
Effect of a Bilateral Mistake of Expectation
General Rule: no effect
