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Contracts Flashcards

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1
Q

What are the 6 Basic Requirements of a Contract?

A
  1. Agreement
  2. Between Competent Parties
  3. Genuineness of Assent
  4. Consideration
  5. Legal
  6. In Proper Legal Form, if any
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2
Q

What is a Bilateral Contract?

A

An exchange of promises.

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3
Q

What is a Unilateral Contract?

A

Promise for an act.

General Rule: You have a contract when the act is completed.

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4
Q

A Promise Can Be…

A
  1. Written
  2. Verbal
  3. Implied
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5
Q

Consideration

A

A bargained-for legal detriment

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6
Q

Express Contract

A

An oral or written contract.

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7
Q

Implied Contract

A

Based on the conduct of the parties.

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8
Q

Quasi-Contract

A

Not a contract. Based on unjust enrichment.

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9
Q

Defense to Quasi-Contract

A

Volunteer

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10
Q

Measure of Damages

A

Quantum Meruit: Reasonable value

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11
Q

Valid Contract

Void Contract

A

Good, binding contract

Not a contract. Usually illegal

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12
Q

Voidable Contract

A
  1. 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.
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13
Q

Recission

A

Disaffirming (avoiding) the contract (outside of court)

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14
Q

Status Quo Ante

A

An equitable remedy, restores both parties to their original value.

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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.

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16
Q

Executory Contract

A

Neither party has performed their part of the agreement

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17
Q

Executed Contract

A

Both parties have completed their part of the agreement.

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18
Q

Partially Executed Contract

A

One party has performed their part of the agreement, but the other has not.

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19
Q

Offer

A
  1. Present, serious contractual intent
  2. Definiteness
  3. Communicated to the offeree
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20
Q

Things (Situations) That are Not Offers

A
  1. Future Offers
  2. Offers made in jest
  3. Preliminary negotiations
  4. Invitations
  5. Invitations to offer
  6. Inquiries
  7. Answers to inquiries
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21
Q

What Can Happen to an Offer?

A
  1. Accept
  2. Reject
  3. Revocation (General Rule: An offer can be revoked at any time prior to acceptance)(Exceptions: Irrevocable Offers 1. Option contracts 2. Firm offers)
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22
Q

Sales Contract

A

Present transfer of title to goods.

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23
Q

Title

A

Ownership

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24
Q

Goods

A

Tangible personal property

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25
Q

Common Law Contracts

A
  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
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26
Q

Option Contracts

A

One party makes an offer and promises to keep that offer open for a certain period of time. Return consideration is required.

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27
Q

Firm Offer

A
  1. Offer
  2. Promise to keep offer open
  3. Made by a merchant
  4. In writing
  5. For 3 months or less
28
Q

Types of Rejection (rejection terminates an offer)

A

A) Flat Rejection

B) Counter Offer

C) Qualified Acceptance (in a common law contract, this is a counter is a form of rejection).

29
Q

Ways an offer can be Terminated

A

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
Q

When Effective

A
  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
Q

When getting rid of them:

Contracts are

Offers are

A

Contracts are discharged

Offers are terminated

32
Q

Doctrine of Legal Consideration:

A

A promise is NOT binding, unless it is supported by consideration.

33
Q

What are the exceptions to the doctrine of legal consideration?

A
  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
Q

Statute of Limitations (how long you have to sue)

A 
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
Q

Forbearance

A

A promise to do nothing or a promise to refrain from doing something.

36
Q

To Modify a Common Law contract

A

a) Both parties must agree

b) Both parties must give new consideration

37
Q

Pre-Existing Duty Rule

A

Performing a pre-existing duty is not consideration.

38
Q

Things (situations) That are not Consideration:

A
  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
Q

Illusory Promises

A

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
Q

How to Analyze Contracts

A
  1. Identify the Courts
  2. Identify the Parties
  3. Consideration
  4. Identify the plaintiff and defendant
  5. Common Law Contract vs. Sales Contract
41
Q

Privity of Contract

A

The relationship between members of a contract. They are “in privity of contract”.

42
Q

Disputed Debt

A

Unliquidated Debt: A debt where the amount owed is disputed.

43
Q

Undisputed Debt

A

Liquidated Debt: A debt whose dollar amount is fixed and undisputed.

44
Q

Defenses for Genuineness of Assent

A
  1. Mistake
  2. Misrepresentation
  3. Concealment
  4. Fraud
  5. Duress
  6. Undue Influence
  7. Unconscionability
45
Q

What is “Mistake” as a Genuineness of Assent Defense

A

a) Mistakes of fact
b) Mistakes of law
c) Mistakes of expectation

46
Q

Effect of a Unilateral Mistake of Fact:

A

General Rule: No effect

Exception: One party knows of the mistake and says or does nothing

47
Q

Effect of a Unilateral Mistake of Law

A

General Rule: No effect on contract (ignorance of the law is no excuse).
Exception: Rare cases where the law is obscure.

48
Q

Effect of a Unilateral Mistake of Expectation

A

General Rule: No effect

49
Q

Effect of (innocent) Misrepresentation as a Genuineness of Assent Defense:

A

General Rule:

  • Contract is voidable
  • Plaintiff is entitled to the equitable remedy, but not damages.
50
Q

Effect of Concealment as a Genuineness of Assent Defense

A

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
Q

Effect of Fraud as a Genuineness of Assent Defense

A

Remedy: rescission

52
Q

Effect of Duress as a Genuineness of Assent Defense

A

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
Q

Undue Influence as a Genuineness of Assent Defense

A

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
Q

Unconscionability as a Genuineness of Assent Defense

A

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
Q

Explain Lack of Capacity

A

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
Q

Void vs. Voidable

A

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
Q

If a minor is sold a non-necessary item, how can he get out of the contract?

A

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
Q

Disaffirm is the same as

A

void

59
Q

A voidable contract is made void by

A

Disaffirming the contract

60
Q

Who can disaffirm if the minor lied about their age?

A

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
Q

Illegality as a Genuineness of Assent Defense

A

General Rule: Illegal contracts are void

Ex. Gambling contracts

62
Q

What is a lottery?

A

To be a lottery there must be:

  1. Prize
  2. Chance (to win that prize)
  3. Consideration.
63
Q

Effect of a Bilateral Mistake of Fact

A

General Rule: Voidable

64
Q

Effect of a Bilateral Mistake of Law

A

General Rule: no effect

Exception: If it is treated as a mistake of fact

65
Q

Effect of a Bilateral Mistake of Expectation

A

General Rule: no effect

Business Law (6 decks)

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