Contracts Flashcards
Inherent gift
Executor elects to use alternate valuation date and property is distributed, sold &exchanged within 6months after decedent’s death, the property is value as of the date of sale, distribution, exchange or other disposition
Accord and satisfaction
Parties agree to change a contract by substituting performance
Accord: agreement to change performance- pay lesser amount
Satisfaction completion of the accord-no discharge until satisfaction
ACCORD + SATISFACTIOn -> discharge Original Duty
Express contract
Oral or written contract
Implied in fact contract
Contract form by conduct or action
Implied in law contract or Quasi contract
NOT a contract but a remedy to prevent plaintiff unjust enrichment
Ex. Put down payment and the seller default-> buyer can sue to recover the money
Unilateral contract
1promise in exchange for performance
Contract is formed when promise is completed
Bilateral contract
A promise exchange for a promise
Contract is formed as soon as promises are exchanged
Executory contract
Duties remain to be performed under the contract
Not fully perform by both parties
Executed contract
All duties under contract have been performed
Fully perform by both parties
Common law vs UCC
Common law RISE: need stated price and time of pmt to be valid Real estate Insurance Services Employment
UCC applies for Sale of good- movable things. ONLY need stated QUANTITY term to be valid contract ( states contract for sale of goods has been made between parties and signed party to be charged
3 requirements for a legally enforceable contract
Agreement made up of OFFER and ACCEPTANCE
EXCHANGE for CONSIDERATION
LACK Of DEFENSE
WRITING is NOT required for a contract to be ENFORCEABLE
OFFER must be accepted by OFFEREE before it is terminated by OFFEROR
3 elements of OFFER
Seriously intended
Must be communicated by words or actions
Definite in term: must include specific price in Common Law Or quality in UCC
Terminate an offer
All is effective ate the date received
REVOKE: offeror can revoke offer anytime before acceptance by communicating (except Option Contract, merchant firm offer, unilateral contract)
REJECTION: terminate the offer and can make Counter offer
AUTOMATIC by operation of Law:
+ either parties dies or incompetent prior to the acceptant
+ subj matter is destroyed
+ sell illegal thing
Acceptance of a offer
ONLY person to whom the offer was made can Accept the offer
ANY REASONABLE manner can use to accept offer unless it is required to use specific way
Mirror image rule: Offer MUST be accepted with NO modification at all ( if make any small change, it is a counter offer)_applied to COMMON LAW ONLY, not for UCC
2 elements of consideration
Legal value given by each party (sth that not obligated to do)
Bargained for exchange
EXCEPT for PROMISSORY ESTOPPEL- donation to charity
Types of fraud
FRAUD in EXECUTION: tricked victim into signing sth->VOID
FRAUD in INDUCEMENT: lying victim to buy sth->VOIDABLE
INNOCENT misrepresentation: both enter contract without knowing
DURESS: threat & force ->physical duress VOID, other Threat VOIDABLE
UNDUE influence: base on weakness to threat VOIDABLE
Types of fraud (continue) MS RID
MUTUAL MISTAKE: both parties make mistake VOIDABLE (subj matter destroy without knowing)
UNILATERAL MISTAKE: one party know ab the error in the contract
Competent parties in contrac
MINORS can cancel the contract anytime before he turns 18 (except Contract to buy NECESSITIES- food, cloth..)-> RATIFY contract when turn 18, minor cant get out of contract
INTOXICATION sign a contract VOIDABLE at the drunkard option if lack of ability to understand nature and term of contract at that time
INSANE -> contract VOIDABLE , future contact is VOID
Statue of limitation to file lawsuit
Common law: RISE 4 to 6 years from the breaching date
UCC: 4year
Statute of limitations bars action at law on contracts unless they are brought within prescribed periods of time
Statue of Frauds : 6 contracts require a writing and MUST be Signed by the Defendant to enforce
MYLEGS
Marriage
Year: cant compete in 1year
Land/ involve interest in Real estate regardless of price
Executor: promise to personal liable for debt of Estate
Goods: sales of good for more than $500 under UCC ( not require under COMMON LAW)
SURETYSHIP: act as a Surety
Exception to writing requirement
Oral contract involving specially manufactured goods
Lease bind recipient as well in 10days without writing
Type of writing
Contract itself need NOT be in writing, any type of writing states material terms is sufficient
ONLY need to be signed by one party but ONLY ENFORCEABLE against the party signed
Novation
Same agreement with substituted party
All parties MUST agree to release
Prevention of performance
Breach of contract
Parole evidence rule
Before written final contract: Evidence NOT accepted either written or oral
After written final contract: Evidence accepted either written or oral
EXCEPTION: to use as evidence
subsequent modification after signed date
Doubtful and uncertainty
Fraud, duress or mistake
PROHIBITED if related to a change in meaning of an unambiguous provision in the contract
Cant assign contract require
Specific skill for personal service
Material increase risk
Prohibited by contract or law
Insurance contract
Quasi contract
Not an actual contract
Legal substitute formed to impose equity between two parties
To modify an existing contract
Both parties must give a new consideration in exchange
NOTE: past consideration is not sufficient to serve as consideration for a new contract because it is not bargained for.
Rescission
Cancel the contract and restore the parties to their former position
Special performance
Compels performance promised
Used when money damages will not suffice( when subj matter is unique and sale of land)
Injured party may seek compensatory damages
Not available ti compel personal services
Only party who is to receive the unique item
Who can donee beneficiary sue?
Only the party who make the promissory- the one who owe the promise action (not the person give gift)
Donee beneficiary can assert rights to the contract if the beneficiary can prove that the terms of the contract and surrounding circumstances manifest a clear intent to benefit her
Intended beneficiary or creditor beneficiary
When debtor contract with the second party to pay its owed debt to its creditor, the creditor is creditor beneficiary
It has the right to enforce the contract
Anticipatory repudiation
Allow parties either sue at once or wait until after performance is due when other party indicates that they will not perform
Mail box rules apply when
Valid Acceptant is sent through properly addressed and
+ offeree uses the express means of communication
+ any reason means is not stated
NOT APPLY if offer state NOT EFFECTIVE UNTIL RECIEVED
Bona fide dispute
Change the debt to an unliquidated debt
Pmt of lesser sum to discharge an unliquidated debt will be effective if accepted as pmt in full if each party gives give consideration in form of forfeiting claim to dispute the amount of debt
Undue influence
Rescind the contract by influenced by the relationship with second party of the contract
Covenant not to compete to be enforceable, the agreement must
Protect party business’ legitimate interests and
Geographic area coved must be reasonable
Inquiry
Is not counter offer
It is merely a request for different term
Minor after reaching age of majority
If he isnt disaffirm the contract in a timely fashion(3days after age of 18) they are bind in the contract.
The seller if not minor has to perform the contract unless the minor is disaffirm.( only minor can disaffirm the contract)
Minor may choose to RATIFY within a reasonable time after reaching age or majority
- By word orall or writing but must ratify ALL
- By actions that indicate ratification
- Ratification prior to majority is not effective
In the event of lawsuit
Either party has a chance of winning or losing on the disputed claim
Creditor has no chance of losing where there is no dispute as to the amount owned; there is no consideration for the promise to pay a lesser amount
