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Regulation > Contracts > Flashcards

Contracts Flashcards

1
Q

What constitutes a good?

A

Goods are tangible personal property, such as cars, clothes, books, livestock, crops, etc.

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2
Q

What is a blended contract?

A

A contract that provides both goods and services. UCC if the primary purpose is sale of goods. CL if primary purpose is installation of the goods.

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3
Q

Name examples of contracts that fall under common law.

A

Contracts for employment, agency agreements, service contracts, medical care, sale of real estate, leases, and mortgages.

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4
Q

What is an express contract?

A

A contract formed wholly by oral and/or written words.

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5
Q

What is an implied or implied in fact contract?

A

A contract formed, at least in part, based on the conduct of the parties or based on factual circumstances.

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6
Q

What is a quasi-contract or implied in law contract?

A

A contract imposed by the courts or by law when some performance has gone forward, even though there is no express or implied contract. (Prevents unjust enrichment).

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7
Q

What is a bilateral contract?

A

A type of contract in which both sides make a promise. A promise is made by one party to the contract in exchange for a promise from the other party to the contract.

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8
Q

What is a unilateral contract?

A

A type of contract in which one side makes a promise in exchange for an action or performance from the other side.

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9
Q

What is an executed contract?

A

A contract that has been fully performed by both parties to the contract.

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10
Q

What is an executory contract?

A

A contract that has not yet been fully performed by the involved parties.

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11
Q

What is a partially executed contract?

A

A contract that has been performed in part. One side has performed the contractual obligation.

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12
Q

What is a valid contract?

A

A contract that has been legally formed and meets the necessary requirements for formation.

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13
Q

What is a void contract?

A

A contract that lacks a legal purpose or is in violation of the law.

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14
Q

What is a voidable contract?

A

An otherwise valid contract that can be set aside because one party has protection under the law and the right, by choice, to be relieved of liability under the contract.

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15
Q

What is an unenforceable contract?

A

An otherwise valid contract that cannot be enforced because of a statutory or other legal defense.

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16
Q

What are the requirements for the formation of a contract?

A

Offer, acceptance, consideration, and no defenses to formation.

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17
Q

What are the requirements of a valid offer?

A

Present intent, definite terms, and communication of the offer.

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18
Q

What definite terms are required under CL?

A

Identification of the parties, the subject matter, the price stated, and the time for performance.

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19
Q

What definite terms are required under UCC?

A

Identify the subject matter and quantity if more than one is being sold.

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20
Q

What is the general rule of revocation?

A

An offer can be revoked at any time prior to acceptance. The revocation is effective when received and must be received prior to acceptance by the offeree.

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21
Q

What are the general rules for options?

A

The offeree gives consideration in exchange for the offeror’s promise to keep the offer open for a specified period. The offer cannot be withdrawn during the option period. The offeree has the right to accept during the option period, but is not required to. The offeree’s rejection during the option period does not end the option.

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22
Q

What is a firm offer under the UCC?

A

Offer is in writing, made by a merchant, states that it will be kept open for a period of time (not more than 3 months, unless consideration given), does not require consideration.

23
Q

What is the general rule for rejection?

A

An offer is terminated at any time prior to acceptance and is effective when received.

24
Q

What is a counteroffer?

A

A counteroffer is a form of rejection, made when the offeree responds with changed terms. Conditional acceptance is a form of a counteroffer.

25
Q

What is the mirror image rule?

A

Acceptance must be absolute, unequivocal, and unqualified. Any variation of the terms results in a counteroffer and rejection.

26
Q

When does an offer terminate by operation of law?

A

Death or insanity of the offeror or offeree (except options), destruction of the subject matter (except fungible goods), illegality of the subject matter.

27
Q

Explain acceptance for a unilateral offer.

A

Acceptance takes place upon completion (total performance) of the act required by the offer.

28
Q

Explain common law acceptance.

A

CL relies on the mirror image rule. Acceptance must be absolute, unequivocal, unconditional, and communicated to the offeror.

29
Q

Explain UCC acceptance.

A
  1. Definite expression of acceptance - contract.
  2. Nonmerchant - definite expression of acceptance followed by additional terms - contract without additional terms
  3. Merchant - definite expression of acceptance followed by additional terms - contract with additional terms (unless material, statement of offer being limited to the terms, rejection by the offeror w/in reasonable amount of time)
30
Q

Explain the general rule of timing of acceptance.

A

If sent by an authorized medium, the acceptance is effective and the contract is formed at the moment the offeree delivers the acceptance to the authorized medium - even if it is never received by the offeror.

31
Q

What is considered an authorized medium?

A

An authorized medium is the same or faster method of communication used by the offeror if no method is specified in the offer. If a means is specified in the offer, the only authorized means is that specified means.

32
Q

What is the mailbox rule?

A

If the offeree uses the authorized means, once the acceptance to a mail-authorized offer is dropped in a mailbox, there is acceptance of the offer, regardless of any delays or nondelivery. This applies to acceptance communication only.

33
Q

What happens when an offeree uses a means other than the means specified?

A

This is considered a counteroffer and rejection because the offeree has violated the terms of the offer and the mirror image rule.

34
Q

What if no authorized means is specified?

A

If the offeree uses a slower method of communication than used by the offeror, then the acceptance is effective only when received by the offeror.

35
Q

Name the types of contracts that must be in writing under the Statute of Frauds.

A
  • Guaranty of debt contracts
  • Contracts involving interest in real property
  • Contracts impossible to perform in 1 year
  • Contracts for the sale of goods at $500 +
  • Promises of executors for personal liability for debts of the estate
36
Q

What is a guarantor?

A

A person who guarantees to pay for someone else’s debt if her or she should default on a loan obligation.

37
Q

Are there any exceptions to the real property rule under the Statute of Frauds?

A 
Leases less than one year in length
The following partial performance applies:
-some level of payment has been made
-buyer is in possession
-buyer has made improvements
38
Q

When is the one-year mark measured under the Statute of Frauds?

A

The one-year mark is measured from the date of acceptance; the time frame is not just the period of performance.

39
Q

What forms of communication fall under the term “record”?

A

e-mail, click agreement, faxed document, PDF agreement, etc.

40
Q

Explain the merchant’s confirmation memo under the UCC Statute of Frauds.

A
  • Two merchants with an oral agreement
  • One merchant sends another a written confirmation and the other does not object w/in 10 days of receipt
  • Enforceable by either party even though only one party actually signed the memo
41
Q

What are the three exceptions under the merchant’s confirmation memo?

A
  • special ordered goods
  • admission under oath
  • performance by buyer
42
Q

What are the criteria for a valid writing/record?

A

Signature of the party to be held liable on the oral contract (except merchant’s confirmation memo). The writing also does not need to be in one document or formal.

43
Q

What does the parole evidence rule apply to?

A

Fully integrated contracts (one that is complete and unambiguous). Parole evidence can be used to explain ambiguous terms, obvious typos and clerical errors, and incomplete contracts.

44
Q

What is the parole evidence rule?

A

A fully integrated contract cannot be contradicted, varied, or altered by evidence of the parties’ prior negotiations, prior agreements, or contemporaneous oral agreements.

45
Q

What are two exceptions to the parole evidence rule?

A
  • subsequent modification (later)

- oral evidence can be introduced to show any of the defenses to formation.

46
Q

What are the five types of defenses to formation?

A
  • Mistake
  • Fraud (fraud in the inducement) (misrepresentation)
  • Duress
  • Undue influence
  • Illegality
47
Q

What does capacity mean?

A

Each party must be of legal age and each party must have the mental capacity to enter into a contract (also means being free from a level of intoxication that results in mental incapacity)

48
Q

What is a minor’s right to disaffirm?

A

A minor who enters into a contract has the right to disaffirm the contract and avoid liability at any time before reaching majority and for a reasonable time thereafter.

49
Q

How does a minor disaffirm?

A

Show intent

Return any consideration still in possession

50
Q

What are the exceptions to a minor’s right to disaffirm?

A

-necessities (cannot be under the care of a parent or guardian)

51
Q

How does a minor ratify a contract?

A
  • express (notifies the other party)

- implied (continues to perform on the contract)

52
Q

What are the rules of mentally incompetent persons in regard to contract formation?

A
  • before adjudged - voidable
  • after adjudged - void
  • Intoxicated - must be to an extent that the person did not understand the binding nature of the contract - voidable
53
Q

What is a novation?

A

A novation is an agreement between three parties whereby a previous agreement is discharged by the creation of a new agreement. The new agreement substitutes one contracting party for another.

Regulation (11 decks)

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