Contracts Flashcards
If the offerer loses capacity, the offer
expires
May specific performance be used to force an individual to perform personal services?
No.
May specific performance be used to force an individual not to perform an action?
Yes.
In a loan for consumption:
The “borrower” becomes the owner of the consumable property, and bears the risk of loss. The camper is entitled to replacement or value.
A hotel’s liability for items put into safe deposit boxes provided in rooms…
is limited to $500
A mandatary may generally contract for the principal without express authority. However, a mandatory may not enter certain types of contracts, such as
contracts for loans, without express authority. A mandatory also needs express authority to acquire or lease anything, become a surety, draw or endorse promissory notes, make inter vivos donations, accept or renounce a succession, acknowledge or make remission of a debt, or make healthcare decisions.
Parties to a compromise need capacity only if
the compromise effects a transfer or renunciation of rights. The answer choice states the opposite.
Can a court declare a contact relatively null sua sponte?
No.
The prescriptive period for raising both relatively and absolutely null contracts is
five years
Within what time from of when the obligee learned or should have learned of the obligor’s offending act must a revocatory action be brought?
The action must be brought within a year.
An oblique action
allows an obligee to pursue resources that the obligor fails to follow up on if the obligor’s failure increases its insolvency. It is the best recourse for the investor to ensure that the partnership will be able to repay its debt to him.
An oblique action is not allowed if
the right is strictly personal to the obligor.
Under the Civil Code, when a seller has not delivered as agreed, the buyer may
demand specific performance or seek dissolution of the sale. Damages may also be available if the owner purchases substitute goods for a higher price than contracted
A contract is
an agreement by two or more parties, whereby obligations are created, modified, or extinguished.
a unilateral contract is
a contract by which only one party incurs an obligation. This is totally ok in civil law, but not under the common law.
Example: donation or deposit contract
a bilateral contract
AKA synallagmatic contract. involves two or more parties, all of which incur an obligation
example: contract of sale, contract of lease
onerous contract
each party to the contract obtains an advantage in exchange for his or her obligation
example: sale
gratuitous contract
only one party obtains an advantage in exchange for his or her obligation
example: donation
commutative contract
performance of a party is correlative to performance of another party\
example: sale
Aleatory contract
Performance, or extent of performance, of either party’s obligation depends upon an uncertain event.
EXAMPLE: Contract of car insurance
Principal contract
a contract that can stand on its own
accessory contract
Made to provide security for performance of an obligation (e.g., suretyship, mortgage).
Nominate contract
Given special designation and regulated by special rules.
EXAMPLE: Sale, lease, loan, insurance
innominate contract
Contracts that have no special designation.
Requirements for a Valid Contract
capacity
consent
cause
object
persons have capacity to contract, except:
minority
interdiction
being deprived of reason (temporary or otherwise)
a contract made by a person without legal capacity is
relatively null. it can be declared null, but it can be ratified to be given effect.
exceptions to lack of capacity, unemancipated minor
Un-emancipated minors have capacity to contract when:
a. Other party reasonably relies on minor’s representation of majority; or
b. Contract provides minor with something necessary for his support or education, or contract relates to his business
exceptions to lack of capacity, persons deprived of reason
When persons deprived of reason have capacity to contract:
a. A non-interdicted person may obtain rescission of an onerous contract only upon showing that other party knew or should have known of that person’s incapacity.
b. A contract made by a non-interdicted person may be attacked after that person’s death only when contract:
(1) is gratuitous;
(2) evidences lack of understanding;
(3) was made within thirty days of person’s death; or
(4) when application for interdiction was filed before person’s death.
Formation of Contract
- Formed by consent of parties established through offer and acceptance.
- May be made orally, in writing, or by action or inaction that clearly indicates consent.
- No form required, unless law of contracts specifies.
- If parties intend a certain form to be used, it is presumed that they do not intend to be bound until contract is executed in that form.
An offer is
an expression by one individual of an interdiction to form a contract
An offer must be
serious
precise (specific price for a specific thing)
firm (offer can accept by just saying yes)
declared to the offeree
When is an offer revocable?
a. May be revoked before acceptance.
b. Revocation is effective when received by offeree.
c. Will expire if not accepted within reasonable period of time.
What is an irrevocable offer?
a. Offer specifying period of time for acceptance is irrevocable during that time.
b. Will expire if not accepted within period of irrevocability
For a revocable offer, acceptance is effective when:
(mailbox rule) it is transmitted–as soon as the acceptance is put into the mail.
For an irrevocable offer, acceptance is effective when
the acceptance is received
Revocation of an offer is not effective until
it is received
A written revocation, rejection, or acceptance is received when
it comes into the possession of the addressee, or a person authorized to receive it (mandatary), or when it is deposited in the place the addressee has indicated for the receipt of similar communications
offeror invites offeree to accept by performance, and it is contemplated that performance will be completed if commenced, contract is formed when
offeree begins performance.
If offer can be accepted only by completed performance, offeror must allow offeree who has begun performance reasonable time to complete performance; however
offeree need not complete performance.
When commencement of performance constitutes acceptance or makes offer irrevocable
, offeree must give prompt notice of commencement unless offeror knows or should know that offeree has begun to perform. Offeree who fails to give notice is liable for damages.
Offer is deemed accepted when offeree’s silence
leads offeror reasonably to believe that a contract has been formed.
Offer of Reward to Public, Binding upon offeror even if
person who performs has no knowledge of offer.
Offer of Reward to Public, May be revoked before completion of requested act, if
by same or equally effective means as offer.
Generally, cause is
(sort of like consideration) the reason a party obligates himself
an obligation cannot exist without
lawful cause
If a false cause is expressed, obligation is still effective if
a valid cause can be shown
Detrimental Reliance
- Promissee must have relied on promise to his detriment.
- Promissor must have known or should have known promise would induce other to rely.
- Promissee must have been reasonable in relying.
a. Reliance on a gratuitous promise made without required formalities is not reasonable. - Recovery may be limited to expenses incurred or damages suffered as a result of promisee’s reliance on promise.
Parties may contract for any object that is
lawful
possible
determinable
object is possible (or impossible) according to its own nature and does not depend on
whether the specific parties to the contract can themselves actually do it
future things
you can contract for future things if it doesnt exist yet, but will be produced; EXCEPT you cannot contract for the succession rights of any living person
Contractual object must be determined at least as to its kind; however, quantity only needs to be determinable
a. If determination of quantity of object has been left to discretion of a third person, quantity of an object is determinable.
b. If parties fail to name a person, or if person named is unable or unwilling to make determination, court may determine quantity.
c. Quantity of a contractual object may be determined by output of one party or requirements of another, measured in good faith.
A third person’s obligation or promise to perform may be the object of contract. Promisor is liable for
damages if third person does not fulfill obligation or perform.
Third party beneficiary:
the object between the two contracting parties is to bestow a benefit on some third party (teach my kid piano)
Vices of consent
error
fraud
duress
Mutual error
Where both parties have labored under a common faulty assumption regarding present facts, there is mutual error.
Unilateral Error
Where one party has labored under a common faulty assumption regarding present facts, there is unilateral error.
Consent is vitiated only when
(1) the error affects the cause, (2) the other party knew or should have known of the erring party’s cause (though not necessarily the error)
Error concerns a cause when it bears on
(1) nature of contract;
(2) contractual object or a substantial quality of that thing;
(3) person or qualities of other party;
(4) law; or
(5) any other circumstance parties regarded (or should have in good faith) as a cause of obligation
Party who obtains rescission on grounds of his own error is liable for loss sustained by other party, unless
the other party knew or should have known of the error
Courts might not grant release if the damages sustained by the non-erring party are going to be
too significant
If the non-erring party is willing to perform the contract as expected or anticipated by the party who erred, then
the court will allow the transaction to go forward
inexcusable error
some errors, even if they go to the cause and/or the other party knew or should have known, are too outrageous to nullify the contract. for example, I signed the contract, but I didn’t read it so I didn’t know what I was doing/actually buying.
Fraud is a
misrepresentation or a suppression of truth made with intention to obtain unjust advantage for one party or to cause loss or inconvenience to another.
Fraud does not vitiate consent when party against whom fraud was directed could have
determined truth without difficulty, except if a relation of confidence has reasonably induced a party to rely on another’s assertions or representations.
Consent may be vitiated even if error induced by fraud does not concern cause of obligation, although it must concern
circumstance that has substantially influenced that consent
May fraud result from silence or inaction?
Yes.
Consent is vitiated when obtained by duress that causes
a reasonable and unjust fear of considerable injury to a party’s person, property, or reputation
a. Includes duress directed against spouse, ascendant, or descendant of contracting party.
2. Duress allows for rescission, damages, and attorney’s fees.
General Effect of Contract
- Have effect of law for parties.
- May be dissolved only through consent of parties or on grounds provided by law.
- Must be performed in good faith
Three instances of failure to perform
non-performance
defective performance
delayed performance
The non-breaching party may seek
dissolution of the contract and damages, or specific performance of the contract.
For obligations to deliver a thing, to not do an act, or to execute an instrument, specific performance may be obtained unless
doing so would be impracticable
impracticable means impossible, or greatly disproportionate in cost, not in the creditor’s interest, or had a substantial, negative effect on interested third parties.
If specific performance is impracticable, court may allow
damages
Obligor is liable for damages caused by
failure to perform a conventional obligation, including nonperformance, defective performance, or delay in performance.
Damages are measured by
loss sustained by obligee and profit of which he has been deprived.
Obligor in bad faith is liable for
all damages, foreseeable or not, that are a direct consequence of his failure to perform.
Obligor in good faith is liable only for:
foreseeable damages
Obligee may not recover damages when:
(1) his own bad faith has caused obligor’s failure to perform; or
(2) in contracting, he has concealed from obligor facts that he knew or should have known would cause a failure.
Obligee must make reasonable efforts to
mitigate damage caused by obligor’s failure to perform, and in absence of such efforts obligor may demand that damages be accordingly reduced
Non-pecuniary damages are recoverable when:
(1) Because of its nature, contract is intended to gratify a non-pecuniary interest; and
(2) Because of circumstances in formation or nonperformance of contract, obligor knew (or should have known) that failure to perform would cause such a loss.
Regardless of nature of contract, damages are also recoverable when
obligor intended through his failure to aggrieve feelings of obligee.
Parties have great latitude in contracting for damages. However, parties cannot exclude or limit
liability of one party for intentional or gross fault that causes damage or physical injury to another.
Parties may stipulate damages to be recovered in case of
nonperformance, defective performance, or delay in performance of an obligation.
b. Obligee does not have to prove damages.
c. Court may not modify, unless so manifestly unreasonable as to be contrary to public policy.
Moratory damages are available when
(1) the parties agree that the contract would be performed by a specific time
(2) the obligee puts the obligor in default by:
(a) written request of performance;
(b) oral request of performance made before two witnesses;
(c) filing suit for performance; or
(d) specific provision of contract
If obligor fails to perform, obligee may
serve notice to perform within a reasonable time, with warning that contract will be dissolved unless performance is rendered within that time.
Obligee is not required to provide notice of dissolution to obligor if
it is obvious that obligor will not perform or if delayed performance would no longer be of value to obligee.
If after dissolution restoration in kind is impossible or impracticable
the court may then assess damages based on loss profit and cost expended
Dissolution does not affect
performance already rendered under contracts providing for continuous or periodic performance.
