Contracts Flashcards
What is a Contract?
An agreement between two parties that is enforceable in a court of law
What is an agreement?
An offer to the contract and an agreement to the contract.
Promises in the agreement (terms of the agreement)
Agreed on essential obligations to each other
What is Complete?
The agreement must be complete
What is Deliberate?
Both parties must want to enter into a contractual relationship.
Intention to create legal relations.
What is Voluntary?
Agreement must be freely chosen.
• No unfairness or coercion
What does it mean by Two or More Competent Persons? and what is the exception?
There must be two parties to any contract, who must have a legal capacity.
•PRIVITY – ONLY the parties to the contract can sue or be sued or enforce their rights and duties under the contract
Exception: Subrogation
What is Supported by Mutual Consideration
A contract involves a bargain or exchange between parties. One party must give something of value in exchange for receiving something in value from the other party.
What does it mean by Not Necessarily in writing?
Oral contracts are enforceable.
Preferable for negotiators to get the contract in writing.
What are the pre-contractual factors factors?
- Begin with communication such as discussing possibilities – negotiation stage
- ETHICAL QUESTION: is it ethical to bluff during business negotiations?
What is an offer? Who is the offeror and who is the offeree
A promise to enter a contract on specified terms as soon as the offer is accepted.
Offeror: Person who makes an offer
Offeree: Person whom an offer is made
What is Certainty of Offer?
Only a complete offer can form a basis of a contract.
All essential terms must be set out or contract will fail.
What is an Agreement?
Before a contract can be in place, parties must come to an agreement when they have reached a consensus to their rights and obligations.
What is invitation to treat?
Willingness to do business.
What is the standard form of contract? Give an example of what type of business this is.
Take it or leave it contract.
Customer agrees to a standard set of terms that favors the other side.
ex. borrowing money from the banks
Name 5 ways an offer can be terminated
Revocation
-Withdrawal from an offer (anytime before acceptance)
Lapse
-Expiration of an offer after a specified or reasonable period
Rejection
-Refusal to accept an offer
Counteroffer
-Rejection of one offer and proposal of a new one
Death or insanity
What is acceptance?
Unqualified willingness to enter a contract on terms of the offer.
Then a contract is formed
What is Communication of Acceptance?
Legal acceptance, the offeree must communicate by words or by conduct.
What is Consideration and gratuitous promise?
Consideration: The price paid for a promise.
Gratuitous Promise: a promise for which no consideration is given.
What is Pre-existing legal duty?
A legal obligation that a person already owes.
What is Promissory Estoppel?
A doctrine whereby someone who relies on a gratuitous promise may be able to enforce it.
What is Rebuttable Presumption?
Legal Presumption in the favor of one party that the other side can seek to rebut or dislodge by a lending evidence to the
assumption that is made in the law that will stand as a fact unless someone comes forward to contest it and prove otherwise.
What is an expressed term of a contract?
Provision in a contract that states or makes explicit one party’s promise to another.
What is an implied term of a contact?
A provision in a contract that is not expressly included, but is necessary to give effect to the parties’ intention.
What is rules of construction?
Guiding principles for interpreting or constructing the terms of a contact.
What is entire contract clause?
Term in the contract that the parties agree that their contract is complete as written.
What is contractual quantum meruit?
Awarding one party a reasonable sum for the goods and services provided under a contract.
What is Parol evidence rule?
Limits the evidence a party can introduce concerning the contents of the contract.
Conditions Subsequent
Event or circumstance that, when it occurs, brings an existing contract to an end.
Conditions Precedent
Event or circumstance that, when it occurs, suspends the parties obligations to perform their contractual obligations.
Limitation of liability clause
Term in a contract that limits liability for breach to something less than would be otherwise recovered.
Exemption clause
Term in a contract that identifies events causing loss for which there is no liability.
Liquidated damages clause
Term of a contract that specifies how much one party must pay to the other in the event of a breach.
What is a voidable contract?
in certain circumstances, an aggrieved party can choose to keep or force to bring a contract to an end.
Void Contract
Involving a defect so substantial that it is of no force or effect
Legal capacity
ability to make binding contracts
Age of majority
Age at which a person becomes an adult for legal purposes. 18 or 19 years of age
Economic duress
Threats of economic harm that coerces the will of the other party and results in a contract
Undue influence
Unfair manipulation that compromises someone’s free will.
Unconscionable contract
Unfair contract formed when one party takes advantage of the weakness of another
Misrepresentation
False statement of fact that causes someone to enter a contract
Fraudulent, Negligent, and Innocent Misrepresentation
Fraudulent: Deliberate intent to mislead or make a statement recklessly without know or believing it is true
Negligent: Makes statement carelessly or negligently
Innocent: Neither negligent or fraudulent, but misrepresented a fact
Mistake
Error made by one or both parties that seriously undermines a contract.
Rescission
Misrepresentation remedy that results in parties being returned to the pre-contractual conditions. (Cancelling the contract)
Common Mistake
Both parties to agreement share the same fundamental mistake.
Illegal contract
Contract cannot be enforced because it is contrary to legislation or public policy.
Public policy
Community’s common sense and common conscience.
Non-solicitation clause
Clause forbidding contract with the business’ customers
Non-competition clause
Clause forbidding competition for a certain period of time.
Guarantee
Promie to pay the debt of someone else, should that person default on the obligation.
Novation
Substitution of parties in a contract or the replacement of one contract with another.
Assignment
Transfer of a right by an assignor to an assignee
Frustration
Termination of a contract by an unexpected event.
Or change that makes performance functionally impossible or illegal.
Breach of a Condition
an important term that gives the innocent party the right to terminate the contract and claim damages.
Breach of a Warranty
a minor term that, if breached, gives the innocent party the right to claim damages only.
Innominate Term
A term that can’t easily be classified as either a condition or a warranty.
fundamental breach
a breach of contract that affects the foundation of the contract
Anticipatory breach
A breach that occurs before the date named for performance.
3 Damages Remedies
Damages: Monetary compensation
Expectation Damages: Provide plantiff with monetary equivalent to contractual performance
Punitive Damages: Awarded to the plaintiff to punish the defendant for malicious, oppressive, and high-handed conduct
6 Other Remedies
Duty to Mitigate: the obligation to take reasonable steps to minimize the losses resulting from a breach of a contract.
Specific performance: The court orders the party who breached to do exactly what the contract obligated him to do
Injunction: Promises not to engage in specific activities, disregarding these promises is a breach of contract.
Rescission: results in parties being returned to the pre-contractual conditions
Unjust Enrichment: One party undeservedly or unjustly secured a benefit at the other party’s expense.
Quantum Meruit: Amount that is reasonable given the benefit the plaintiff has coffered.
