CONTRACTS Flashcards
Common Law vs UCC
Common law - real estate and employment contracts. Much more detailed because need more support to prove an answer.
UCC - sale of goods and services. Codified law much less detail
Express contract
Contract made orally - I will see you my laptop for $1,000 you say “yes”
Implied contract
Taking car to mechanic - you will not know exactly how much you will have to pay, but you will pay something.
Quasi contract
implied in LAW - court imposes contract because there was performance. You order from caterer, you eat the food but then say it was not good and will not pay. The caterer performed - you are required to pay for the service.
What makes a contract valid?
- Offer & Acceptance
- Does not lack legal capacity
- Consideration
- Legal purpose
Void vs Voidable Contracts
Void - lacks a LEGAL purpose, or involves illegal act
Voidable - you have a valid contract, but can be voided i.e. selling a fake rolex watch
What constitutes a valid offer?
- Price
- Subject matter
- Identification of parties
- Time for performance
When does acceptance occur for unilateral contracts?
Completion (performance) of the contracts
When does acceptance occur for bilateral contracts?
Depends. Common Law - mirror image rule - if anything occurs other than the contract terms = rejection and/or counteroffer UCC - depends if merchant or nonmerchant merchant - offer + additional terms nonmerchant - offer only
When does the mailbox rule apply?
When acceptance terms are NOT specified and ONLY for original acceptance. Does not work for offers, counteroffers or rejections.
What does consideration entail?
Must be of LEGALLY SUFFICIENT but does not have to be “fair” exchanging a honda for a lexus
Both sides are giving something up - if contract terms change, they have to change for both parties otherwise there is no consideration
Legal detriment
Promising to do something without legal duty
Promising to refrain from doing something that had no prior legal duty
Statue of Frauds
Requirement that certain contracts must be in writing
1. If goods sold is over $500 - otherwise can be oral
Sales contracts can made orally over $500
2. If cannot be returned to “status quo” after partial performance
3. If cannot be performed in less than 1 year
Parole Evidence Rule
Items cannot be used in court if not specified in contract unless it is fraudulent
i.e. I bought $1,000 computer from Danielle; went to court and I said “Oh, but after the contact was signed, she said I could buy it for $800”
Minor in contracts
Can void contract at any time while a minor, and within reasonable time after becoming an adult. If it has to do with an item that is a necessity, seller can seek some recovery of reasonable value.
If ratify after being an adult either ratify entire contract, or keep performing
Mental Capacity
Void - if declared by courts “insane”
Voidable - Didn’t understand nature or effect
2 Types of Mistakes
Unilateral - one party knows/should have known of mistake; material and obvious mistake i.e. writing $500 instead of $5,000; mathematical error
Bilateral - both mistaken to the subject matter; sold a Picasso painting, did not both know it was not a real Picasso painting
Undue Influence
VOIDABLE - someone in position of authority or trust uses authority to get someone to enter a contract
Conditions of Performance
- Precedent - getting pre-approved for a mortgage
- Subsequent - returning an item to receive a refund
- Concurrent - simultaneous performance
Discharge of Duty
Failure to perform conditions of performance
Mutual agreement
Novation - new party takes over assuming liability of another
Accord & satisfaction - you owe m $500 but I take $400 and say you no longer owe me
Discharge by Operation of Law
Bankruptcy Impossibility Death/insanity Destruction of subject matter Illegality
2 types of monetary damages
Punitive - money awarded to punish wrongdoer
Compensatory - COMPENSATES for damages - costs/loss actually suffered i.e. storage costs, legal fees
Mitigation for breaches
- Specific performance
- Recession/Rescission - restore to positions before contract
- Reformance - rewrite - reform contract terms
Incidental beneficiary
Getting a benefit from the performance of a contract but is not does not directly impact them - cannot sue
