Contracts Flashcards
What does the formation of a valid common law contract require?
Offer, Acceptance, Consideration, and a lack of Defenses
What are the 2 mains sources of contract law?
Common law- real estate and services (derived from courts)
Uniform Commercial Code (UCC) - Sale of goods (derived from statutory law)
Bilateral and Unilateral contracts
Bilateral- 2 promises are made (promise to pay $ if you promise to do my audit)
Unilateral- 1 promise for an act (promise to pay 100 if you find my dog)
An offer has 3 things…
Definite terms- Price, nature, parties, performance
Intent- Objective intent, what a reasonable person believes
Communicated to offeree- constructively rec’v when available to EE
The following would terminate an offer:
Expiration- after reasonable time if none stated
Revocation- must be rec’v to be effective (direct or indirect); Option contract- consideration to hold open
Rejection- refusal by EE
Counteroffer- form of rejection (except if inquiry)
Law- death, insanity, destruction
* Offer can’t be assigned, but contract can
2 important rules of Acceptance
Mirror-image rule: accept all terms and conditions unequivocally and unqualified
Early acceptance rule: “mail box”rule- effective when transmitted (dispatched)
* Maker is the master of his offer
** Acceptance rec’v after an offer has terminated considered a counter-offer
Condition precedent
Acceptance, but events outside the contract must take place first acceptance effective
Consideration
Legal term for exchanging benefits and sacrifices “of value” in a contract; must be understood by both parties
What is past consideration
A promise in exchange for an act completed prior to the making of the promise; will not be enforced because the act was not done in exchange for the promise.
Pre-existing duty rule under common law contracts
When 2 parties attempt to modify a contract; only bonding if both parties provide new consideration (additional consideration not needed for sales contract modification)
Examples of voidable contracts
Duress- coerce into contract (economic in nature)
Undue influence- violate relationship of trust to enter contract
Misrep of a Material Fact- Innocent misrep (prove MILE; Fraud in the Inducement similar, but damages could be awarded) Fraudulent misrep (prove MILE, but error caused by fraud/scienter, intentional tort)
Mistake- mutual mistake of fact or unilateral mistake
Capacity- minor (can withdraw, if reach age during contract treated as ratified if they don’t disaffirm in reasonable time); Intoxication (at time of contract, can ratify once sober); Incompetent
Examples of void contracts
Extreme duress- physical threat
Fraud in the Execution- getting to sign agreement w/out realizing they are signing contract (sue for damages)
Illegal subject matter
Incompetent persons, death
Statute of Frauds
Common law requirement that contracts be in writing [GROSS]
sale of Goods worth 500+
Real estate sales
Over 1 year to perform (impossible to perform under a year)
Suretyship - guarantee debt of another
Statements in consideration of marriage
What are the additional exceptions for contracts involving the sale of goods
[SPAM]
Specifically manufactured (enforce by seller)
Partially performed (to extent of performance)
Admits in court
Merchant does not object w/ in 10 days (bound by their silence)
*Not in writing, but still enforceable
Parole Evidence Rule
Bars from court testimony any prior oral or written contracts that contradict the written contract
- Even if contract not required to have written (Statute of Frauds)
- Rule doesn’t bar sub oral modifications, evidence to prove fraud/duress/mistakes, subjects not addressed or ambiguous to written contract
