Contracts Flashcards
What must a contract contain?
Offer Acceptance Consideration (something of value) Proper form (oral or written) Legal subject matter Two or more competent parties No defenses
What forms may acceptance of a contract take?
Can be written or oral
Must be in the form/method required by offeror
Must be mirror image - i.e. no changes in terms
Who can accept an offer?
Must be accepted by intended party (offeree)
Acceptance can only be made by a party who knows an offer has been made and has all of the facts - AKA a meeting of the minds
They must intend to accept
What happens if an offeree accepts a contract but puts added stipulations?
It is not acceptance; but instead becomes a counter-offer and the original offeror is now the offeree
When is an offeror bound by a contract?
When they RECEIVE the acceptance.
If the offeree rejects; then accepts - whatever gets to the offeror first is what is binding.
What will void an offer?
If offeror dies or becomes insane before acceptance; offer is void.
Contract is binding if acceptance occurs before death/insanity.
What is an Option?
Some amount of consideration (like money) is put forth by offeror to keep the offer open for a stated period of time
What actions or circumstances will revoke a contract?
Offeror revokes and offeree receives revocation
Offeree finds out prior to acceptance that offeror has sold the item
In the case of an Option; offeror cannot revoke until the time of the option has elapsed
Initial rejection by offeree doesn’t void the option.
What is promissory estoppel?
Promises to donate are legally enforceable
Basically; you can’t tell a charity; “Hey; if you buy this $100;000 piece of land; I’ll pay for the building that will go on it;” and then renege on your promise
What can make a contract VOIDABLE?
Fraud in the inducement
Party not competent to contract
Formed under SIMPLE duress
Undue influence
What is the result of a clerical error in a contract?
The contract is unenforceable.
Example: Person signs a contract to pay $500.00 to have their lawn re-seeded but due to clerical error; it actually reads $5000.00
What is a Requirements Contract? How are they limited?
These are contracts where someone becomes the “exclusive” provider of something in exchange for
consideration
Companies can’t get locked in to one and then have market conditions force them to sell something at
what has become an unreasonable price
What makes a contract subject to the Statute of Frauds? Need signing by the defendant
MYLEGS Marriage Year - Cannot be completed within 1 year Land - Purchase of real estate Executor Goods for sale - $500+ Sale of Goods Surety
What is the parol evidence rule?
Prevents one party to a written contract from coming in after the fact and claiming that a certain conversation took place that conflicts with what is agreed upon in the written contract
It also prevents using an oral argument to read into the meaning of what is written on paper
If it’s on paper; it trumps what was agreed-upon orally prior to the written contract
Note: does not negate oral agreements made AFTER the contract or disallow oral words from clarifying ambiguous contract language.
What are the requirements for the assignment of a contract?
Contracts are assignable to a third party beneficiary; but must be done so in good faith
Obligations may be assignable- Assignor is still liable
Assignor may be released from liability if other party grants a novation
When can contracts be discharged by law?
Party under contract is bankrupt
Party under contract dies or is incapacitated
Party cannot physically complete the contract (i.e. They are in prison so can’t finish building your house)
Which contracts are governed by common law?
RISE > Real Estate > Insurance > Services > Employment
Contracts under the Statute of Frauds must be in what form to be valid?
They must be in writing.
Which contracts are governed by UCC uniform commercial code sales article?
Sales of goods - moveable things
What’s a creditor beneficiary?
Creditor beneficiary receive interest because a party owes them something.
What is a donee beneficiary?
Donee beneficiaries receive their interests as a gift
What’s the statute of limitations?
The statute of limitations provides that legal action must be commenced within a certain period of time. If the statute of limitations has expired on the contract it is unenforceable. It does not make a contract void but merely bars access to judicial remedies.
What is the statute of limitations for RISE - common law?
4 to 6 years
What is the statute of limitations period under you UCC?
Four years
What is a unilateral contract?
A unilateral contract is formed when a promise is exchanged for an act.
Example: Kay promised to pay for John’s education in exchange for John obtaining rare artifacts and John performed. Thus, a unilateral contract was formed.
What is innocent misrepresentation?
An innocent misrepresentation has all the elements of fraud except scienter. The misrepresentation is made innocently not intentionally. (not punitive)
What are the options if a party commits an act that constitutes anticipatory repudiation?
Treat the repudiation as an immediate breach and Sue for damages immediately.
Ignore the repudiation, await the time specified for performance, and sue if the repudiation party does not perform.
Cancel the contract
What is a gratuitous surety?
Is one that it’s not compensated for his promise to the creditor.
If the creditor does anything that that the gratuities surety’s risk the surety’s obligation is discharged.
What is a surety right of exoneration?
If the debtor fails to pay, the surety may bring a suit for exoneration to compel the debtor to pay. The surety may do this prior to paying the creditor
What is the surety right of subrogation?
Once the surety pays the creditor, the surety may enforce any right that the creditor had against the debtor. For example, if the creditor was a secured creditor, the surety would gain the rights of a secured creditor upon payment.
What is a surety reimbursement?
The surety is entitled to reimbursement from the debtor from any amounts that the surety paid. This is also called indemnification.
What is a quasi-contract?
It is not a contract but a remedy to prevent unjust enrichment.
Name a circumstance in which a promise will be enforced without consideration.
Detrimental reliance and Promissory estoppel
What is promissory estoppel?
Promises to donate are legally enforceable
Basically; you can’t tell a charity; “Hey; if you buy this $100;000 piece of land; I’ll pay for the building that will go on it;” and then renege on your promise
What is detrimental reliance?
Promises made by one party and detrimentally relied upon by another can be enforced without consideration. For the doctrine to apply the promise must be reasonably relied upon and detrimental.
