Contracts and Companies Flashcards
What is the difference between an express and implied contract?
Express - parties assent to terms through writing or oral agreement
Implied - arises when someone undertakes an obligation through performance
What is the “mailbox rule”?
Unless otherwise specified, an acceptance of an offer becomes effective when sent through the mail
What does the Statute of Frauds dictate in terms of the types of contracts that require written agreement?
The sale of land, wills, and contracts for the sale of goods above a certain amount require written agreement (usually above $5000)
What are the main reasons for why a party can terminate a contract?
A material breach or failure of substantial performance - typically defined within the contract
What are some common considerations when drafting a contract?
Parties, approval for changes, conditions precedent representations, rights upon defaults, risk of loss and insurance, indemnification, disclaimers and limitations of liability, and dispute resolution
What are the different types of damages awarded in contract disputes?
Expectation - The difference between the outcome if the contract had been performed and what the party must otherwise pay to achieve the same result
Reliance- A party’s loss from reliance on another party’s performance
Liquidated - A fix amount to be paid in the case of a breach; courts do not favor these
Specific Performance - a party is compelled to complete the contract (a sale of a unique property)
Unjust Enrichment - The amount the breaching party was enriched at the other’s expense
What is the duty to mitigate?
The nonbreaching party has a duty to mitigate avoidable costs resulting from a breach. They are unable to recover damages for avoidable losses.
What prompted Thompson v. Voldahl?
$275,000 was spent to improve ditches in Iowa. Years later, an additional $25,000 was spent for improvements in specific subdistricts. Landowners were taxed for the improvements. They sued to recover what was paid to the private contractors saying that Iowa failed to hold a necessary public hearing.
What did the court find in Thompson v. Voldahl?
Essentially, contractors enter into agreements with the government at their own risk. The money was illegally awarded and must be returned to the taxpayers, despite the improvements having already been completed.
What are the general requirements of public bidding?
The typically apply above $20,000 for purchases and above $100,000 for construction.
They do not apply to professional services.
Bidders must offer a maximum price, information about their capacity to perform, and provide a bond to protect the bidding authority.
Contracts are awarded to the lowest responsible bidder.
What prompted Lawrence Brunoli, Inc. v. Town of Bradford?
Plaintiff was informed he was the lowest responsible bidder. Offer was withdrawn, citing his failure to attend a previous prebid conference. Plaintiff asserted that the town knew he had not attended and still allowed his bid, and he stated that the bid then went to the second lowest responsible bidder.
What did the court find in Lawrence Brunoli, Inc. v. Town of Bradford?
The plaintiff had grounds for injunctive relief but no monetary damages. Monetary damages are not a more effective deterrent to prevent fraud, corruption, or favoritism in bidding - injunctive relief is sufficient
What are common considerations when selecting an organizational type?
Limited investor liability, the need to raise capital, extent of control over organizational decisions, tax consequences, and the burdens of legal formalities
What are common organizational forms and their benefits?
Corporations - accumulation of capital and limited investor liability
Limited Liability Companies - no tax, but there are still liability protections
Partnerships - no formal filing necessary, but each partner is liable for the acts and obligations of the partnership
Limited Partnerships - Must be filed, but limited partners are only liable to the extent of their investment and have less authority
Trusts - agreement to transfer property with the intent to hold it for another’s benefit
