Contracts - Ch. 8 Flashcards
What are the elements of a binding contract?
Offer, acceptance and consideration.
Uniform Commercial Code
A series of model statutory provisions originally drafted by the National Conference of Commissioners on Uniform State Law, it governs commercial transactions and has been adopted by all states, entirely or in part.
Consideration
Anything of value; it must be present for a valid contract to exist, and each side must give consideration.
What steps will the courts take when interpreting an ambiguous contract?
- Read the contract and try to give the words their common sense meaning.
- Determine the parties’ intent
- Apply commonly accepted definitions from the relevant industry or business.
- Interpret the language so as to favor the party who did not draft it
What are the defenses used in contract cases?
- Fraud
- Mistakes of fact
- Undue influence
- Duress
- Lack of contractual capacity
- Illegal contract
Adhesion contract
A contract formed where the weaker party has no realistic bargaining power. Typically a form contract offered on a “take it or leave it” basis.
Unconscionable contract
A contract formed between parties of very unequal bargaining power where the terms are so unfair as to “shock the conscience.”
Offer
In contract law, an indication of a firm desire to enter into an agreement, sufficiently definite that once accepted a contract is formed
To be considered valid, the terms of an offer must contain reference to at least what four items?
- The parties to the contract
- The subject matter of the contract
- The nature of the consideration
- The time for performance
Acceptance
In contract law, an act by the offeree indicating an agreement to be bound to the contract
Consideration
Anything of value; it must be present for a valid contract to exist, and each side must give consideration
Undue influence
When one party is in a position of trust and misuses that trust to influence the actions of another
Unconscionable contract
Contract formed between parties of very unequal bargaining power where the terms are so unfair as to “shock the conscience”
Implied warranty of fitness
An implied promise that the goods being sold will satisfy a special purpose
Implied warranty of merchantability
An implied promise that the goods being sold will be usable for the ordinary purpose for which they were sold
Statute of frauds
A statutory requirement that in order to be enforceable certain contracts must be in writing.
According to the statute of frauds what are the types of contracts that must generally be in writing?
- Contracts involving land, including fixtures, and documents dealing with land, such as mortgages and leases
- Contracts that cannot be performed in one year
- Collateral contracts, those that involve a secondary as opposed to a primary obligation, unless the main purpose is to secure a personal benefit
- Promises made in consideration of marriage, such as prenuptial agreements
- Contracts for the sale of goods valued at $500 or more.
Assignment
The transfer by one of the original parties to the contract of part or all of his or her interest to a third-party
Delegation
The transfer by one of the original parties to the contract of his or her obligations to a third party
Third-party beneficiary
Although not a party to the contract, someone the contracting parties intended to benefit
Specific performance
When money damages are inadequate, the court may use this equitable remedy and order the breaching party to perform his or her contractual obligations
Mitigation of damages
The requirement that the nonbreaching party take Reasonable steps to limit his or her damages
Consequential damages
Damages that arise out of special circumstances that must be foreseeable to the other party
Nominal damages
Damages that are awarded when there has been a breach but no provable damages
