CONTRACTS EXAM Flashcards
Contract
A binding promise that courts will enforce
2 Sources of Contract Law
UCC and Common Law
UCC is ______ Law
State
Perform
Successful Completion of a contractual duty
Express
K formed in words
Implied
K inferred from conduct
Bilateral
One promise in return for another promise
Unilateral
One makes promise, one accepts
Executed
K fully performed by all parties
Executory
K not fully performed
Valid
Meets all requirements for K
Voidable
K may exist, voidable by innocent party
Unenforceable
Valid K but enforceable by 1+ parties
Examples of voidable Ks
Physical Threats, Fraud in the Execution
Unilateral Examples:
Scholarship, Mowing lawn
When can an offer be revoked?
Anytime before acceptance
What is NOT required for a firm offer to be unrevokable?
CONSIDERATION (buyer doesnt have to pay to keep offer open)
When is a K formed?
Upon acceptance
K must be in writing if amount is greater than:
$500
When is email offer effective?
When open or viewed
When is email acceptance effective?
When sent to the correct email address
Variant Acceptance
Acceptance that contains different terms than the offer
Mirror Image Rule
CL, Offer and Acceptance must be identical
Battle of the Forms
UCC
Duress
Wrongful act or threat that overcomes the free will of a party
Undue Influence
Taking unfair advantage of a person by reason of a dominant position based on a confidential relationship
Bargained for Exchange
Legal Detriment and Legal Benefit NEW to each party when K forms
Settlements are
MODIFICATIONS
Undisputed Debts
When both parties (in K or tort) agree that the debt is owed and agree to the amount owed
Original Contract + Modification =
Modified Contract
CL: Consideration Req + Consideration Req*
*EXCEPTION: Original Contract is Executory and in light of facts that could not be anticipated at Original Contract’s formation — the modification is fair
UCC: Consideration Req + No Consideration Req
Assumes good faith, if no GF, still enforceable if modification is in writing or has consideration
Can you sue over a disputed debt?
NO
Undisputed debt
where both parties have agreed a debt exists and agree on the amount to be owed (K and Torts)
Promissory Estoppel
Promise made by unharmed party that harmed party justifiably relied on AND harmed party was materially damaged due to change of position because of promise
Substitute contracts
Revoke previous contract and enters into a new one
Ursury
Lender charges too much interest (interest + fees)
3 Outcomes for Ursury
- No principal or interest recovered
- No interest recovered
- No interest over legal amount recovered
NOT A COVENANT NOT TO COMPETE
NDA, Garden Leave, Retirement Payments
Law assumes _______ about capacity
That people have capacity unless they can prove otherwise
Are minors still liable for their torts?
YES
Main Purpose Doctrine
Happens when Guarantor gets the main economic benefit from debt
Equal Dignity Doctrine
If agent signs, it must be in writing to be enforceable
Parol Evidence Rule
Negotiations or agreements that occur prior to or contemporaneous with the formation of a written agreement
Can an integrated, written K be changed with Parol Evidence?
NO
3 Situations where rights can be assigned to someone else:
Parties assign rights to 3P, Parties assign duties to 3P, 3P Beneficiary
Who does Assignee give notice to?
Obligor under the assigned right
General Rule for Assignment of Rights
First to receive assignment prevails
Minority Rule for Assignment of Rights
First to give notice to obligor prevails
Novation
Delegator gets their duties released under K from Obligee
What type of law does not allow for delegation?
COMMON LAW
Conditions
An uncertain event the happening or non-happening of it affects the duty of performance
Conditions Precedent
Event must occur before performance is due
Anticipatory Repudiation
Back out of K prior to performance
Subjective Impossibility
Promisor (but not others) cannot perform; promisor not discharged from contract
Objective Impossibility
Performance cannot be done by anyone; generally discharges the promisor
Frustration of Purpose
if one of the basic assumptions on which the contract is based changed by no fault of the contracting parties, duties may be discharged
Commercial Impracticality
Performance can only be foreseen in unjust hardships
Contract Remedies
The nonbreaching party asks the court to award them one or
more of the contract remedies
Equitable Remedies
Granted at the discretion of the court
Liquidated Damages
An amount of damages agreed to by the parties in the contract
Benefits of Liquidated Damages
Dont have to prove actual damages, can deduct from remaining payments
Threats of Liquidated Damages
Court can see as penalty, may have to prove damages
Reliance Damages
Puts injured party in as good a position as if K had never been made
Nominal Damages
“moral victory”, but can collect atty fees & costs
If you sue and win, do you automatically get court and attorney costs?
NO
Mitigation
Act of reducing or avoiding damages
Under the UCC, Mitigation is called
Cover
If non breaching party cannot mitigate, breaching party will:
Be liable for all damages
Reformation
Court corrects a K to conform to the
agreement
Specific Performance
Court orders breaching party to perform
Injunction
Court prohibits a party from doing a specific act
Rescission
Restores BOTH parties to the place they were before entered into K
Restitution
the restoration of something lost or stolen to its proper owner
Time is of the Essence Clause
CL, counts as material breach and nonbreaching party can sue for damages
