Contractual Relationships I

Question 1

Why do contracts exist?

Answer 1

To make business matters more predictable

Question 2

Judicial Restraint

Answer 2

A court taking a passive role and requiring the parties to fulfill whatever obligations they agreed to, whether the deal was wise or foolish. Makes the law less flexible but more predictable.

Question 3

Judicial Activism

Answer 3

A court will ignore certain provisions of a contract, or an entire agreement, if the judge believes that enforcing the deal would be unjust. Will sometimes artificially create a contract to avoid injustice. Makes law more flexible but less predictable.

Question 4

Agreement

Answer 4

One party must make valid offer, and the other party must accept it

Question 5

Consideration

Answer 5

There has to be bargaining that leads to an exchange between parties

Question 6

Legality

Answer 6

The contract must be for lawful purposes

Question 7

Capacity

Answer 7

The parties must be adults of sound mind

Question 8

Four Elements to a Contract

Answer 8

Agreement, Consideration,

Legality, Capacity

Question 9

Consent

Answer 9

Neither party may trick or force the other into the agreement

Question 10

Written Contracts

Answer 10

Some contracts must be in writing to be enforeable

Question 11

Third Party Interests

Answer 11

Some contracts affect people other than the parties themselves

Question 12

Performance and Discharge

Answer 12

If a party fully accomplishes what the contract requires, his duties are discharged

Question 13

Remedies

Answer 13

A court will award money or other relief to a party injured by a breach of contract

Question 14

Contract

Answer 14

A promise that the law will enforce

Question 15

Non-competition Agreement

Answer 15

One party (usually employee) agrees not to enter into or start a similar profession or trade in competition against another party (usually employer)

Question 16

Bilateral Contract

Answer 16

Both parties make a promise. Promise for a promise

Question 17

Unilateral Contract

Answer 17

One party makes a promise that the other party can accept only by doing something (lawn mowing example)

Question 18

Express Contract

Answer 18

The two parties explicitly state all important terms of their agreement

Question 19

Implied Contract

Answer 19

The words and conduct of the parties indicate that they intended to and agreement

Question 20

Executory Contract

Answer 20

When one or more parties has not fulfilled its obligations

Question 21

Executed Contract

Answer 21

When all parties have fulfilled their obligations

Question 22

Valid Contract

Answer 22

One that satisfies all of the law’s requirements. A court will therefore enforce it.

Question 23

Unenforceable Contract

Answer 23

Occurs when the parties intend to form a valid bargain but a court declares that some rule of law prevents enforcing it.

Question 24

Voidable Contract

Answer 24

Occurs when the law permits one party to terminate the agreement.

Question 25

Void Agreement

Answer 25

One that neither party can enforce, usually because the purpose of the deal is illegal or because on of the parties had no legal authority to make a contract.

Question 26

Remedy - Promissory Estoppel

Answer 26

No contract made BUT defendant made a promise that the plaintiff relied on

Question 27

Remedy - Quasi-contract

Answer 27

No contract made and defendant did not make any promise, BUT did receive a benefit from the plaintiff.

Question 28

Promissory Estoppel is enforceable if…

Answer 28

Defendant made promise knowing plaintiff would likely rely on it, the plaintiff did rely on promise, and the only way to avoid injustice is to enforce promise.

Question 29

Quasi-contracts compensate plaintiff if…

Answer 29

Plaintiff gave some benefit to the defendant, plaintiff reasonably expected to be paid for the benefit and the defendant knew this; and defendant would be unjustly enriched if he did not pay

Question 30

Qantum Meruit

Answer 30

Damages awarded in a quasi-contract, meaning plaintiff gets “as much as he deserved”.

Question 31

Uniform Commercial Code (UCC) Article 2

Answer 31

Governs the sale of goods. “Goods” means anything movable, except for money, securities, and certain legal rights.

Question 32

Article 2 and mixed contracts?

Answer 32

Article 2 governs only if the primary purpose was the sale of goods

Question 33

Common Law

Answer 33

Governs contracts for services, employment, real estate, and certain other things.

Question 34

American Law Institute (ALI)

Answer 34

Drafted Restatement of Contracts, attempting to codify what its members regarded as the best rulings of contract law. NOT LAW, but influences many lawyers as they draft contracts and courts as they decide cases.