Contractual Relationships I Flashcards
Why do contracts exist?
To make business matters more predictable
Judicial Restraint
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.
Judicial Activism
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.
Agreement
One party must make valid offer, and the other party must accept it
Consideration
There has to be bargaining that leads to an exchange between parties
Legality
The contract must be for lawful purposes
Capacity
The parties must be adults of sound mind
Four Elements to a Contract
Agreement, Consideration,
Legality, Capacity
Consent
Neither party may trick or force the other into the agreement
Written Contracts
Some contracts must be in writing to be enforeable
Third Party Interests
Some contracts affect people other than the parties themselves
Performance and Discharge
If a party fully accomplishes what the contract requires, his duties are discharged
Remedies
A court will award money or other relief to a party injured by a breach of contract
Contract
A promise that the law will enforce
Non-competition Agreement
One party (usually employee) agrees not to enter into or start a similar profession or trade in competition against another party (usually employer)
Bilateral Contract
Both parties make a promise. Promise for a promise
Unilateral Contract
One party makes a promise that the other party can accept only by doing something (lawn mowing example)
Express Contract
The two parties explicitly state all important terms of their agreement
Implied Contract
The words and conduct of the parties indicate that they intended to and agreement
Executory Contract
When one or more parties has not fulfilled its obligations
Executed Contract
When all parties have fulfilled their obligations
Valid Contract
One that satisfies all of the law’s requirements. A court will therefore enforce it.
Unenforceable Contract
Occurs when the parties intend to form a valid bargain but a court declares that some rule of law prevents enforcing it.
Voidable Contract
Occurs when the law permits one party to terminate the agreement.
Void Agreement
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.
Remedy - Promissory Estoppel
No contract made BUT defendant made a promise that the plaintiff relied on
Remedy - Quasi-contract
No contract made and defendant did not make any promise, BUT did receive a benefit from the plaintiff.
Promissory Estoppel is enforceable if…
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.
Quasi-contracts compensate plaintiff if…
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
Qantum Meruit
Damages awarded in a quasi-contract, meaning plaintiff gets “as much as he deserved”.
Uniform Commercial Code (UCC) Article 2
Governs the sale of goods. “Goods” means anything movable, except for money, securities, and certain legal rights.
Article 2 and mixed contracts?
Article 2 governs only if the primary purpose was the sale of goods
Common Law
Governs contracts for services, employment, real estate, and certain other things.
American Law Institute (ALI)
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.
