Exam 3 - ch 12 Flashcards by Lynette Lopez

t/f; a contract can be valid even if it isn’t written

true

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_____ create expectations as to how parties to agreements will conduct themselves in the future.

contracts

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If a party to a valid contract does not carry out a promise, a
court will ______ the contract and provide some form of
______ or ______ to the non-breaching party.

enforce, relief, remedy

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______ is an agreement that can be enforced by law between 2 or more parties who promise to perform or not perform some act now or in the future.

contract

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a _____ isn’t exactly a contract

agreement

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contractual promises are ____

duties

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_______ theory of Contracts – The apparent intention of a
party to enter into a contract is determined by the objective,
outward manifestation of his or her assent as it would be
interpreted by a reasonable person.

objective

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what are the 3 objective factors of contracts?

words, actions, circumstances

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what are the 4 requirements that make a Valid Contract?

agreement, consideration, contractual capacity, legality

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state the requirement:
the mutual assent and agreement of the
parties must be evidenced by an offer and an
acceptance.

agreement

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state the requirement:
legally sufficient and bargained-for
consideration must be exchanged for contractual
promises. think price

consideration

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state the requirement:
each party to a contract must be
recognized as being legally competent to enter into
contracts

contractual capacity

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state the requirement:
he purpose and subject matter of the
contract must not be contrary to law or public policy

legality

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t/f: the law assumes that all adults posses capacity

true

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what are 2 defenses to the enforceability of a contract?

voluntary consent
form

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Voluntary Consent:
consent must be voluntary and not based on… (3)

mistake, fraud, undue influence, or duress

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Form:
sone contracts must be in ______ and _____ by the party being sued

writing, signed

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what is the name of the party making an offer to enter into a contract?

offeror

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what is the name of the party who, if interested in the offer, may accept the contract?

offeree

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a bilateral contract can be though of as…

a promise for a promise

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_______ contract – Reciprocal promises are exchanged
by the parties so that the promise of one party is
exchanged for the promise of the other

bilateral

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a bilateral contract is formed as soon as…

the promises are exchanged

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a _______ contract forms when the act is PERFORMED. The offeree must ___ the act to _____ the contract.

unilateral, do, form

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_______ contract – One party makes a promise in
exchange for the other party’s actually performing
some act or refraining from performing some act.

unilateral

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what are the 5 different classifications of contracts?

Bilateral v. Unilateral Contract Express v. Implied Contracts Executed v. Executory Contracts. Enforceable v. Unenforceable Contracts. Formal v. Informal

_______ Contract – The terms of the agreement are fully and explicitly stated in oral or written words. EX) apartment lease

express

______ Contract – The terms of the agreement are inferred from the conduct of the parties

implied

what are the 3 steps to establish an implied contract? (what the plaintiff has to prove)

1. P furnished a good/service 2. P expected to be paid & D should've known that 3. D had a chance to reject the good/service but didn't

t/f: if the defendant wasn't aware of the good/service, then they didn't have a chance to reject it

true

______ contract - both parties performed the formed contract FULLY

executed

______ contract - if neither or only 1 party performed the contract

executory

_____ contract - A contract that by law requires a specific form, such as being executed under seal, to be valid.

formal

negotiable instruments, which include checks, drafts, promissory notes, bills of exchange, and certificates of deposit are examples of which contract?

formal contracts

_____ contracts - A contract that does not require a specified form or formality in order to be valid. what are the also known as?

informal, simple contracts

most of the contracts we talked about in class were ______ contracts

informal

in a ______ Contract all elements that are necessary to form a contract are present.

valid

valid contracts are either ______ or ______

enforceable, unenforceable

why might a valid contract be unenforceable?

because a party failed to satisfy a legal requirement of the contract

______ Contract. a. A valid contract exists but one or more of the parties has the option of avoiding his or her contractual obligation. b. The party with the option can elect to void the contract or ratify it

voidable

if a minor is involved in a contract, it is ______ contracts made by ______ ______ may be voidable

voidable, mentally incompetent

if a contract is voided, both parties are ______ from it. if a contract is ratifies, both parties must fully ______ the contract,

released, perform

______ Contract. a. Agreement has no legal effect and is not really a contract. b. No legal obligation exists on the part of either party

void

Agreement is one of the 4 requirements of a contract. what are the 3 requirements of the Offer?

1. serious intent 2. reasonable certain & definite terms 3. communication

an ____ is a promise/commitment to do or refrian from an action in the future

offer

the offeree's acceptance creates a...

legally binding contract

What is intention (1st req. for an offer)?

the offeror must manifest his/her objective, serious intention to be bound by the terms

which was the landmark case that involved 2 marries couples? One possessed the Ferguson Farm that was highly sought after. Over drinks, the 2 husbands started to make a full deal to sell the farm. They wrote the terms of the contract on a napkin, put the title insurance, price, and ran out of room. it was even rewritten to include the wife's interest and it gets signed. The husband with the land argues that he was kidding about the deal, the other sues him. what are the 2 issues? what did the court say about serious intent?

Lucy v. Zehmer Issue 1: is serious intent present? Issue 2: capacity? Court said that there was serious intent because of everything they put on the napkin and even rewriting it to include the wife's interest.

what are the 6 situations where intent may be lacking?

1. Expressions of opinion - an expressed opinion isn't an offer 2. Statements of intention to make an offer in the future - "I'm thinking about selling" "I'm planning to..." 3. Preliminary negotiations, requests to negotiate - testing the interest 4. Invitations to bid 5. Advertisements, catalogues, circulars, and price lists - treated as invitations to negotiate 6. Live and online auctions

under a bid, there's no deal until...

the bid is given

T/F: agreements to agree to the material terms of a contract at some future date are considered to be binding?

false

that agreements to agree may be enforceable agreements (contracts) if it is clear that the parties...

intended to be bound by the agreements

A ________ agreement can constitute a binding contract if the parties have agreed on all essential terms and no disputed issues remain to be resolved.

preliminary

Definiteness of Terms is the 2nd requirements of a valid contract. what are the 4 terms that are required for the contract to be valid?

1. identify parties 2. identify subject matter of the contract 3. consideration to be paid 4. time of payment, delivery or performance (not always required)

T/F: Courts are willing to supply missing reasonable terms when the parties have clearly manifested their intent to form a contract.

TRUE

T/F: when the parties have tried to use a term, but the meaning is vague, courts will not supply a “reasonable” term in its place.

true

Communication is the 3rd requirement of a valid contract. the offeror must have the ________ of making the terms known to the offeree & those terms must be _____ by the offeree

intent, received

does the offeree need to have knowledge of the terms in the offer under the Communication requirement>

yes

can offers be public?

yes

a contract forfeiting the right to pursue a legal claim is called what?

a release

Termination of the Offer: The offeror’s act of revoking, or withdrawing, an offer is known as...

revocation

a revocation is effective when it is ______

received

what are the types of irrevocable offers? (3)

1. option contracts 2. rejection of the offer by the offeree 3. counteroffer by the offeree.

An _______ contract is created when an offeror promises to hold an offer open for a specified period of time in return for a payment (consideration) given by the offeree. if not period of time is stated, then a ____ period of time is given

option, reasonable

an offer must be revoked in which 2 ways?

1. Express repudiation of the offer (such as “I withdraw my previous offer of October 17”). 2. Performance of acts that are inconsistent with the existence of the offer and are made known to the offeree (for instance, selling the offered property to another person in the offeree’s presence).

What if one of the parties dies during the option period?

if someone dies, the contract dies with them.

What are the 3 things under the Rejection of the offer by the offeree? 1. offeree demonstrates his/her _____ not to accept the offer 2. rejection is accepted when ______ 3. an inquiry made by an offeree is a _______, not a rejection

intent received question

Counteroffer by the offeree: a _______ is a rejection of the original offer and the simultaneous making of a new offer.

counteroffer

Counteroffer by the offeree: a counteroffer ____ the original offer

terminates

Counteroffer by the offeree: What is the mirror image rule?

valid acceptance is the mirror image of an original offer, offeree's acceptance has to match the offeror's offer

T/F: any change in the offer isn't a mirror image

true

Termination by Operation of Law: The power of the offeree to transform the offer into a binding, legal obligation can be terminated by operation of law through the occurrence of any which 4 events?

1. Lapse of time. 2. Destruction of the specific subject matter of the offer. 3. Death or incompetence of the offeror or the offeree. 4. Supervening illegality of the proposed contract.

what are the properties of lapse of time?

- when too much time goes by, the offer is terminated. - if the duration of the offer isn't states, the offer lapses after a reasonable period of time

what is Destruction of the specific subject matter of the offer?

whatever we're selling has been destroyed; subject matter is gone

what is Death or incompetence of the offeror or the offeree?

one party dies before the contract foes through; contract dies w them

what is Supervening illegality of the proposed contract?

a law change makes the contract illegal

acceptance is the 4th requirement of a valid contract. acceptance is a ____ act by the offeree.

voluntary

Acceptance: Can silence constitute acceptance?

no, they must exhibit the agreement with words or other overt conduct

Acceptance: what are the exceptions to Silence as acceptance?

1. the offeree accepts the offer and had the opportunity to reject 2. there was a similar prior course of dealings

Marabel’s restaurant routinely receives shipments of produce from a certain supplier. That supplier notifies Marabel’s that it is raising its prices because its crops were damaged by a late freeze. If the restaurant does not respond in any way. Does her silence constitute acceptance in this situation?

yes, because she had the chance to reject

Communication of Acceptance is the 4th requirement of a valid contract. If a unilateral contract is contemplated, acceptance is affected when the performance is completed; notification of the acceptance is not necessary.