FINAL Prep Flashcards
What is a Contract?
legally enforceable agreement that is created when two or more competent parties agree to perform, or to avoid performing, certain acts that they have a legal right to do and meet certain legal requirements.
Sources of Contract Law
- Article 2 of the UCC is relevant to contract law but only applies to transactions in goods or other tangible personal property.
- Common law, on the other hand, is the source of contract law regarding the sale of fixed assets, services or intangibles.
Elements of an Enforceable Contract
- Offer and Acceptance with Mutual Agreement
- Consideration
- Competent Parties
- Legality of Purpose
- Proper Form - Not formally said in the book
Oral Contracts
Not in writing or signed by the parties, but is a real contract created entirely by the conversation of the parties.
Written Contracts
Reduced to writing on a permanent surface. A written contract can be simply a handwritten note or any other memorandum containing the terms of the agreement, as long as it is signed by the party or parties who wish to be bound by the agreement.
Express Contracts
○ One that specifically states the agreement of the parties (either written or oral)
Implied Contract
The terms and actions of the parties dictate an implied contract.
Formal Contract
Also referred to as specialty contract, it is a written contract under seal. The seal may consist of simply the word Seal or L.S. (locus sigilli), a scroll, a wafer or an impression on the paper.
Simple Contract
It is an informal contract made without seal (even though the subject matter of the contract may be extremely complex and may involve huge amounts of money).
Entire Contract
○ Also known as indivisible contract, it has two or more parts.
Each part is dependent on the others for satisfactory performance. Such a contract must be completely performed.
Divisible Contract
○ It is made up of two or more parts, and each part is independent of the others.
Executory Contract
○ It is a contract where a future act or obligation remains to be performed under its terms.
○ A contract is completely executory if no part of it has been performed.
It is partly executory if some parts been performed and some have yet to be performed.
Executed Contract
○ If all the terms of the agreement have been fully performed by both parties, it is an executed contract.
It is more a record of an agreement that has been completed by all the parties.
Valid Contracts
- contracts that contain all legal elements
- contract can be valid but unenforceable
void contracts
- Agreement that lacks one or more of the essential elements
- object is illegal or has defect rendering it NOT a contract
- cannot be enforced; not true contract
