Law-C6-Contracts Flashcards
What is a contract?
An enforceable voluntary agreement between two or more parties that contains express and implied terms.
What do contracts involve?
Contracts involve offer and acceptance. Rejection is an express or implied refusal to accept an offer. Request for offers is called an invitation to treat.
•GENERALLY, a party can revoke an offer at any time before it has been accepted. An important exception: In the procurement context (ie. a bidding process), an offer in the form of a bid is irrevocable until the end of the evaluation period. In order to be irrevocable, an offer must provide consideration to all parties involved. Consideration is something of value promised by each party to the contract.
Gifts cannot be enforced.
What is Privy?
a condition where only parties to the contract can enforce the contract.
What is Enforceability?
refers to the likelihood that a court would uphold a contract.
What is a Voidable contract?
a contract that can be voided by a party that is not in breach of the contract and may be due to events including these conditions:
Mistake-a misunderstanding with respect to a term of a contract; must have the following features: significant and non-trivial (a material mistake), mutual mistake, mistake made at the time the agreement was made.
Duress-is improper pressure, threats, or coercion used by a party to enter into a contract.
Misrepresentation-is an untrue factual statement made by one party and induces the other party to enter into the contract (misrepresentation fall into 3 categories: innocent, negligent, and fraudulent.)
Unconscionability-is one that is so unfair or opporessive that it would be offensive for the court to enforce it. (eg. no-damages-for-delay clauses may be unenforceable)
Frustration-(or impossibility) occurs when an unforeseen event occurs that makes the performance of the contract either impossible or of no value. In order for this condition to be satisfied, it must not be a risk that was originally allocated to one of the parties. (Force-majeure clauses are typically included in contracts, making this condition difficult to prove true.)
What is an Amendment?
a change to a contract. It is a “mini-contract”.
What is Estoppel?
The other party starts relying on the actions or representations of the other party, rather than on the contract. Wavier of rights are subject to estoppel.
What is a Change directive?
An order by the owner that the contractor proceed with a change to change the work to be performed under a contract that is generally paid for on a cost-plus basis
What is a Change order?
An agreement to change the work to be performed under a contract.
What is Constructive changes?
Changes to the work to be performed under a contract where an owner refuses to acknowledge that a change has occurred.
What is a Breach of contract?
The failure by one party to perform his or her obligations
What are reasons for breaching a contract?
Inability-a situation where on party would like to perform its obligations, but is unable to (eg. lack of financial resources).
Inadvertence-Refers to the unintentional breach of contract.
Disagreement-Means that two of the parties interpret the meaning of the contract differently. Protesting party can “perform under protest”, which means that this party gives the other written notice that it will be performing the work on the understanding that it may exercise its right to argue that it is entitled to additional payment for that work.
Lack of profit-Breach contract may sometimes occur because one party finds that it is more costly to perform than to face the legal consequences of non-performance.
What are Damages? What are the three limitations of Recovery? What are the two kinds of damages?
Refers to the compensation the court awards tan injured party.
•Most common remedy for breach of contract is damages. Amount of money awarded is supposed to put the innocent party in the same position as the final outcome of the contract if no breach had occurred.
•Recovery of damages is subject to 3 limitations:
1) Mitigation: the party who has suffered a loss must take reasonable steps to reduce or mitigate that loss.
2) Damages cannot be speculative. Ie. there must be proof of damages.
3) Remoteness: the lack of connection between a wrong and a loss.
•Consequential damages: indirect losses
•Liquidated damages: genuine estimates of loss written into the original contract, before any breach has occurred. Eg. Parties agree beforehand that delays will cost damages of $1000/day.
What are the six ways to end/terminate a contract?
- Most common way to end a contract is to complete the performance.
- Fundamental breach: breach that goes to the root of the contract and deprives the innocent party of all or most of the benefit of the contract.
- Simple breach: a breach that does not entitle the innocent party to treat the contract as ended to permit the innocent party to stop performing their part of the contract.
- Repudiation: occurs where one party lets the other party know that it does not intend to perform its obligations.
- Anticipatory breach: occurs where one party communicates to the other party before the time for performance of an obligation that he or she intends to breach that obligation of the contract. This breach is fundamental in nature.
- Termination clause: clause that lists the acts by either party that entitle the other party to terminate the contract.
