lesson 2: intention, certainty, and privity

Question 1

5 contract essentials

Answer 1

consensus, consideration, intent , legality, capacity

Question 2

consensus is

Answer 2

offer + acceptance
and objectively

Question 3

consideration

Answer 3

each party must receive something of value

Question 4

intent

Answer 4

Parties must intend to create a legally binding contract

Question 5

legality

Answer 5

contract myst be for a legal purpose

Question 6

capacity

Answer 6

parties must have legal capacity to enter into a contract

Question 7

letter of intent

Answer 7

Works as a framework with some binding/not binding components

Question 8

3 elements of lack of certainty

Answer 8

Essential term missing (e.g., price).

Agreement to agree (future negotiation required).

Essential term too vague.

Question 8

intention

Answer 8

people shouldn’t be legally bound if that wasn’t what they were intended

Question 9

witnessed and legally signed document is a clear indication of

Answer 9

intention to be legally boudn

Question 10

privity of contract

Answer 10

only parties to a contract have rights/ obligations under it

Question 11

third parties generally …

Answer 11

cannot enforce a contract

Question 12

in a business intent is bound or not bound?

Answer 12

intent to be bound is presumed unless explicitly excluded

Question 13

in family and social agreements, intention is …

Answer 13

not assumed

Question 14

courts interpret agreements to avoid …

Answer 14

uncertainty

Question 15

3 scenarios when certainty becomes an issue

Answer 15

1. essential term is missing
2. it is an agreement to agree
3. essential term is too vague

Question 16

agreement to agree is not a

Answer 16

contract

Question 17

courts seem more likely to enforce a case where one party has acted in

Answer 17

bad faith

Question 18

when the mechanism fails, courts hold that

Answer 18

there is no contract for lack of certainty or hold for a fair/ reasonable price

Question 19

courts will not make agreements for people but …

Answer 19

arbitrators can make agreements for parties

Question 20

2nd kind of uncertainty

Answer 20

vagueness

Question 21

a signed contract…

Answer 21

binds a party even if unread

Question 22

parol evidence rule

Answer 22

no external evidence can contradict written terms

Question 23

written contracts supersede..,

Answer 23

prior discussions

Question 24

some exceptions to the parol evidence rule:

Answer 24

fruad
misrepresentation
mistake
lack of intent
ambiguity
rectification
collateral agreements
equitable remedy

Question 25

entire agreement clause

Answer 25

to increase certainty and eliminate most of the exception to the parol evidence rule

Question 26

privity of contract

Answer 26

third parties cannot sue or be sued on a contract

Question 27

in order to be a party to the contract,

Answer 27

a promise must have been made to that person and that person must have provided consideration

Question 28

5 exceptions to privity

Answer 28

agency – agency may bind a principal

trusts – beneficiaries may enforce trust obligations

specific performance – exception in equity

tort law – third parties may sue under negligence

statutory exceptions – insurance and consumer laws may override privity

Question 29

employees can claim protection under ran employers limitation of liability clause if 2 circumstances are met even though they are not parties to the contract:

Answer 29

1.contract must extend benefits to the third party

2. third party must act within scope of employment when the loss occurred

Question 30

2 part test for third party enforcement

Answer 30

1. did the contracting parties intend to benefit the third party
2. were third party activities contemplated under the contract

Question 31

third party enforcement only can be used …

Answer 31

defensively not offensively

Question 32

contracts for the benefit of third parties may be enforceable in…

Answer 32

equity