lesson 2: intention, certainty, and privity Flashcards
5 contract essentials
consensus, consideration, intent , legality, capacity
consensus is
offer + acceptance
and objectively
consideration
each party must receive something of value
intent
Parties must intend to create a legally binding contract
legality
contract myst be for a legal purpose
capacity
parties must have legal capacity to enter into a contract
letter of intent
Works as a framework with some binding/not binding components
3 elements of lack of certainty
Essential term missing (e.g., price).
Agreement to agree (future negotiation required).
Essential term too vague.
intention
people shouldn’t be legally bound if that wasn’t what they were intended
witnessed and legally signed document is a clear indication of
intention to be legally boudn
privity of contract
only parties to a contract have rights/ obligations under it
third parties generally …
cannot enforce a contract
in a business intent is bound or not bound?
intent to be bound is presumed unless explicitly excluded
in family and social agreements, intention is …
not assumed
courts interpret agreements to avoid …
uncertainty
3 scenarios when certainty becomes an issue
- essential term is missing
- it is an agreement to agree
- essential term is too vague
agreement to agree is not a
contract
courts seem more likely to enforce a case where one party has acted in
bad faith
when the mechanism fails, courts hold that
there is no contract for lack of certainty or hold for a fair/ reasonable price
courts will not make agreements for people but …
arbitrators can make agreements for parties
2nd kind of uncertainty
vagueness
a signed contract…
binds a party even if unread
parol evidence rule
no external evidence can contradict written terms
written contracts supersede..,
prior discussions