M3: Contracts Flashcards
What is a contract
agreement between 2+ parties enforceabl in law
Does a contract need to be in writng?
NO
Qualities of a contract
- 2+ competent parties (adults not disabled)
- Mutual Consideration
- Act voluntarily
- enforceable judicially
- not necessarily in writing
pros of contracts
CERTAINTY
defines rights and obligations <3 can be specific or general
Binding promises to create certainty so each party receives what they bargained for
Why make a contract?
so no need to go through litigation
Is every agreement a contract?
NO!
What are the legal ingredients of a contract?
- intention to create a legal relationship: both must want to enter a relationship that binds them in law
- offer and acceptance: requires one party offr to do something that other part accept the offer
- Mutual consdieration: both parties should gain some value!
- Legality: must conform to the law
What makes a valid offer?
an offer is a promise to enter into a contract on specified terms as soon as it is accepted
express/implied identification of:
- parties
- product
- price
other stuff can be general
what is acceptance?
Accetance: willingenss to enter into a cntract
-> when offer is uncondiitonalyl accepted!
how is acceptance communicated?
if specificed method, that method is mandatory! if not specified than any reasonable communication is allowed
acceptance can also be indicated by conduct!
not true in every case but typically true
MUTUALity of itnention
for contract to arise there must be a meeting of minds on essential terms, consensus ad idem
court test for mutuality of intention
REASONABLE PERSON TEST! understand what the parties said to each other and from what they did following contractual formation
consideration
both must exchange something of value
how dos the court assess consideration?
not HOW much value is exchanged, just any value has exchanged
what if one party does not exchange any value?
unilateral contract which is not enforceable agreement
gratuitious promise
consideration: forebearsnec
a promise NOT ot do something 9something is being exchanged)
contract: if you pay me 10K i wont sure you for brekaing my leg
how can offers be terminated
If offer is revoked befre acceptd: no contract
REVOCATION: withdrawl at any time, as long as communicated before it is accepted, contract doesnt exist
LAPSE: offer expires on a specified time, or reasonable amount of time
REJECTION: offerree rejects it! only be accepted if revied by offeror with a new or revised offer. If the offerree rejects it and then later reopens it IT WILL BE A NEW OFFER! NO LONGER THE SAME
COUNTEROFFER: this is an implied rejection! any change of a material term is a counteroffer that changes the offer
DEATH/INSANITY: if either offeror/offeree dies, contract is assumed to be dead. but if deceased was not anticiapted then their estate can continue the contract
is not reading the terms of the contract, does the contract become void?
NO! you have to abide it
what are exceptions to contracts?
- unequal relationship (balance of power)
- misrepreseentation of details
- defects in the contract etc.
what is void vs voidable
VOID: CONTRACT SO FLAWED THAT IT WAS NEVER VALID! did not ever give rights/obligations; typically a statute is against this
VOIDABLE: Contract with a flaw but not a super serious one that voids the whole contract; when it is rescinded then it is treated as if it never existed; reasons: misrepresentation, undue influence, etc.
Voidable contract, 2 options:
- void it: it is treated as not valid from the start
- ratify it: it is treated as valid from the start, notwithstanding flaw
Recission vs repudiation
Recission: validly and lawfully renouncing the contract; parties allowed to treat contract as if it was void from beginning, AND NO ONE IS PENALIZED! parties are entitled to be put in og position pre-contract. THERE MUST BE A PROPER LEGAL REASON
Repudiation: Unlawful renunitaion of a contract that puts you in the wrong/ Basiclaly this is a party without a proper legal basis decides not to be bound by a contract so THEREFORE THIS IS UNLAWFUL
minors are not bound to any contracts that could e deterimental to them
only bound by contracts for essentials + beneficial contracts of employment
3 categories of misrepresentation
- fraudulent: deliberate intent
- negligent: only actionable when special relationship between speaker and plaintiff (requries proof of duty of care)
- innocent: no intent to decieve so no right to claim dMges
remedies to types ofmisrepresentation
fraudutent: RESCISSION + DAMAGES
negligent: RESCISSION + DAMAGES
innocent: RESCISSION IN CONTRACT
Mistake + 3 types
mistake may prevent parties reaching an agreement consensus ad idem; even though there is a meeting of the minds
- Common mistake: same mistake- so void or voidable
- Mutual: both parties msitaken about a term(s) cuz diff facts; VOID; NEVER a meeting of minds
- Unilateral: an error made by one party and they dont do anything to enlighten other party
Rectification
Illegality
- common law: contrary to public policy
- statuatory: contrary to statue
what contracts need to be in writing
- contracs dealing with land
- contracts dealing with guarantees
how to manage the risks of unenforceability
4 reasons why contractual relationship may end
- performance: completed contract
- mutual agreement: b4 contract is formed the parties voluntarily end
- breach: serious breach may release innocent party from contract
- frustration: incapable of performance; prevention is force majora clause
Performance
- all contractual obligations (express and implied) are carried out entirely
- EXACTLY as in the contract
- any failure to perform exactly and precisly: can result in damages for breach
Mutual agreement
- end all rights and obligations
- assign rights/onligations to athird party
(transfer of property, interest, or rights from one person to another, like a debtor)-> doesnt require consent of all parties - novate rights and obligations under contract (new contract is in place for an exisitng one)-> requires consent of all parties
breach of contract: condition or warranty
condition: improtrant term, if breached, gives sinnocent party right to terminate contract and claim damages
warranty: minor term, if breached gives innoecnt party right ot claim damages only
how many damage types
6 tyoes
boilerplate clauses
common clauses that are repeated a lot
steps
- title & intro
- preamble/recital: explains what contract is about
- definitions and interoreationsL defined terms
- body of contract
- price
- conditions`
- representations and warranties
- boilerplate provisions
quantum merit- equitable remdy WHEN NO CONSIDERATION
provide remedy whn no express or implied contract’ where work has been preformed
Paid reasonable amount
offer acceptance and consideration: 3 hallmarks of contract
without this contract doesnt exist
promissory estoppel
typically a gratuitious promise is NOT enforceable but…
but if one of the parties does actions to their own detriment due to grat promise
then a contract exists
equitable princples
-quantum meriut
-Promissory Estoppel
privity of contract
only party to the contrat are bound by it
basically 3rd parties like benficiaies cant sue on anothers behalf
assignment
benefits in contract being transferred
steps to contract law
- was a contract formed?
->what was the offer, was there acceptance, were parties legal, legal requirements ( see the slide)
for case study number 2, it’s going to be even easier, because contracts are.
Once you identify the issue, you just need to figure out the legal tests and analogy of facts is less relevant, more so. How you go about assessing what happened
through the legal test is easier. So.
whereas with negligence you were trying to find something more similar in terms of facts here it’s even less
important because the way the courts apply legal tests and contract principles. You’ll see it’s
it’s a bit easier.
But identifying the issue.
Once you’ve identified the issue, go to the CD go to contracts, click and view influence, and there it is magic.
rules of construction & interpretations
society functions on promises made & promises kept! if contract has offer acceptance and consideration then courts iwll bend over backwards to enforce them
There are many rules of construction
RoC: Express Terms
Implied Terms
Ambiguity
-> plain contextual meaning of the words in terms of the contract
-> words that arent written but implied by necessity and contract because it is common sense (business efficacy, established custom, previous dealings, stat requirements like sale of goods act)
-> 2 ossible interpretations of the law; court allows for additional info (like parole evidence rule)considering full text
anticipatory breach
type of breach occurs before
