Midterm Review Flashcards
For a contract to be formed, the parties must have (1)
mutual assent
An offer made in jest, even accepted by the offeree, is not an (1)
enforceable contract
An offer can be accepted only by a person who (1) and (2). If a person does not know about an award but returns the dog anway, this does not constituted valid (3).
- knows about the offer
- intends to accept
- acceptance
Definition of a contract
Oral or written agreement between two or more persons that is an exchange relationship, involving at least one promise and which is legally enforceable.
Bilateral contract
A contract in which both parties make promises
Unilateral contract
A contract formed by one party acting in response to a promise made by another party
Express contract
A contract in which–either orally or in writing–the terms are stated clearly, definitively and unambiguously
Implied contract
A contract manifested either verbally or by action, that does not have expressly stated terms
executed contract
a contract in which all obligations have been met
promise
an undertaking to act or to refrain from acting in a specified way at some future time
void
having no legal effect, as if it never existed–thus, not enforceable
agreement
a meeting of the minds
voidable
one mor more party may, at its option, invalidate the contract
promissory estoppel
theory under which a promise can be enforced, depite lack of consideration, because of reliance on that promise and knowledge of that reliance
objective theory of contracts
standard by which it is determined whether there was a meeting of the minds–mutual assent–between parties. Asks whether the ordinary, reasonable, prudent (ORP) person would believe a contract was formed.
offer
an indication of willingness to enter into a contract, communicated to the offeree
acceptance
manifestation of asset to the terms of an offer, in a way invited or required by the offeror
5 rules of offer and acceptance
- offer must be communicated to the person/persons to whom it is addressed (must be known by offeree)
- offer must indicate a desire to enter into a contract
- offer must be directed at some person or group of persons (defined or sometimes undefined)
- offer must invite acceptance–offeror can stipulate terms of the acceptance (e.g., reasonable, timely)
- offer must create reasonable understanding that upon acceptance, a contract will arise without further approvial or action on the part of the offeror
Is an offer in jest able to be accepted for an enforceable contract?
No. The offer does not indicate a desire to enter into a contract, and does not create reasonable understanding that upon acceptance, a contract will arise.
Is an advertisement an offer?
No. An advertisement is an offer to “negotiate” because it is aimed generally. If the offeree is more clearly identified and terms are defined, it can become an offer that upon acceptance creates a contract.
Is an auction an offer?
No. It is a solicitation for bids. Unless the auction is said to be “without reserve,” the auctioneer may withdraw the item at any time prior to bid-taking. The bidder may also withdraw his bid at any time.
Are negotiations an offer?
No. Negotiations are the communication that you “will consider this price.” They are a statement of future intentions, whereas an offer requires present intent.
Are intents to contract in the future offers?
No. (e.g., letters of intent, negotiations)–offers must involve present intent to enter into a bargain. Future intent does not imply readiness to be bound.
Is acceptance by silence valid acceptance?
At common law, it was invariably not. There are some exceptions, however, such as silence when a service is knowingly being done and the offeree does noting to stop it–will have to pay quantum meruit to avoid unjust enrichment–this becomes a quasi-contract. Exceptions are also subject to subjective determination–such as with book clubs.
Option contract
A contract with a promise to keep an offer open for a stated period of time.
Consignment contract
an arrangement under which goods are placed for sale, but titled does not transfer to the seller
Mailbox rule
Exists in absence of specification as to timing of acceptance. Acceptance in this case happens as soon as the expression of it is out of the offeree’s possession (e.g., when hitting “send” in email). Occurs when dispatched by appropriate means.
letter of intent
an agreement in principle. Not a contract–contract will follow.
Quantum meruit
“As much as is deserved.” Equitable theory of measurement of damages to avoid unjust enrichment
mirror image rule
common law rule that acceptance of an offer must be identical to the offer–the slightest deviation in language constitutes a counter-offer
quasi-contract
a contract that did not form but in fairness is upheld by the courts to avoid unjust enrichment
counter-offer
An alternative offer made by the offeree that acts to reject the original offer
manifestation of mutual assent
appearance that an agreement has been reached–that there is a meeting of the minds
by operation of law
an offer may be terminated by events such as death of a party, illegality, passage of time, or destruction of the subject matter
consideration
something promised or done that has the effect of making an agreement legally enforceable
Difference between a contract and a gift
Consideration makes a contract enforceable as a contract, rather than unenforceable as a gift. (e.g., “no purchase necessary” in contests avoids a contractual relationship)
pre-existing duty
a promise to do something one already has a legal obligation to do, or forbear doing something one is not legally entitled to do–neither of which makes for a valid contract
illusory
consideration that appears to obligate a party but in reality does not
sham consideration
The Stated consideration did not really occur. The term consideration is used, but it not given.
accord and satisfaction
agreement by parties to give and accept payent different from what was stated in the original contract
condition precedent
an event that must occur before a contemplated contract is complete
liquidated debt
a debt, the amount of which is not in dispute
not doing something one is legally entitled to do
forbearance
bargained for exchange (bargain)
each party gets something to which it was not entitled before the contract, and each party gives up something
gift
executed transfer of property, without consideration, and for which the receiver of the propety is not required to do anything in return
identification clause
clause in a contract that can identify parties and addresses, dates and the type of contract
recital clause
clause in a contract that sets out offer and acceptance and may include background and the reason for the contract. Not part of the contract.
body of the contract
part of the contract that sets out terms and conditions, obligations and responsibilities of the parties
parol evidence rule
applies to oral or written negotiations done before completion of the integrated contract which are not admissable as evidence because they contradict or change the integrated contract
boilerplate
standard language that can be included in any contract because it is not adapted to the specific parties or circumstances
legalese
formal, archaic language use in contracts to impress clients
scrivener’s error
a typographical error or a drafting defect
self-proving document (clause)
a document for which the signatures have been verified and sworn to before a notary public. Can be admitted as evidence without the need to call those who signed the document/clause
merger clause
clause that states that the contract is complete and final
incorporated by reference
reference to an outside document not part of the contract but which parties wish to make part of the contract by referencing it
invalid assent is (1) that (2). It can be (3) or (4).
- wrongful conduct
- invalidate assent
- non-intentional
- intentional
misrepresentation
a false statement made without intent to deceive upon which a party justifiably relies to his or her detriment
fraud
a false statement made with the intent to deceive and upon which a party justificably relies to his or her detriment
fraud in the inducement
fraud that relates to the party’s motivation for entering the contract
fraud in the execution
fraud that relates to the nature of the actual contract/ agreement
silence as fraud
having a duty to disclose but knowingly concealing the truth
puffing
opinion; “sales talk”
mutual mistake
all parties are mistaken as to a basic assumption of the contract
unilateral mistake
only one of the parties is mistaken as to a basic assumption of the contract
undue influence
where one party has a strong influence over the other party and abuses their position of dominance to the disadvantage of the other party.
unconscionable contract
A contract that is so unfair or so unreasonable that it “shocks” the conscious.
Duress
A wrongful threat or act that overcomes the free will of the other party.
intent to deceive
Knowingly. Knowledge that a statement is false and is offered to induce another party into an agreement.
justifiable reliance
The reliance upon the other party’s assertion is reasonable, and to the detriment of the person so relying.
basic assumption of fact
A fact that is an essential term of the contract.
fiduciary relationship
One party is obligated to act in the best interest of another party.
bargaining power
the ability to negotiate; the ability to influence
scienter
having a guilty mind, knowledge of the falsity
Severable (Severability Clause)
Clause that states that if a part of a contract is unenforceable the courts may severe, edit out, the unenforceable clause and enforce the remainder of the agreement.
Cognovits (Confession of judgment clauses)
It is a clause that permits the immediate entry of judgment without notice or opportunity to present a defense.
Exculpatory clause
an attempt by a party to excuse themselves from liability for their own tortious acts
indemnification clause
When one party agrees to compensate the other party for any losses they may incur that arise from the contract.
contrary to public policy
Something that is not good for society
insurable interest
One must have a legitimate financial interest in a person to insure their life.
arms length transaction
the parties are operating under equal status and have equal negotiating power.
moral turpitude
To act contrary to the duties which a man owes to their fellow man or to society in general. It is conduct that is contrary to justice, honesty, modesty, or good morals.
covenant not to compete
provision under which party agrees to refrain from engaging in specified business activities
The 10 areas that wil probably relate to hypothetical scenarios
- fraud in the inducement
- the Parol Evidence Rule
- Offers made in jest
- illusory consideration
- Promissory Estoppel
- Intent to contract
- offer and acceptance
- mutual mistake
- contract v. gift
- misrepresentation
