Mod 26 Contracts Flashcards
Six Elements of a contract neumonic
Only Accuracy Can Pass Law Candidates
Contract
An agreement, a meeting of minds
Six elements of a contract (Only Accuracy Can Pass Law Candidates)
1 an Offer 2 an Acceptance 3 Consideration 4 Proper form 5 a Lawful object 6 two or more Competent parties
Elements of a contract:
Proper form
Sometimes writing is required
Offers have 3 elements
Must be…
1 Seriously intended
2 communicated
3 definite in its terms
Offer element:
Must be seriously intended
Would a reasonable man consider it a serious offer
Offer element:
Must be communicated…
By either words or actions
Offer element:
Must be definite in its terms
Must include price
Advertisements and price quotes are not official offers, they are…
Invitations to deal
Acceptances have 3 elements
1 must be unconditional
2 must be communicated
3 can only be accepted by party to whom it’s made
Element of Acceptances:
Must be unconditional
Must comply with all of offeror’s terms or it’s a counteroffer
Element of Acceptances:
Must be communicated by…
Actions or words
The following 3 will end offers only when they are received
1 counteroffers
2 rejections
3 revocations
Counteroffers end offers but are…
Effective only when received
Rejections end offers but are only effective when…
Received
Revocations end offers but are effective only when received. Offeror may usually…2
1 Revoke any time before acceptance
2 even if offeror promises offer Will be open
Option Contracts are…
Why?
Irrevocable
Party pays consideration to keep offer open
In UCC Sales Firm Offers are irrevocable without consideration if made by…3
1 merchant
2 in writing and
3 guarantees offer will be held open
Offers end at…
Time stated
If no time is stated for end of an offer, the offer…
Ends at reasonable time
What 2 things end offers immediately, but do not end most contracts?
1 death
2 insanity
Destruction of subject ends…
Offer immediately
Sale of subject only revokes offer when…
Offeree learns of it, not when it is sold
Mailbox rule 3 (1 and and 2 ors)
1 an acceptance is valid when sent if properly addressed and
2 offered uses express means of communication or
3 any reasonable means if none is stated
Offeree uses express means of communication, what does this mean?
Means offeror said to use
Any reasonable means if none is stated, what does this mean?
Same means offeror used or faster means
If offer states acceptance net effective until received then it’s…
Not effective until received
If offer states you must use a specific means of communication, you must…
Use that means
Bilateral contract
Promise for a promise (most contracts are bilateral)
Unilateral contract
Promise for an act (a reward)
Under a unilateral contract, which is a promise for an act (a reward), the offeree must…
Know of reward to accept
Void, define, example
Contract is unenforceable by either party
Ex. Illegal, no meeting of minds
Voidable, define , example
Legal contract but one party can rescind (cancel, disaffirm)
Consideration
Giving up of legal right
Consideration must be present…
For both parties
Considerations must be…
Mutually bargained for and legally sufficient
There is no requirement that the consideration be…
Of equal value
2 cases where consideration is not present
1 past consideration is no good
2 no consideration when party is contractually obligated to perform
No consideration is needed on a promise to…
Donate to charity
Illegal contracts are…
Why?
Void, courts won’t aid either party
Failure to have required license makes…
All contracts void
Failure to have required license makes all contracts void.
What’s the exception?
Contract not void if license was a mere revenue raising measure
Neumonic for 6 types of contracts requiring some kind of writing to be enforceable
GRIPE + Marriage
6 types of contracts where writing required to be enforceable, under GRIPE + Marriage
1 Goods over $500
2 Real Estate Contracts
3 Impossible contracts to perform in one year
4 Promise to answer debt of another
5 Executor’s promise to be liable for debt of estate
6 Marriage contracts
Written contract:
Sale of Goods of $500 or more must…
State quantity
Written contract:
Contracts Impossible To perform in 1 year, begin measuring from…
2) When is it not?
When contract is made (not when performance begins)
Written contract:
Promise to answer debt of another example
Guarantor
Written contract:
Marriage contract example
Pre nup
Any type of writing that states the major terms can satisfy the Statute of Frauds, need…
2) But is enforceable…
Only be signed by 1 party
2) against the one who signed
Any type of writing that states the major terms can satisfy the Statute of Frauds, the terms can be stated in…
More than one document
Exceptions to the Statute of Frauds- no writing required even though one of six types…3
1 contract fully performed by both parties (executed)
2 contract impossible to perform in one year and one party has
fully performed
3 oral real estate deals are enforceable if buyer is in possession
And has made substantial down payment or improvements
Competent parties:
Minors cannot disaffirm…2
Real estate contracts or necessary contracts
Competent parties:
To disaffirm the minor need only…
Return what they possess or control at that time
Competent parties:
Minor can ratify contract after…
2) but must ratify…
Becoming and adult
2) entire contract
Competent parties:
Minor can disaffirm a contract but is liable for…
Torts (minor lies about age)
3 types of competent parties
1 minors
2 drunks
3 the insane
Competent parties:
Drunks can disaffirm only if…
Incapable of understanding what they did
Competent parties:
Insane can usually disaffirm, but once adjudicated insane…
All future contracts are void
Most mistakes have…
No effect on contract
Most mistakes have no effect on contract. 2 exceptions
1 mutual mistakes of material fact make contract void
2 material unilateral mistakes, one may disaffirm only if other party knew or should have known mistake was being made
Duress
Forcing someone into contract by threat of violence, economic destruction or criminal action
Duress makes a contract…
Voidable
Undue influence is…
Using a position of love, confidence or affection to overcome
another’s free will in contract
Undue influence makes a contract…
Voidable
5 elements of actual fraud neumonic
MS RID
5 element of fraud MS RID
Material Misrepresentation of fact Scienter Reasonable Reliance Intent to rely Damages
elements of fraud, MSRID:
M 2
1 Must have Material Misrepresentation of fact or deliberate
concealment
2 must be a fact, opinions don’t count unless given by expert
elements of fraud, MSRID:
S
Must have Scienter, an intent to deceive
elements of fraud, MSRID:
R
Must have Reasonable Reliance, victim must justifiably rely on misrepresentation
Constructive Fraud or Gross Negligence neumonic
2) what is different from actual fraud?
MR RID
Actual fraud has Scienter, while constructive fraud has reckless disregard for the truth
Reckless disregard for the truth
Making a statement without knowing if it is true or false
Fraud in the execution is void
Injured party did not know a contract was made
Fraud in the inducement is voidable
Injured party knows he made a contract, but one or mor terms is misrepresented
Innocent Missrepresentation, neumonic
2) the 4 elements of innocent Missrepresentation do not include
MR ID
2) Scienter it reckless disregard for truth
Under innocent misrepresentation, the injured party can…
Only rescind and cannot sue for money damages
5 elements under Constructive Fraud
Material Misrepresentation of fact Reckless disregard for truth Reasonable reliance Intent to rely Damages
4 elements of innocent misrepresentation
Material misrepresentation of fact
Reasonable reliance
Intent to rely
Damages
When evidence is inadmissible under the patrol evidence rule 2
1 evidence (oral or written) contradicting written contract is inadmissible in court
2 evidence must have occurred prior to or contemporaneous with writing
When evidence is admissible under the parol evidence rule, neumonic
FAME
When evidence is admissible under the parol evidence rule.
Can always introduce evidence of…4
Fraud or illegality
After the writing (took place after writing)
Mistakes
Explain the writing or clear up ambiguities
Third Party Beneficiary Contracts where A&B make contract intending to benefit third party:
Donee beneficiary
Someone you make a gift to
Third Party Beneficiary Contracts where A & B make contract intending to benefit third party:
Creditor beneficiary
May sue either A or B if there is a breach
Third Party Beneficiary Contracts where A&B make contract intending to benefit third party:
Incidental beneficiary
Not in contract so gets no rights under contract
Third Party Beneficiary Contracts where A&B make contract intending to benefit third party:
Donne beneficiary can only sue…
Original promisor
Original promisor
Person paid to deliver gift to donee beneficiary
Most contract rights can be…
2) most duties can be…
Assigned
2) delegated
An assignment or delegation does not usually require a…
Writing or consideration
Assignment of all rights is usually interpreted as…
Both an assignment and delegation
4 types of contracts that cannot be assigned or delegated (cannot assign if PIPI)
1 personal service contracts call for special skill
2 increase risk or alter performance materially
3 prohibited by contract or law
4 insurance contracts can’t be assigned
Exception for assigning a contract prohibited by law
Can assign right to receive money even if prohibited by contract
Assignee gains all of…
All of assignor’s rights and all his liability
Assignee gains all of assignor’s rights and all his liability. If there is a breach…
Both assignee and assignor are liable
Assuming a mortgage define
Buyer purchases land already encumbered by a mortgage
Assuming a mortgage, 2 things that occur
1 buyer agrees to take over mortgage and buyer is liable for
mortgage
2 seller (original mortgage) is still liable for mortgage
Buying Subject to Mortgage
Buyer purchases land encumbered by a mortgage
Buying Subject to a Mortgage, 3 things happen
1 buyer doesn’t agree to take over mortgage an isn’t liable
2 seller (original mortgager) is only one liable for mortgage
3 buyer runs risk of foreclosure if seller doesn’t pay
Discharge by Novation
Parties agree to replace 1 side of contract with new party
Discharge by Novation, 2 things creditor does
1 Creditor agrees to release old party
2 creditor agrees only to look to new party for performance
Discharge by breach
Material breach by one side releases other from performing
3 types of discharge of material breach
1 prevention of performance
2 anticipatory repudiation
3 doctrine of substantial performance
Prevention of performance is…
A material breach and discharges other party
Anticipatory repudiation define
1 party before time of performance repudiates contract
Anticipatory repudiation, what may injured party do…2
1 sue immediately or
2 wait until time for performance and then sue if there is a breach
Doctrine of Substantial Performance involves an…2
1 Unintentional but minor breach
2 breaching party may still recover but subtract damages for the
minor breach
Impossibility of performance will…
Release both parties from performance
Impossibility of performance 2 examples
1 death of party to perform services in personal service contract
2 destruction of subject matter of contract
Accord and satisfaction
Parties agree to change a contract by substituting performance
Accord is the agreement to…
Change performance (usually to pay lesser amount)
Satisfaction is…2
1 Satisfactory completion of the accord,
2 no discharge until satisfaction
Statute of Limitations does not discharge the contract, it is merely…
A bar to judicial remedies
Statute of limitations is always measured from…
The date of the breach
How many years is the Statute of Limitations for contracts? Sales?
Contracts = 6 years from breach
Sales = 4 years from breach
Compensatory damages are an…
Award of money to compensate for any and all harm done
Punitive damages are rarely awarded in…
Contracts or in sales
Specific performance define
party sues for a court order that other side specifically perform
Specific performance can only be used with…
Unique property and never in personal service contracts
Specific performance:
A party does not usually receive…
Specific performance and compensatory damages
Liquidated damages 2
1 parties agree in advance what damages will be in there is a
Breach
2 damages must be reasonable to the damage actually done and
Not a penalty
Rescission
Cancel the contract and restore the parties to their former position
