Module 2: Contracts II Flashcards
voidable contract
a contract that, in certain circumstances, an aggrieved party can choose to keep in force or bring to an end
void contract
a contract involving a defect so substantial that it is of no force or effect
legal capacity
the ability to make binding contracts (must not be a minor, must have mental capacity)
economic duress
the threat of economic harm that coerces the will of the other party and results in a contract - voidable at the option of the party who was victim to duress
undue influence
unfair manipulation that compromises someone’s free will or choice: includes actual pressure and presumed pressure (based on relationship)
unconscionable contract
an unfair contract formed when one party takes advantage of the weakness of another; 2 elements: there must be substantially unequal bargaining power, and terms of contract must be grossly unfair . almost like fraud / exploitation
misrepresentation
a false statement of fact that causes someone to enter a contract
rescission
the remedy that results in the parties being returned to their pre-contractual positions
fraudulent misrepresentation
speaker has a deliberate intent to mislead or make the statement recklessly without knowing or believing that it is true
negligent misrepresentation
speaker makes the statement carelessly or negligently
innocent misrepresentation
speaker has not been fraudulent or negligent, but has misrepresented a fact. by process of elimination, the misrepresentation is merely innocent
mistake
an error made by one or both parties that seriously undermines a contract; most common type is a mutual mistake
common mistake (aka mutual mistake)
both parties, without fault, are mistaken about an ESSENTIAL TERM of the contract (fundamental assumption)
rectification
a remedy available where parties have made a mistake in recording their agreement and based on establishing the specific terms actually agreed to; typographic or clerical mistake
non-solicitation clause
a clause forbidding contact with the business’s customers
non-competition clause
a clause forbidding competition (no-compete)
vicarious performance
performance of contractual obligations through others
novation
the substitution of parties in a contract or the replacement of one contract with another
termination by frustration
contract is terminated on the basis that work that was to be performed is simply impossible
privity of contract
there is a contract between the parties as intended (can only be a breach of contract if concerning the parties in the contract)
condition
if breached, innocent party has right to terminate the contract and claim damages
warranty
minor term that if breached, gives innocent party right to claim damages only (not terminate)
innominate term
a term that cannot easily be classified as either a condition or a warranty
anticipatory breach
a breach that occurs before the date for performance
damages
monetary compensation for breach of contract or other actionable wrong
expectation damages
damages that provide the plaintiff with the monetary equivalent of contractual performance
punitive damages
an award to the plaintiff to punish the defendant for malicious, oppressive, and high-handed conduct
test for remoteness
damages must have been anticipated or having “Arisen naturally” from the breach, or if difficult to anticipate, are reasonably foreseeable because those unusual circumstances were communicated upfront (i.e. the $50mil raptors bid)
interlocutory injunction (or just injunction)
an order to refrain from doing something for a limited period of time (an order for someone to not do something) ; opposite of specific performance
unjust enrichment
occurs when on party has undeservedly or unjustly secured a beneft at the other party’s expense
restitutionary quantum meruit
an amount that is reasonable given the benefit the plaintiff has conferred
valid but unenforceable contracts
exist, but cannot be enforced i.e. Statute of Frauds (some contracts must be in writing in order to be enforceable)
looking forwards
contract law - we put the innocent person in the position they WOULDVE BEEN IN if contract was properly performed. EXPECTATION of where she expected to be
looking backwards
tort law - put innocent person in position they were in BEFORE the incident occurred
remoteness
damages that are not reasonably foreseeable (i.e. 50mil example, forest guy in stretcher)
mitigation
legal duty of innocent person to keep damages relatively low (i cant use your breach of contract as an excuse to live in a lavish hotel and sue you for those costs because u didnt build my floor properly)
negotiable instruments
based on ability to assign rights under the contract; i.e. cheque, asset-backed commercial paper
Statute of Frauds
written proof to prevent fraud and perjury
