Module 3: Contracts Flashcards
Contract Law Sources
Generally not Federal or Federal Statue, generally common law of judicial precedent that have been developed over time that have been codified in Restatement (Second) of Contracts - book put together by judges and legal scholars to summarize common law - not itself law
Contract definition
legally enforceable promise, must be in the future not immediately executed exchange - Can be oral, written, express, or implied (behaved as if we had a contract)
Unilateral contract
Act of acceptance is act of performance, doing the action makes it a contract, not reciprocal (i.e. I’ll pay you $100 to clean the house
Bilateral contract
I promise to do X and you promise to do Y
Promisor, promisee, beneficiary definitions
Promisor: person who makes the contract, Promisee: person to whom the promise is made (Can often reverse and both parties be both in bilateral contract), Beneficiary: third party who may benefit from the contract b/w promisor and promisee Ex: child is beneficiary of a childcare contract
Bailments
particular contractual relationship where you give goods but do not transfer ownership ex: giving your car to a car park for parking w/o transferring ownership of the car
Requirements for Formation of Contract
Mutual Assent, Offer, Acceptance, Consideration (or Detrimental Reliance)
Mailbox Rule Contract Acceptance
Offer deemed valid as soon as acceptance is mailed
Consideration Rule re: gifts
Pledges of gifts are not binding, bargain for exchange for something I wouldn’t have received otherwise only
Pre-existing Duty Rule Contracts
If already obligated to do something legally, consideration is not sufficient action to be new contract
Doctrine of Promissory Estoppel
a party may recover on the basis of a promise made when the party’s reliance on that promise was reasonable, and the party attempting to recover detrimentally relied on the promise
Legal Incapacity to Enter Contracts
Minors (except for life necessities or in cases of deception), mentally incompetent, intoxication
Definition of Third-Party Beneficiary Contracts: Creditor, Donee
Creditor: I contract a person to pay a third party I owe money to;
Donee: Gift, I am forming a contract with party A to benefit party B, party B the donee receives a gift
Contract Assignment
Assignor must show intent to assignee, does not have to receive consent of Obligor but must receive notification. Assignor can revoke unless assignment supported by consideration w/ assignee.
Contract Delegation
Delegator still responsible to see the contract through if the delegate doesn’t perform. Duties cannot be delegated for specific talent/skill
Statute of Frauds
Common law doctrine which states certain contracts must be in writing: Marriage, Year (anything farther in the future than one year), Land, Executor, Goods (worth more than $500), Surety (assurance that someone else’s contract will be performed)
Contract Terms
Must be definite and certain, courts will err on the side of interpreting the contract towards being valid, Specific provisions given more weight
Parol Evidence Rule
Parol Evidence Rule: extra testimony trying to explain after the contract is written and agreed is considered inherently unreliable - Can be used to define the meaning of the word with customary trade usage
Types of Contract Breach
Failure to perform is a breach, extent of failure determines extent of damages: partial/trivial breach, material breach (unsubstantial performance), total breach, anticipatory repudiation (can demand assurances in advancd)
Remedies for Breach of Contract
Compensatory damages (direct damages + consequential damages); duty to mitigate damages, given in diminution if substantial performance given; Restitution (payment for partial services provided); Specific performance (if money isn’t proper compensation); Liquidated damages (specified in contract) - no punitive damages
Affirmative Defense to Contract Breach
Lack of capacity, violation of Statute of Frauds, distress, undue influence (weakened state), mutual or unilateral mistake, misrepresentation/fraud, unconscionability, statute of limitations
Discharge of Contracts
by performance, Force Majeure (impossibility, impracticability, frustration of purpose), mutual recession, novation (creating a replacement agreement), accord and satisfaction (replacing terms of contract with substituted duties)
Illegal Contracts and Public Policy
A contract that violates the law is void and unenforceable - Even if performance has begun, partial damages are generally not available; A contract that is legal but violates public policy statute no necessarily unenforceable but courts my order some restitution
Examples: Exculpatory Clauses or Restrictive Covenants
