Module 9/Chapter 12: Contracts Flashcards
Contracts
P; “The reason that we don’t live in caves”
An economy with no contracts would be a Barter
Economy which would allow no progression m
Basis of commerce and the economy
Law of agreement, legally binding agreements
Voluntary and consensual relationships
A promise with legal consequences if it is broken
A mutual agreement that creates enforceable duties and obligations
Contracts can be three-sided, such as a credit card transaction
There are no laws that contracts have to be fair
There can be an agreement but no contract.
State law and common law about contracts have developed differently
Why are contracts good?
Freedom of choice
Commutative Justice (fairness of exchange) The Ethical Heart of Contract Law
Elements of a Contract know this list!
- Agreement between (see module10)
Offer and acceptance!
2. Competent Parties with (module 11) Competent party- person with capacity
- Genuine Assent (module 11) supported by
- Consideration (module 12) for a
- Legal Object/Purpose and in a
- Legal Form if any is required
Formal Contract
1.Contracts Under Seal
- Signatures followed by “scroll”, the world “seal” or or L.s.
- Don’t have to prove that both parties are bound
- Recognizance Bond
- Made in court
- Contracts of record, obligations entered before the court of record
- Ie person needs to appear for a later hearing - Negotiable Instruments
UCC deals with these
Ie checks, drafts, promissory notes
Informal Contract
enforceable because it still represents an agreement
- The contracts we deal with in class are these
- A contract can be super complex but still informal
Privity
the governing relationship between people in a contract “privity on contract”
- Promises that bind parties together because they owe things to one another
- A contract only binds the parties involved with that contract together
Promisor/obligor (if binding)
Person who makes the contract or the promise
Promisee
Person to whom the promise is made
Executed
contract has been performed completely, neither party has to do anything else (even if haven’t paid yet)
Executory
Duties of performance remain on both sides, so it is an ongoing contract
Contractual Intent=
OBJECTIVE
- Objective is measurable
- Forming contracts uses objective intent
- It is what you think it is, ordinary prudent person
- What would a common sense person think was going on?
Bilateral Contract
- Reciprocal promises
- One promise given in exchange for another
- Promise to sell, promise to buy
Unilateral Contract
- Only one party makes a promise
- Promise for an act
- EX: Forbearance
Option Contract
- A contract to hold an offer open for a fixed period of time (I’ll keep the offer open for 24 hours for $100)
- Little contract that supports a larger contract
- Cannot get out of this contract
EX: Kid puts down $100 at dealership, goes back to dad for rest of money. Gets sent to military school
Right of First Refusal Contract
- Right for party to meet terms before it is executed
- Usually in real estate
- Can put in lease– if someone is leasing space to someone but decides to sell, they must give the person leasing the first option to buy at a reasonable price
