Overview of Contracts

Question 1

Contract

Answer 1

A contract is a legally enforceable agreement that meets certain specified legal requirements between two or more parties in which each party agrees to give and receive something of legal value

Question 2

6 Basic Contract Requirements

Answer 2

i. Offer
ii. Acceptance
iii. Consideration
iv. Legality of subject matter
v. Contractual capacity
vi. Contractual intent

Question 3

Offer

Answer 3

1. an offer is proposal by one party to another manifesting an intention to enter into a valid contract
2. The offer defines the boundaries of the potential relationship between the parties and empowers the other party to create the contract by accepting the proposition

Question 4

Acceptance

Answer 4

To create the contract, the party to whom the offer is made must accept the proposal; the law will not force a person to fulfill an obligation to which she has not agreed

Question 5

Mutual Assent

Answer 5

The offer and acceptance together form the mutual assent of the parties (the agreement that they do intend to be contractually bound to each other

Question 6

Consideration

Answer 6

1. Consideration is the subject matter of the contract; it is the thing for which the parties have bargained
2. Consideration is deemed to be anything of legally significant value; monetary worth is not the ultimate determining factor of legal value

Question 7

Contractual Capacity

Answer 7

1. Contractual capacity refers to the ability of a person to enter into a valid contract
2. The most typical examples of capacity deal with the age of the party and the person’s mental condition

Question 8

Contractual Intent

Answer 8

1. if it can be shown that the parties did not subjectively intend to form a contractual relationship, there will be NOT contract
2. Surrounding circumstances must be analyzed to determine whether a contract exists

Question 9

bilateral contract

Answer 9

1. A bilateral contract is a promise for a promise; the parties are expecting a mutual exchange of promises, with the performance to be carried out only after the promises have been given
2. The contract was created when the promises were given; the performance is intended to take place after the agreement has been made

Question 10

Unilateral contract

Answer 10

1. A unilateral contract is a promise for an act
2. If the contract is unilateral, the contractual relationship is only formed when one side actually performs the requested act; until that time, no contractual remedies are available to the parties

Question 11

Express Contract

Answer 11

An express contract is one in which the mutual assent of the parties is manifested in words, either orally or in writing

Question 12

Implied-in-fact contract

Answer 12

An implied-in-fact contract is one in which the promises of the parties are inferred form their actions or conduct as opposed to specific words being used

Question 13

Implied-in-law or Quasi-contracts

Answer 13

it must be shown that no contract exists b/c a requisite element is missing and one party is unjustly enriched at the expense of the other

Question 14

quasi-contractual situations

Answer 14

are situations in which the parties do not have a contractual relationship but in which it would be most fair to treat them as though a contract did exist

Question 15

formal contract

Answer 15

1. this term refers to a limited group of contracts that different states have declared valid and enforceable if certain statutory requirements are met
2. Some ex. of formal contracts are negotiable instruments such as checks, and certificates of deposit and guarantees

Question 16

Informal contracts

Answer 16

Informal contracts are all non-formal contracts; despite the terminology, informal contracts are agreements that meet all the requirements of valid contracts

Question 17

Executory contract

Answer 17

An executory contract is a contract in which one or both of the parties still have obligations to perform

Question 18

Executed Contract

Answer 18

An executed contract is compete and final with respect to all of its terms and conditions

Question 19

Valid contract

Answer 19

A valid contract is an enforceable contract that meets all of the 6 requirements; either party can bring suit for the enforcement of a valid contract

Question 20

Void contract

Answer 20

A void contract is, in reality, a contradiction in terms b/c there is NOT contract, and therefore the law does not entitle the parties to any legal remedy

Question 21

Voidable contract

Answer 21

In a voidable contract a party to the agreement has the option of avoiding his legal obligation without any negative consequences, but who could, if he wished, affirm his obligation and thereby be contractually bound

Question 22

Unenforceable contract

Answer 22

An unenforceable contract is a valid contract for which the law offers no recourse or remedy if its obligations are not fulfilled