r5 Flashcards
Express contract
formed by language, oral, or written
Implied in fact contract
a contract formed by conduct is an implied in fact contract
Implied in law contract or Quasi
a quasi contract is NOT a contract at all. It is a remedy that allows a plaintiff to recover a benefit unjustly conferred upon the defendant
What are the 2 sources of contract law?
- common law: derived from courts. RISE real estate, insurance, services, employment
- Unicorm commercial code (UCC) sales article. Governs contracts for the sale of goods (moveable things).
What are the three requirements of a legally enforceable contract?
- an agreement made up of an offer and an acceptance
- an exchange of consideration (something of legal value)
- a lack of defenses
Are advertisements offers?
No
What are the contents of an offer?
-intent to make a contract
-terms must be definite and certain
Mailbox rules
Unlike revocations, acceptances are generally effective when they are dispatched. It is irrelevant if a properly addressed acceptance is lost or delayed
What are the two elements of consideration?
-something of legal value given by each party
-there must be a bargained-for exchange
Something is of legal value if it constitutes either a…
detriment to the promisee or a benefit to the promisor
A contracting party can establish the defense of fraud if they can prove:
-misrepresentation of material fact by defrauding party
-scienter (intent to deceive)
-intent to induce reliance
-reasonable reliance
-damages
What is fraud in the execution?
Occurs when a party is deceived into signing something that does not look like a contract. MAKES A CONTRACT VOID
-no voidable bc there is “no meeting of minds”
What is fraud in inducement?
the defrauded party is aware she is making a contract, but the terms are materially misrepresented. This is voidable
What is innocent misrepresentation?
has all the elements of fraud except scienter
When is a unilateral mistake a defense?
When a unilateral mistake as to a material fact is a defense if the other party knew or should have known the mistake.
Which six contracts require writing? MYLEGS
-Marriage
-YEAR Contracts that by their terms cannot be performed within a year
-LAND interests in land
-EXECUTORS contracts by executors or similar representatives to pay estate debts out of personal funds
-GOODS contracts for the sale of goods for $500 or more
-SURETY contracts to act as surety (to pay the debt of another)
What is Accord and Satisfaction and Substituted Contract?
An accord is an agreement to substitute one performance for another, and satisfaction is the execution of the accord. Accord and satisfaction discharge the original duty. Until the accord is satisfied a party may sue ender the original contract or the accord.
What is novation?
available as a defense to a party who has been released from a contract. It occurs when a new contract substitutes a new party for an old party in an existing contract. All parties must agree to the release
Parol Evidence Rule
Prohibits a party in a lawsuit involving a written contract from introducing evidence at the trial of:
-statements made prior to the written contract or oral statements made with the written contract
-that seek to vary the terms of the written contract
What is the goal of contract remedies?
they are intended to put the non-breaching party in as good as a position as he would have been had there been no breach
Are punitive damages available for breach of contract?
No they are for fraud
Foreseeability
Consequential damages are awarded only for those damages that at the time the contract was performed a party could reasonably foresee would result from a breach
Mitigation (reasonable efforts to avoid damages)
Under contract law, a nonbreaching party cannot recover for damages that could have been reasonably avoided. The party must mitigate damages
What does ratification mean
refers to the process by which a minor by his/her action or “inaction” legally accepts an entire contract after he/she reaches the age of majority.
In a substituted contract, the original parties are
both released from the original agreement but are both bound by a new agreement.
To cancel a contract and to restore the parties to their original positions before the contract, the parties should execute a:
A rescission “undoes” a contract and restores the parties to the positions they would have been in if no contract were made.
What items are excluded for the Sales Article?
-contracts for personal services and real estate
-contracts for intangible personal property, such as stock or patent rights
-contracts for fixtures - things attached to the land
How to qualify as a merchant firm offer:
-seller must be a merchant
-offer must be in writing and signed by the merchant
-offer must give assurance that it will be kept open for a certain time
What is a merchant firm offer?
they are irrevocable offers for the time stated, or if no time is stated, for a reasonable time, but in no event longer than 3 months
The UCC Sales Article applies to
the sale of goods which is defined as all thing movable
What are the exceptions to the Statute of Frauds for goods? SWAP
-Specially manufactured goods
-Written merchant confirmatory memo
-Admission in court
-Performance
What is agency?
A legal relationship in which one person or entity assents to have another person or entity act on the principal’s behalf
What are the requisitionn for agency?
*Consent and principal with capacity
1. Writing - only required for contracts greater than 1 year and to buy or sell land
2. Capacity - only the principal must be competent. The agent need not have capacity. Thus, a minor or mentally incompetent person can be appointed
What are the four duties of an agent?
- Duty of loyalty
- Duty of obedience
- Duty of reasonable care
4 duty to account - Subagent
The principal owes the agent what duties?
- Compensation
- Reimbursement
- Remedies of the agent
Actual authority is terminated by: DDDIFS
Death
Discharge
Destruction of the subject matter
Incapacity of the principal
Failure to acquire a necessary license
Subsequently illegality
What is apparent authority?
Is based on the third party’s belief. They have the power but not the right to bind the principal, because the principal conduct has caused the third parties to believe that the agent had authority.
Under the doctrine of respondeat superior,
a principal, including a corporation, can be held liable for an employee’s tort committed within the scope of employment.
What is a surety?
Someone who agrees to be liable for the debt or obligation of another.
What are cosureties?
two or more sureties of the same obligation
What is Exoneration?
the right a surety has against the debtor to force the solvent debtor to pay a debt when the debtor refuses to do so.
-to compel payment
What is subrogation?
the right a surety has by which the surety succeeds to the creditor’s rights against the principal when the surety pays the principal’s obligations.
-to enforce creditors rights against principal
Purchase money security interest (PMSI)
A special type of security interest that has priority over all other types of security interests in the same collateral
Article 9 does not apply to…
security interests in land, wage claims, and statutory liens
A PMSI arises when
- a creditor sells the collateral to the debtor on credit, retaining a security interest for the purchase price
or - The creditor advances funds used by the debtor to purchase the collateral
Goods
Collateral
include goods, inventory, and equipment. The category into which a particular good fallls is determined by how the debtor uses the item, not by the nature of the item
Intangible Collateral accounts
An account is any right to payment for goods, services, real property, or use of credit card not evidenced by an instrument or chattel paper
Investment property
Collateral
includes stocks, bonds, mutual funds
Proceeds
Include whatever is received upon the sale, exchange, collection, or other disposition of collateral
The five methods of perfection
- Filing
- Taking possession of the collateral
- Control
- Automatic Perfection
- Temporary perfection
What is perfection?
Gives notice to the world. Gives rights against third parties your right to collateral.
What are the three attachment requirements?
- agreement
- creditor gives value
- debtor has rights to collateral
