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Regulation > R5- Contracts > Flashcards

R5- Contracts Flashcards

To know all aspects of Contracts

1
Q

What is a contract?

A

Contract is a promise that a law will enforce.

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2
Q

What is express contract?

A

Contract formed by language, oral or written

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3
Q

What is Implied-in fact contract?

A

a contract formed by conduct

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4
Q

What is Implied-in-law contract or Quasi Contract?

A

It is not a contract
it is a remedy
that allows a plaintiff to recover benefit unjustly conferred upon the defendent
a remedy to prevent unjust enrichment

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5
Q

What is Unilateral Contract?

A

there is one promise, given in exchange of performance

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6
Q

What is Bilateral Contract?

A

Both parties have to do something, exchange of promises

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7
Q

What is executory contract?

A

if duties remain to be performed,

wholly or partially

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8
Q

What is Executed Contract?

A

if all the duties have been performed

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9
Q

What are the sources of Law?

A
  1. Common Law- RISE Real Estate, Insurance, Services, and Employment
  2. Uniform Commercial Code- UCC- Sale of goods, moveable
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10
Q

Creation of a contract

What are the three requirements of a legally enforceable contract?

A

a. Agreement( Offer + Acceptance)
b. Exchange of consideration( something of legal value)
c. lack of defenses( no good reason not to perform)
Note: Writing not req’d

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11
Q

Agreement- Offer+ Acceptance

A

a meeting of minds
Offer- one party will make a proposal
Acceptance- and the other will agree to it

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12
Q

OFFER

How can an Offer be made?

A

Express or Implied

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13
Q

OFFER

What are the 3 questions for offer?

A

Was there an intent to contract?
Was there definiteness and certainty?
Was there communication to the offeree?

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14
Q

OFFER

Are advertisements considered an offer?

A

No, it is merely an invitation to seek offers

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15
Q

OFFER

When is advertisement an offer?

A

Exception to general rule
When you specify offeree
when an advertisement limits the scope of the persons who can accept

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16
Q

OFFER

When can offer be definite and certain?

A

UCC- Quantity only

RISE- all other terms need to be definite and certain

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17
Q

OFFER

Under RISE which terms have to be certain and definite?

A 
WHO- identity of the offeree
WHAT- price to be paid
WHEN- time of performance
WHAT- is the quantity involved
HOW- nature of the work to be performed
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18
Q

OFFER

What are the rules for communication of offer?

A

No communication, No offer

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19
Q

OFFER

How can an offer be terminated?

A
  1. Revocation by offeror
  2. Rejection by offeree
  3. By operation of law
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20
Q

OFFER

How can offer be revoked by offeror?

A

Offeror can revoke offer at anytime before acceptance by communicating the revocation to the offeree
Exception: 1. Firm Offer 2. Option Contract

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21
Q

OFFER

In what ways can offer be revoked?

A
  1. Oral or Written
  2. By publication
    Either way it is effective when rec’d
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22
Q

When can the offeror not revoke an offer? EXCEPTION

A

a. Option contract- paid consideration to keep offer open
b. Unilateral Contracts- Offeree begins to perform his promise
c. UCC- Merchant Firm offer-

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23
Q

In what ways can offer be rejected by offeree?

A
  1. Express rejection
  2. Counteroffer
    - Different from mere inquiry i.e. a mere question
    - Effective when rec’d
    - Silence amounts to rejection
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24
Q

How can an offer be terminated by operation of law?

A

Automatic

  1. Death or Incompetency of parties
  2. Destruction of subject matter
  3. Illegality
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25
Q

ACCEPTANCE

What is Acceptance?

A

Acceptance is offeree’s assent of enter into contract
Need not be in writing
Implied OK

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26
Q

Is offer assignable?

A

No, Except Option Contract

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27
Q

What is the method of acceptance?

A
  • in any manner reasonable under the circumstance
  • However, if offeror specifies a method, use that
  • Using other method is counteroffer
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28
Q

What is Mirror Image Rule?

A

Common law only i.e. RISE
Cannot change anything from the offer
must accept excatly or it is counter offer

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29
Q

What is the rule for acceptance regarding communication?

A

-Acceptance effective when mail dispatched

Unlike Revocation, Rejection of Offer, effective when rec’d

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30
Q

What is the Mail Box Rule?

A

-Acceptance are effective when dispatched
>if properly dispatched
>irrelevant if properly addressed envelope is loss or delayed

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31
Q

What is rules for Method of communication for Acceptance?

A

If specified, use that

if not specified, use any reasonable means

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32
Q

Can an offeror opt out of mail box rule?

Effective when dispatched, if Yes How?

A

Yes,

By stating in the offer acceptances must be rec’d to be effective

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33
Q

CONSIDERATION

What is consideration?

A 
Consideration is the price of contracting
Both Parties 
2 Elements
1. Something of Legal Value
2. Bargained for exchange
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34
Q

What is Element of Legal Value?

A 
-either 
detriment to the promisee
or a benefit to the promisee
and not something he/she was already obligated to 
do
- Need not
1. have legal value
2. flow to the party
3. be adequate
4. be sufficient
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35
Q

What is Bargained-for Exchange?

A

your promise induced by promise
Gift- No Exchange
Past or Moral Consideration- Saving Tim

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36
Q

What is the exception to Bargain-for Exchange?

A

Donation to Charity

done without any reciprocal benefit

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37
Q

Detrimental Reliance/ Promissory Estoppel?

A

a promise made by one party
and detrimentally relied upon
by another can be enforced without consideration

Eg. MRI machine at hospital

38
Q

DEFENSES

WHAT ARE DEFENSES?

A

Defenses can make a contract unenforceable

39
Q

DEFENSES

What amount to Fraud?

A 
MAIDS
M-Misrepresentation of material fact
A-Actual and justifiable reliance
I-Intended to Induce the victim to rely
D-Damages
S- Scienter (defrauding party knew, reckless disregard for the truth)
40
Q

Rules for Fraud?

A
  • must be material facts, opinions do not count
  • Scienter- intention to deceive
  • intent to induce
  • reasonable reliance- independently check values/ financials
  • Damages- Compensatory and punitive for fraud
41
Q

DEFENSES

Fraud in Execution and Fraud in Inducement

A

Fraud in Execution- VOID

Fraud in Inducement- VOIDABLE

42
Q

DEFENSES

Innocent Misrepresentation

A

MAID No scienter

43
Q

DEFENSES

Duress

A

Put a gun
Physical- Void
Emotional/ Economic/ Social- Voidable

44
Q

DEFENSES

Undue Influence

A

Taking unfair advantage of a relationship

Abuse of position of trust or confidence

45
Q

DEFENSES

Mutual Mistake

A

Both parties are mistaken
Party is loss can avoid
-Does not apply to value, Value are opinion
Non existence of subject matter- Void

46
Q

DEFENSES

Unilateral Mistake

A

Not a defense
tough
Exception : if other party knew or should have known Eg. Bids

47
Q

DEFENSES

Illegality

A

VOID

48
Q

DEFENSES
Illegality
Licensing

A

If license-

a. to protect public- VOID
b. to raise money- enforceable

49
Q

DEFENSES
Illegality
Promises not to compete

A

Enforceable if reasonable
Time
Distance req’d to protect
No stealing trade secrets

50
Q

DEFENSES

Minors may generally disaffirm contracts

A

Cancel
Disaffirm anytime
must return what he possesses

51
Q

What is the exception to the rule Minor can disaffirm?

A

Exception- Contracts for Necessities

52
Q

What is ratification?

A

is only when minor reaches majority
a person is bound by the contracts entered as minor when attains majority
Ratify in full not partially

53
Q

How can a contract be ratified?

A
  1. Failing to disaffirm
  2. Expressly, Oral or Written
  3. Retaining or accepting the benefits
54
Q

DEFENSES

Intoxication

A

prevents the promisor from knowing the nature and significance of his promise
and the other party knew he was drunk

55
Q

DEFENSES

Mental Incompetency

A

Incapable of understanding the contract
GR- voidable
If adjudicated mentally incompetent- Void

56
Q

DEFENSES

Statute of Limitation

A
  • a legal action must commence within a certain time
  • if expired, unenforceable
  • measured from date of breach
  • 4 to 6 yrs
57
Q

DEFENSES

Statue of Frauds

A 
6 Contracts require in writing
MYLEGS
M- Marriage
Y- More than 1 Yr
L- Land
E- Executors
G- Sale of goods 500 or more
S- Surety
58
Q

DEFENSES

Impossibility

A

Impossibility is a defense

  1. Destruction of subject matter
  2. Death of party to perform services
59
Q

DEFENSES

Accord and Satisfaction and Substituted Contract

A

An Accord is to substitute on contract for another and

Satisfaction is the execution of accord

60
Q

DEFENSES

Novation

A

is available as defense to a party who has been
released from a contract.

When a new contract substitues a new party for an old party in an existing contract

61
Q

DEFENSES

Conditions can affect a party’s duty to perform

A

if condition doesnt happen

cannot perform the promise

62
Q

DEFENSES

Prevention of performance is a breach

A

one party prevents other from performing contract duties

63
Q

DEFENSES

Parol Evidence Rules

A

Prohibits-

  • a party in a lawsuit in written contract
  • from introducing evidence at trial of
    a. oral or written statements made prior to written contract
    b. that seek to vary the terms of contract
64
Q

What is ok to add as per parol evidence rule?

A

a. Subsequent Modification- After
b. Evidence to explain ambiguous terms
c. Evidence to show fraud, duress, or mistake

65
Q

DEFENSES

Unconscionability

A

is a doctrine used by courts
to enforce a contract
on basis of fairness

66
Q

REMEDIES FOR BREACH OF CONTRACT

WHAT IS A BREACH?

A

WHEN A PARTY FAILS TO PERFORM SOMETHING HE IS OBLIGATED TO DO AS PER CONTRACT

67
Q

REMEDIES FOR BREACH OF CONTRACT

Material or Substantial Breach

A

RISE- Intentionally pay zero

Minor- Damages

68
Q

REMEDIES FOR BREACH OF CONTRACT

Anticipatory Repudiation or Early Breach

A

Anticipatory- In advance

69
Q

What are the options for the good party for Anticipatory Breach?

A

a. Immediately sue for damages
b. await the time of performance
c. Cancel the contract

70
Q

REMEDIES FOR BREACH OF CONTRACT

DAMAGES

A

Damages intend to put the non breaching party in as good a position as he would have been had there been on breach

71
Q

DAMAGES

Compensatory Damages

A

Benefit of the bargain
Personal Service Contracts S in RISE
Consquential damages- foreseeable damages

72
Q

DAMAGES

Specific Performance- used with land or unique items

A

money would not be adequate remedy

a. cannot be used for personal service
b. specific performance or compensatory damages

73
Q

DAMAGES

Liquidated damages- Damages agreed as per contract

A

as per clause in the contract

i. reasonable in relation to the actual harm done
ii. not a penalty

74
Q

DAMAGES

Punitive damages

A

Fraud

not available for breach

75
Q

DAMAGES

Recission or Cancellation

A

Original Position

restores the parties to former position

76
Q

What is the doctrine of substantial performance?

A

For services only, unintentional breach

77
Q

DAMAGES

Quasi Contract Restitutional damages

A

prevent unjust enrichment

78
Q

DAMAGES

Limitation on monetary damages

A

Foreseeability-consequential damages

Mitigation- reasonable efforts to avoid damages

79
Q

THIRD PARTY RIGHTS

A

third party beneficiaries

need not have privity of contract

80
Q

Intended vs unintended parties

A

intended parties- can enforce

unintended parties- cannot enforce

81
Q

Assignment of Rights

A

give contract rights to a third party is called assignment
Giving rights is called Assignor
Receiving the rights is called Assignee
Assingment of all rights

82
Q

Delegation of Duties

A

if a party wants to have a 3rd party perform the contractual duties is called delegation

83
Q

What may be assigned or delegated?

A

contract rights are assigned

duties are delegated

84
Q

What is the exception regarding assignment?

A

when the assignment will change the obligor’s risk
(Insurance)
or delegated duties involves specialized personal services

85
Q

Can you assign offers?

A

Generally cannot assign offers

but can assign option contracts

86
Q

What is the effect of delegation?

A

Both parties are liable

Unless a Novation

87
Q

What is Assumed Mortgages?

A

Both parties liable

88
Q

Compare Assignee taking subject to the mortgage?

A

assignor liable

89
Q

Assignment of a creditor’s right to receive money?

A

Permitted even if contract prohibits assignment

Not effect against Debtor unless debtor receives notice

90
Q

Implied warranty of Assignor?

A

Assignor has not knowledge of any fact impairing the value of assignment

Regulation (17 decks)

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