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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
ACCEPTANCE | What is Acceptance?
Acceptance is offeree's assent of enter into contract Need not be in writing Implied OK
26
Is offer assignable?
No, Except Option Contract
27
What is the method of acceptance?
- in any manner reasonable under the circumstance - However, if offeror specifies a method, use that - Using other method is counteroffer
28
What is Mirror Image Rule?
Common law only i.e. RISE Cannot change anything from the offer must accept excatly or it is counter offer
29
What is the rule for acceptance regarding communication?
-Acceptance effective when mail dispatched Unlike Revocation, Rejection of Offer, effective when rec'd
30
What is the Mail Box Rule?
-Acceptance are effective when dispatched >if properly dispatched >irrelevant if properly addressed envelope is loss or delayed
31
What is rules for Method of communication for Acceptance?
If specified, use that | if not specified, use any reasonable means
32
Can an offeror opt out of mail box rule? | Effective when dispatched, if Yes How?
Yes, | By stating in the offer acceptances must be rec'd to be effective
33
CONSIDERATION | What is consideration?
``` Consideration is the price of contracting Both Parties 2 Elements 1. Something of Legal Value 2. Bargained for exchange ```
34
What is Element of Legal Value?
``` -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 ```
35
What is Bargained-for Exchange?
your promise induced by promise Gift- No Exchange Past or Moral Consideration- Saving Tim
36
What is the exception to Bargain-for Exchange?
Donation to Charity | done without any reciprocal benefit
37
Detrimental Reliance/ Promissory Estoppel?
a promise made by one party and detrimentally relied upon by another can be enforced without consideration Eg. MRI machine at hospital
38
DEFENSES | WHAT ARE DEFENSES?
Defenses can make a contract unenforceable
39
DEFENSES | What amount to Fraud?
``` 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
Rules for Fraud?
- 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
DEFENSES | Fraud in Execution and Fraud in Inducement
Fraud in Execution- VOID | Fraud in Inducement- VOIDABLE
42
DEFENSES | Innocent Misrepresentation
MAID No scienter
43
DEFENSES | Duress
Put a gun Physical- Void Emotional/ Economic/ Social- Voidable
44
DEFENSES | Undue Influence
Taking unfair advantage of a relationship | Abuse of position of trust or confidence
45
DEFENSES | Mutual Mistake
Both parties are mistaken Party is loss can avoid -Does not apply to value, Value are opinion Non existence of subject matter- Void
46
DEFENSES | Unilateral Mistake
Not a defense tough Exception : if other party knew or should have known Eg. Bids
47
DEFENSES | Illegality
VOID
48
DEFENSES Illegality Licensing
If license- a. to protect public- VOID b. to raise money- enforceable
49
DEFENSES Illegality Promises not to compete
Enforceable if reasonable Time Distance req'd to protect No stealing trade secrets
50
DEFENSES | Minors may generally disaffirm contracts
Cancel Disaffirm anytime must return what he possesses
51
What is the exception to the rule Minor can disaffirm?
Exception- Contracts for Necessities
52
What is ratification?
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
How can a contract be ratified?
1. Failing to disaffirm 2. Expressly, Oral or Written 3. Retaining or accepting the benefits
54
DEFENSES | Intoxication
prevents the promisor from knowing the nature and significance of his promise and the other party knew he was drunk
55
DEFENSES | Mental Incompetency
Incapable of understanding the contract GR- voidable If adjudicated mentally incompetent- Void
56
DEFENSES | Statute of Limitation
- a legal action must commence within a certain time - if expired, unenforceable - measured from date of breach - 4 to 6 yrs
57
DEFENSES | Statue of Frauds
``` 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
DEFENSES | Impossibility
Impossibility is a defense 1. Destruction of subject matter 2. Death of party to perform services
59
DEFENSES | Accord and Satisfaction and Substituted Contract
An Accord is to substitute on contract for another and | Satisfaction is the execution of accord
60
DEFENSES | Novation
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
DEFENSES | Conditions can affect a party's duty to perform
if condition doesnt happen | cannot perform the promise
62
DEFENSES | Prevention of performance is a breach
one party prevents other from performing contract duties
63
DEFENSES | Parol Evidence Rules
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
What is ok to add as per parol evidence rule?
a. Subsequent Modification- After b. Evidence to explain ambiguous terms c. Evidence to show fraud, duress, or mistake
65
DEFENSES | Unconscionability
is a doctrine used by courts to enforce a contract on basis of fairness
66
REMEDIES FOR BREACH OF CONTRACT | WHAT IS A BREACH?
WHEN A PARTY FAILS TO PERFORM SOMETHING HE IS OBLIGATED TO DO AS PER CONTRACT
67
REMEDIES FOR BREACH OF CONTRACT | Material or Substantial Breach
RISE- Intentionally pay zero | Minor- Damages
68
REMEDIES FOR BREACH OF CONTRACT | Anticipatory Repudiation or Early Breach
Anticipatory- In advance
69
What are the options for the good party for Anticipatory Breach?
a. Immediately sue for damages b. await the time of performance c. Cancel the contract
70
REMEDIES FOR BREACH OF CONTRACT | DAMAGES
Damages intend to put the non breaching party in as good a position as he would have been had there been on breach
71
DAMAGES | Compensatory Damages
Benefit of the bargain Personal Service Contracts S in RISE Consquential damages- foreseeable damages
72
DAMAGES | Specific Performance- used with land or unique items
money would not be adequate remedy a. cannot be used for personal service b. specific performance or compensatory damages
73
DAMAGES | Liquidated damages- Damages agreed as per contract
as per clause in the contract i. reasonable in relation to the actual harm done ii. not a penalty
74
DAMAGES | Punitive damages
Fraud | not available for breach
75
DAMAGES | Recission or Cancellation
Original Position | restores the parties to former position
76
What is the doctrine of substantial performance?
For services only, unintentional breach
77
DAMAGES | Quasi Contract Restitutional damages
prevent unjust enrichment
78
DAMAGES | Limitation on monetary damages
Foreseeability-consequential damages | Mitigation- reasonable efforts to avoid damages
79
THIRD PARTY RIGHTS
third party beneficiaries | need not have privity of contract
80
Intended vs unintended parties
intended parties- can enforce | unintended parties- cannot enforce
81
Assignment of Rights
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
Delegation of Duties
if a party wants to have a 3rd party perform the contractual duties is called delegation
83
What may be assigned or delegated?
contract rights are assigned | duties are delegated
84
What is the exception regarding assignment?
when the assignment will change the obligor's risk (Insurance) or delegated duties involves specialized personal services
85
Can you assign offers?
Generally cannot assign offers | but can assign option contracts
86
What is the effect of delegation?
Both parties are liable | Unless a Novation
87
What is Assumed Mortgages?
Both parties liable
88
Compare Assignee taking subject to the mortgage?
assignor liable
89
Assignment of a creditor's right to receive money?
Permitted even if contract prohibits assignment | Not effect against Debtor unless debtor receives notice
90
Implied warranty of Assignor?
Assignor has not knowledge of any fact impairing the value of assignment

Regulation (17 decks)

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