R6- Contracts Flashcards
What must a contract contain?
- Offer & Acceptance
- Exchange of Consideration
- Proper form (oral or written)
- Lack of Defenses
- Legal subject matter
- Competent parties
What forms may acceptance of a contract take?
- Meeting of the Minds
- Can be written or oral
- Must be in the form/method required by offeror
- Must be mirror image- i.e. no changes in terms
Who can accept an offer?
- Must be accepted by intended party (offeree)
- Definiteness & Certainty
- They must intend to accept
- Acceptance can only be made by a party who knows an offer has been made and has all of the facts
What happens if an offeree accepts a contract but puts added stipulations?
It is not acceptance
- But instead becomes a counter-offer and the original offeror is now the offeree
When is an offeror bound by a contract?
- When they RECEIVE the acceptance.
- If the offeree rejects; then accepts
- Whatever gets to the offeror first is what is binding.
What will void an offer?
- Destruction of Subject Matter & Illegality
- If offeror dies or becomes insane before acceptance; offer is void.
- Contract is binding if acceptance occurs before death/insanity.
What actions or circumstances will revoke a Offer/contract?
– Offeror revokes and offeree receives revocation
- Offeree finds out prior to acceptance that offeror has sold the item
- In the case of an Option;
–Offeror cannot revoke until the time of the option has elapsed
- Initial rejection by offeree doesn’t void the option.
What is an Option?
Some amount of consideration (like money) is put forth by offeror to keep the offer open for a stated period of time
What is a Requirements Contract?
- These are contracts where someone becomes the exclusive provider of something in exchange for consideration
What is Detrimental Reliance/Promissory Estoppel?
- Promises to donate are legally enforceable
- One Party detrimentally relied upon by another can be enforced without consideration
What can make a contract VOID?
- Fraud in the execution
- Formed under extreme duress
- Extreme Illegal
What can make a contract VOIDABLE?
- Fraud in the inducement
- Party not competent to contract
- Formed under SIMPLE duress
- Undue influence
What is the result of a clerical error in a contract?
- The contract is unenforceable.
Contracts under the Statute of Frauds must be in what form to be valid?
They must be in writing.
What kinds of contracts are subject to the Statute of Frauds?
- Marriage
- Cannot be completed within one year
- Involves the purchase of Land/real estate
- $500+ Sale of Goods
- Executors
- Surety: Co-signing and guaranteeing the debt of another
“MY LEGS”
What is the parol evidence rule?
- Prevents one party to a written contract from coming in after the fact and claiming that a certain conversation took place that conflicts with what is agreed upon in the written contract
- It also prevents using an oral argument to read into the meaning of what is written on paper
- If it’s on paper; it trumps what was agreed-upon orally prior to the written contract
Note: does not negate oral agreements made AFTER the contract or disallow oral words from clarifying ambiguous contract language.
What are the requirements for the assignment of a contract?
- Contracts are assignable to a third party beneficiary; but must be done so in good faith
- Obligations may be assignable
- Assignor is still liable
- Assignor may be released from liability if other party grants a novation
When can contracts be discharged by law?
- Party under contract is bankrupt
- Party under contract dies or is incapacitated
Party cannot physically complete the contract
(i.e. They are in prison so can’t finish building your house)
What is a Executory Contract?
- If duties remain to be performed
- Partially: One party has performed
What are Governed by Common Law?
- Real Estate, Insurance, Services & Employment: “R.I.S.E.”
An Offer for the Sale of Goods generally need only include?
- UCC
- The Quantity Term
An Offer to create a contract under Common Law must include:
- Identity of Offeree
- The Price
- Time of Performance
- Quantity involved
- Nature of the work to be performed
What are the Limitations on the Offerer’s Power to Revoke an Offer?
- Irrevocable Offers:
- Option Contract: Keep option open for consideration
- Unilateral Contracts
- Merchant’s Firm Offers under UCC Sales
Once an offer is effectively rejected, can it be accepted?
- No
An attempted acceptance that changes some of the terms or adds new terms is?
- Not a Valid Acceptance
- Is a Counter-offer
Mailbox Rule, Acceptances are generally effective when?
- They are Dispatched
- Irrelevant if a properly addressed acceptance is lost or delayed
The Offeror can opt-out of the Mailbox Rule by stating the in the offer that?
Exception to Mailbox rule:
- Acceptances must be Received to be effective
What is consideration of a Contract?
- Both sides must be supported by Legally Sufficient Consideration
- Law will NOT enforce Gratuitous Promises
What are the 2 Elements of Consideration?
- Something of Legal Value
- Bargained for Exchange
Element of Legal Value for Consideration, Need Not?
- Have Monetary Value
- Flow to Party
- Courts will NOT inquire into Adequacy: Not a Sham
- Preexisting Legal Duties Generally not Sufficient
To make a modification of a new or different Consideration Enforceable:
- UCC: In Good Faith
- R.I.S.E: Give Consideration
A contracting party can establish the Defense of Fraud if they can prove:
- Misrepresentation of Material Fact
- Scienter: Knew statement was false/Reckless disregard
- Intended to induce the victim
- Actual & Justifiable Reliance
- Damages
“MAIDS”
What is a Scienter?
- Intent to Deceive
- Misrepresentation with Reckless Disregard
- Constructive Fraud
- Gross Negligence
When are Punitive Damages ONLY awarded for?
- Fraud
Promises Not to compete are illegal under what law?
- Antitrust Law
When is it enforceable for Promises not to compete?
Only when Reasonable:
- Employment Contracts
- Sale of a Business
What are the Exceptions for contracts not having to be written being performed within a Year?
- When it is possible to Perform in one Year
- Full Performance by One Party
When do Land Contracts NOT have to be written form?
- Leases for Less than a Year
- Full or Partial Performed
What is a Accord & Satisfaction & Substituted Contract?
- Same Parties But New Agreement
What is a Novation?
- Same Agreement but Substituted Party
Common Law, If there has been a Material or Substantial Breach, the Non-breaching party can?
- Can be discharged from the contract
If the breach is only Minor, the Non-breaching party?
- Not discharged but entitled to damages
What is the intention of Money Damages for the Non-breaching Party?
- In a good position as they would have been, had there be no breach
What is the Purpose of Compensatory Damages?
- Standard of measure for personal service contracts
- Enough money to obtain substitute performance
What is the Purpose of Consequential Damages?
- Collect damages that are reasonably foreseeable as a result of the breach
- In addition to Compensatory Damages
What is a Quasi- Contract/Restitution Damages?
- Used when there is No contract but one party confers a benefit on another at the other’s Request
- With reasonable expectation of being compensated
What are the Limitations of Monetary Damages?
- Consequential Damages: Foreseeability
- Mitigation
- Reasonable Efforts to Avoid Damages
For 3rd Party Beneficiaries to have rights they need?
- Must be named or specifically described in the contract
- Incidental Beneficiaries have no rights
What is the General Rule for the parties to the contract to have rights?
- People: Privity of contract
- ‘Intended’ 3rd Party Beneficiaries
When can a contract NOT be Assigned or Delegated?
When the assignment will:
- Change the Obligor’s Risk
OR
- Delegated duty involves: Specialized personal services
How is a Requirements Contract limited?
- Companies can’t get locked in to one
&
- Then have market conditions force them to sell something at what has become an unreasonable price
What is governed under the Statutory Law?
- Uniform Commercial Code: ‘UCC’ (Sale of Goods)
What types of Conditions affecting Performance may validly be present in contracts?
- Precedent
- Concurrent
- Subsequent
