Test 2 Flashcards
Of old how were agreements made
Medieval merchant guild
Courts of Chancery (equity)
Today contracts are…
Common law (judge made precedent)
What 3 things are not covered by the UCC
Intangible good
Real estate
Services
Uniform commercial code
Laws and judicial gloss governing tangible goods.
Offeror/promisor
Person making the offer (promisor used in financial contracts)
Giver
Offeree / promisee
Persons the offer was directed to.
Ower
Void
Never was a co tract to begin with
Voidable
Can be voided with correct legal steps
Involved a minor
Fraud
Duress
Executory
Not yet filled by both parties
To be filled at a later date
Executed
Fully filled by both parties
Quasi contract
Contract implied in law
Legal fiction to promote socially desired results
Contract implied in fact
Details of contract created by interactions of the parties involved
Unjust enrichment
Financial gain by mistake of another. You can be billed for services if a company put a roof on your house by mistake.
Bilateral
Promise for promise
Unilateral
Promise for an action
Forebare
Withhold an action
Unenforceable
Courts won’t enforce because some legal reason (not void or voidable)
Are oral contracts enforceable
Usually
Goals of the UCC
Uniformity
Conform to how people had done business
Create hard line rules for complex
situations with common law
Common law is …
Simple
Understandable
Draconian (no intent is considered)
Lex Mercatoria
Law of merchants
Absorbed into common law
4 fundamental questions of contract
-Was a contract made?
-Is contract enforceable?
- Was contract executed(discharged), breached; or performance was legally excused
-If breached , how shall it be enforced or what remedy shall be granted
4 basic elements of a contract: what 4 things must a contract have to be valid.
Mutual assent
Consideration
2 or more parties with legal capacity
Contract must not be illegal or contrary to public policy
For an offer to be valid it must be
Clear
Complete
Unambiguous
Mutual assent
2 parties freely and voluntarily enter into the contract.
UCC gap fillers
Price -reasonable for market/service
Quality
Place or delivery-buyer pick up at seller place of business
Time of delivery- normal business hours
Time of payment - upon receipt
Method of payment -cash or cash equivalent
What are the UCC gap fillers
Price -reasonable for market/service
Quality
Place or delivery-buyer pick up at seller place of business
Time of delivery- normal business hours
Time of payment - upon receipt
Method of payment -cash or cash equivalent
What 4 things are not valid offers
Predictions
Opinions
Statements of future intent
Negotiations
Ads are considered what
Solicitation to a buyer not an offer
What is needed for contract to be valid under UCC
Did the parties intend to contract with each other.
How does the UCC attempt to save a contract
Gap fillers
Course of performance
Course of dealing
Usage of trade
What is course of performance
Details can not be changed within the course of the same contract
What is course of dealing
How the parties of a contract have dealt with each other under previous contracts creates precedent
What is usage of trade
Every trade has its on jargon and can establish contract terms within that jargon
“Truckload” is an exact quantity
Termination and duration of offers
Acceptance - now it is a contract
Rejection or counteroffer
Lapse of time
Revocation of offer
Death or insanity
Destruction of subject matter
Supervening illegality
What is an offer with reserve
Usually at auction
Minimum amount accepted
Auctioneer is the offeree soliciting offers does not have to accept the offer.
What is an offer without reserve
Auctioneer is offer or and obligated to take the highest bid
Usually seen only at estate sales.
What is a lapse of time within the common law
Face to face offer ends when one person leaves
Telephone- when hung up
What is lapse of time according to the UCC
Set by the terms
Reasonable not more than 90 days
Different products have different times such as the price changes quickly reasonable under the circumstances
What is an option
Agreement to keep the offer open but is not binding unless money has been exchanged
What constitutes a firm offer
In writing with a signature to hold offer without payment for a given time. It is binding.
When is a unilateral offer binding
When the work begins (supplies are bought) becomes irrevocable
Types of consideration
Money
Action -service
Forbearance
Promise -to pay act or forbare
What is the mirror image rule
For an acceptance to be valid it must match the offer exactly
Explain “master of his offer”
The offerer may condition an offer’s acceptance on anything but silence.
What is the objective theory of contracts
Would a reasonable person in this position believe the offeree intended to accept the offer
What is the purpose of consideration
To encourage economic exchange of legal value
No moral stake
What is the courts stance on consideration?
The do not evaluate adequacy of consideration unless there is fraud, duress or undue influence
What things look like consideration but are not
Past consideration
Moral obligation
Pre-existing duty
Illusionary promises
What is past consideration
You can not be rewarded for something that has already occurred.
What is pre existing duty?
Person has a preexisting duty to not do that already. Ie drugs
What is illusionary promise
Promise based on opinion “I’ll pay $2000 if I like it”
Liquidated debt vs unliquidated debt
Liquidated is not in question vs unliquidated is in dispute
When is consideration unnecessary
Promissory estopple
Charitable pledges
Written promise to pay debt after bankruptcy
Written promise to pay debt after statute of limitations
What is promissory estoppel
Legal principle that a promise is enforceable by law even without formal consideration
What are the 5 steps to argue promissory estoppel
-Def makes a promise to plaintiff
-Def knew pl would rely on the promise -Pl does rely on the promise
- Pl relying on said promise was reasonable
-Pl suffered damages as a result of promise
Who does not have legal capacity
Minors
Mentally incompetent
Why can minors not sign contracts
Lack of maturity, education and experience
Contracts between adults and minors are …
Voidable not void
What is disaffirmance
And words or actions manifesting an intent not to be bound by the contract
When can a minor or mentally incompetent person disaffirm a contract
Anytime while still a minor or incompetent or within a reasonable time after
Who can disaffirm a contract
Only the minor/incompetent or their legal guardian
If a contract is disaffirmed what happens to the items
Minor must return in current condition if lost stolen used there is no remedy, if sold return money gained if they still have it.
Adult must return money and items to minor
What contracts with minors can not be disaffirmed.
Necessities
What is ratification
Opposite of disaffirm a indication that the minor/incompetent wants to be in contract
How can a contract be ratified
Express words
Actions indicating intent
Failing to disaffirm within a reasonable time
What can cause mental incompetence
Mental illness
alcohol
drugs
Stress
Physical illness
It’s is the claimer’s job to prove
What contracts are illegal
To commit a crime
Violate a statute
Do a legal thing by an illegal manor
By a person lacking a license
What contracts are contrary to public policy
No void but unenforceable if challenged in court
Ie non compete
Exculpatory clauses
Surrogacy contracts
Decided by the court
What is exculpatory clause
Contract clause that shifts liability to another person
3 criteria of a non-compete
Has a purpose other then stifling competition
Reasonable geographic area
Reasonable time
Blue pencil remedy
A remedy that makes a contract agreeable to the court
Rarely used
What limits exist for an exculpatory clause
You can not insulate yourself from negligence
What will negate freedom of contract
Fraud
Misrepresentation
Duress
Undue influence
Bilateral mistake of fact
Unconscionability
6 elements of fraud
Misrepresentation of fact
Misrepresented fact was material
Misrepresentation was intentional
Pl relied on the misrepresentation
Pl reliance was reasonable
Pl suffered damage
What three things are not considered to be fraud
Opinions
Puffing
Silence
Remedies for fraud
Rescission or compensatory and punitive damages.
What is misrepresentation
Negligent tort
Same a fraud but the misrepresentation was negligent not intentional
No punitive damages can be awarded
Elements of duress
Def make a threat of harm
Reasonable for pl to believe threat
Threat results in contract not otherwise signed
Pl suffered damages
May include non-criminal if motivated by malice
Undue influence
Someone enters a contract with another and uses their power or position over them unfairly
How much evidence is required to prove a mistake in terms
Clear and convincing
Prima facia
On its face
