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15 Cards in this Set

  • Front
  • Back
  • 3rd side (hint)
Statute of limitations and bankruptcy are two examples of when the _____ can discharge a contract.
Law
Another reason a contract could be discharged by the law is impossibility of performance.

Examples of impossibility of performance include:
1 – Death of the person to perform the service
2 – Destruction of the property/goods being sold
3 – A law makes performance of contract illegal
4 – Acts of God make fulfillment of contract impossible
________, which is something of value given in exchange for a promise, is a required element of a valid contract.
Consideration
Consideration is based on the Latin expression “quid pro quo,” which is translated “something for something.” Without consideration, a contract is normally not enforceable.
In English common law, affixing a wax seal was a substitute for consideration. A wax seal is not a valid substitute for consideration in modern court cases. If a contract violates_________ policy, the agreement can be declared illegal.
public
Public policy requires that contracts be in agreement with general morality. This means that a “reasonable person” should not think that the contract is unjust/immoral. A contract that obstructs justice, restricts a person from earning a living, contains unreasonable exculpatory clauses, or discriminates unfairly will most likely violate public policy and be unenforceable.
A(n) ________ contract is a contract in which the parties use oral or written words to specifically state the contract’s terms and their intentions.
express
Express contracts are specific and carefully worded to reflect the intentions of the two parties. Express contracts are oral or written promises between two parties. Examples include:
Written – An apartment lease that both parties agree to and sign
Verbal – Two parties verbally agree on the price of a vehicle for sale
A(n) “_________-in-fact” contract is not spoken or written. Instead, this type of contract is based entirely on the behaviors and actions of the involved parties.
Implied
With “implied-in-fact” contracts, the proof of the contract is the behavior or actions of the involved parties. Consider the following example:
You get in a taxi cab and tell the cab driver to take you to a restaurant. You have not verbally promised to pay him, but you have “implied-in-fact” that you would pay him. A court would rule that you must pay him the fare even though you did not verbally promise anything.
If _________ is absent, the contract is unenforceable.
Consideration
Some examples where consideration is absent include:
Illusory promise – I will sell you my car for $5,000 if I feel like it
Moral obligation – I will always take care of my sister
Pre-existing duties – Police officer who arrests a criminal is not eligible for the award
Past consideration – You rescue a pet for someone who then promises to pay you an award
None of the above examples have adequate consideration. Therefore, they are not binding.
A parking garage that places the following text on the receipt: “Parking Garage USA is not responsible or liable for the damage or theft that may occur to your vehicle. Park at your own risk.” A(n) _________ clause, which is meant to protect the interest of one party, relieves one party of liability.
Exculpatory
An exculpatory clause is legal if it is reasonable and not hidden. If a party has other options and can reasonably refuse to be subjected to the risk, the exculpatory clause will be upheld. In the case of the parking garage, the exculpatory clause would most likely be considered legal and be upheld.
A ________ contract is only binding on one of the parties.
Voidable
Contracts with minors and contracts with persons under mental duress are two examples of voidable contracts. With a voidable contract, only one of the parties is bound.
Due to the threat of being shot and killed, Vickie agrees to sell her car for $1. Because she was under severe _________, the contract is void. If someone enters/modifies a contract while under _________, the contract/modification is void. (hint: type one correct answer in the blank—the answer for both blanks is the same).
Duress
Duress, which is a threat that leaves an individual no reasonable alternative, voids a contract. If an improper threat was made that caused someone to enter a contract, it is normally considered duress.
55 When a contract is based on a _________ mistake, the contract is voidable.
mutual
The court will look for the following three items prior to voiding the contract:
1 – Both parties made a mistake
2 – The mistake has material impact on the contract
3 – The party seeking avoidance has not assumed the risk of the mistake
A unilateral (one party – not mutual) mistake is not normally grounds for voiding a contract.
Discharge by __________, which means both parties have “substantially” fulfilled their obligations, is the way a contract is supposed to end.
Performance
A contract that is discharged by performance does not require performance of every last detail. Instead, the contract is analyzed to ensure that it was “substantially” performed.

For example: A contractor signs a contract that promises a graded lot, built house, poured driveway, and landscaped yard in exchange for $100,000. Unfortunately, the nursery is out of shrubs and trees and the contractor cannot landscape the yard. Since he has “substantially” performed the contract, the court will see the contract as “performed,” but subtract the cost of the landscaping from the agreed upon price.
If a person with a “superior position” or “confidential relationship” takes advantage of another individual, the contract will be unenforceable due to the _________ influence.
undue
A dominant relationship (trusted relationship or weakened state) and the unfair persuasion of the other party are the two requirements for undue influence. Remember, undue influence normally involves two parties who are in a trusted relationship – Father/Son, Doctor/Patient, Attorney/Client, etc.
If James and Caroline have a contract and James is unable to perform or in breach of his contract, he can obtain a __________ from Caroline by payment of consideration.
Release
If one party agrees to excuse the other party from performance of his contract, it is called a release. Normally the consideration is a cash payment, but it can be anything of value. After a release is obtained, the party is protected from a suit.
When a contract clause requires both parties to act simultaneously, it is known as a __________ condition. Most contractual conditions fall in this category.
Concurrent
Concurrent conditions require both parties to act concurrently (simultaneously). For example, a loan will be granted when the debtor’s credit is approved. The other two types of conditions are:

Condition Precedent (think beginning) – is a condition that must be met before there is a contractual obligation. For example, the seller of land must agree to get it zoned residential by a certain date.
Condition Subsequent (think end) – is a condition that terminates the contractual obligation of a party. For example, a manufacturer’s warranty claim must be made within 90 days.
When a party to the contract fails to perform as promised, the contract is discharged by _________.
Breach
It is important to realize that if the contract is “substantially” performed, it is not breached. Even if the contract is not “substantially” performed, the non-breaching party may be responsible for the value of goods or services received (quantum meruit).
The non-breaching party of a contract can sue for damages.