Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
186 Cards in this Set
- Front
- Back
|
Elements of a Contract |
Offer, Acceptance, Consideration, Legality, Capacity, Consent, Writing |
|
|
Offer |
all contracts start with a deal proposal |
|
|
Acceptance |
Must respond in a certain way once offer is received |
|
|
Consideration |
has to be bargaining that leads to an exchange between parties |
|
|
Legality |
Contract must be for a lawful purpose |
|
|
Capacity |
parties must be adults of sound mind |
|
|
Consent |
Certain kinds of trickery and force can prevent the formation of a contract |
|
|
Writing |
Verbal agreements often amount to contracts, some types of contracts must be in writing to be enforceable |
|
|
Contracts |
promise that the law will enforce |
|
|
Development of Contract Law |
common law once required contracts to be in writing Some payment was required before contract could be enforced |
|
|
Contracts 1600's |
mutual promises became enforceable |
|
|
Contracts 1900's |
courts began to consider the fairness of contracts before enforcing them |
|
|
Bilateral contract |
both parties make a promise to each other |
|
|
Unilateral Contracts |
one party makes a promise to the other that the other party can accept only by doing something specific |
|
|
Express Contracts |
the two parties of the contract state all of the important terms of their agreement |
|
|
Implied Contract |
the words and conduct indicate that the parties intended to make an agreement |
|
|
Executory Contract |
when one or more parties have not fulfilled its obligations under the contract |
|
|
Executed Contract |
when all parties to the contract have fulfilled their obligations under the contract |
|
|
Valid Contract |
satisfies the law's requirements |
|
|
Unenforceable contract |
when the parties intend to form a valid bargain but some rule of law prevents enforcement |
|
|
Voidable contract |
when the law permits one party to terminate the agreement |
|
|
Void Contract |
one that neither party can enforce, usually when purpose is illegal or had no legal authority |
|
|
Promissory Estoppel |
when there is no contract a plaintiff may use this to enforce the defendants's promise |
|
|
Promissory Estoppel must show |
defendant made a promise knowing the plaintiff would likely rely on it Plaintiff relied on the promise Avoid injustice by enforcing the promise |
|
|
quasi contract |
when there is no contract a court my use this to compensate a plaintiff |
|
|
quasi contract must show |
plaintiff gave some benefit to the defendant reasonably expected to be paid defendant would be unjustly enriched if they did not pay |
|
|
damages awarded in a quasi contract |
quantum meruit, "as much as he deserved" |
|
|
UCC |
Uniform Commercial Code |
|
|
UCC Article 2 |
governs the sale of goods |
|
|
Meeting of the Minds |
must understand each other and intend to reach an agreement, required to form a contract |
|
|
Invitation to Bargain |
not an offer advertisement is generally not an offer |
|
|
Letter of Intent |
may or may not be an offer depending on the writers intent
|
|
|
Problems with Definiteness |
term of the offer must be definite |
|
|
Termination by Revocation |
Effective when the offeree receives it |
|
|
Termination by Rejection |
If an offeree rejects an offer, the rejection immediately terminates the offer |
|
|
Termination by Counteroffer |
If an offeree counteroffers, it is a rejection that immediately terminates the offer |
|
|
Termination by Expiration |
If offer is not accepted within time limit or reasonable period the contract is terminated |
|
|
Termination by Destruction |
Destruction of subject matter terminates Death of offeror or offeree terminates |
|
|
Offer is irrevocable when |
Written Signed by offeror Containing essential terms/conditions Supported by consideration |
|
|
Acceptance in a bilateral contract |
offeree generally must accept by making a promise |
|
|
Acceptance in a unilateral contract |
offeree must accept by performing |
|
|
Mirror Image Rule (Common Law) |
Requires that acceptance be on precisely the same terms as the offer |
|
|
New terms added to a sales of goods contract |
does not void the agreement |
|
|
Mailbox Rule |
An acceptance is generally effective upon dispatch, meaning the moment it is out of the offeree's control |
|
|
if there is an illegal contract |
court will not assist either party, even if its refusal leaves one party shortchanged |
|
|
ancillary |
provide necessary support to primary activities |
|
|
Restraint of Trade |
agreement not to compete must be ancillary to a legitimate bargain |
|
|
Examples of Restraint of Trade |
Sale of business and employment |
|
|
Exculpatory clauses |
part of a contract that attempts to release you from liability for injury to another party |
|
|
Exculpatory clauses are unenforceable when |
attempts to exclude an intentional tort or gross negligence affected activity is in the public interest parties have greatly unequal bargaining power not clearly written and readily visible |
|
|
Unconscionable Contracts |
court refuses to enforce because of fundamental unfairness |
|
|
Oppression |
meaning that one party used its superior power to force a contract on the weaker party |
|
|
Surprise |
meaning that the weaker party did not fully understand the consequences of its agreements |
|
|
Voidable contracts for Capacity |
minor under age of 18 |
|
|
Void contracts for Capacity |
persons adjudged incompetent by the court |
|
|
Disaffirmance for minors |
minor may notify the other party he refuses to be bound by the agreement has option of filing a suit to rescind the contract |
|
|
Restitution for minors |
minor who disaffirms a contract must return the consideration he has received, to the extent he is able |
|
|
Mentally Impaired Persons |
mental illness or defect, who is unable to understand the nature and consequences of a transactions, usually lead to a voidable contract |
|
|
Intoxication and contracts |
when an intoxicated person makes a contract, it is voidable |
|
|
Innocent misrepresentation |
means the owner believes the statement to be true and has a good reason for that believe |
|
|
Fraudulent misrepresentation |
means the owner knows that the statement is false |
|
|
3 things to rescind a contract based on Misrepresentation and Fraud |
False statement of fact statement was fraudulent or material Injured person justifiably relied on the statement |
|
|
If the makers statement is fraudulent the injured party generally has a choice |
Rescission of the contract or suit for damages |
|
|
Nondisclosure of a fact is misrepresentation only when disclosure is necessary |
To correct a previous assertion
To correct a basic mistaken assumption To correct a mistaken understanding about a writing In a relationship of trust |
|
|
In a relationship of trust |
when one party naturally expects honestly based on a close relationship, the other party must act accordingly |
|
|
Bilateral Mistake |
when both parties negotiate based on the same factual error, contract is voidable by the injured party |
|
|
Conscious Uncertainty |
No rescission is allowed where one of the parties knows they are taking a risk |
|
|
Unilateral mistake |
when only one party enters a contract under a mistaken assumption |
|
|
To rescind a unilateral mistake |
if enforcing the contract would be unconscionable or the nonmistaken party knew of the error |
|
|
Statute of Frauds |
many agreements are unenforceable unless it is in writing and signed |
|
|
Agreements that must be in writing |
land over a year to pay debt of another marriage sales of goods over $500 |
|
|
Exception for Land deals to be in writing |
Full performance by the seller Part performance by the buyer |
|
|
Collateral promise |
paying debt of another must be in writing |
|
|
Writing must contain |
signature of the defendant name of each party subject matter of the agreement all of the essential terms and promises |
|
|
Third Party Beneficiary |
Someone who was not a party to the contract but stands to benefit from it
|
|
|
incidental beneficiary |
may not enforce the contract |
|
|
intended beneficiary may enforce a contract is they were intended to benefit and if |
enforcing the promise will satisfy a duty or the promisee intended to make a gift to the beneficiary |
|
|
Assignment of rights |
contracting party may transfer his rights under the contract |
|
|
Delegation of duties |
contracting party may transfer her duties pursuant to the contract |
|
|
Assignor |
the one making the assignment |
|
|
assignee |
the one receiving the assignment |
|
|
Contractual rights may not be assigned when they |
substantially change rights or duties under the contract forbidden by law or public policy validly precluded by the contract itselft |
|
|
Once assignment is made and the obligor is notified |
the assignee may enforce contractual rights against the obligor |
|
|
Obligor may delegate unless |
delegation would violate public policy contract prohibits delegation obligee has a substantial interest in personal performance by the obligor |
|
|
Discharged |
when there are no more duties under a contract |
|
|
Rescind |
terminate contract by mutual agreement |
|
|
Strict Performance |
exactly what promised, not cause for discharge |
|
|
Substantial Performance performed |
receives the full contract price, minus the value of any defects |
|
|
Substantial Performance failed |
receives nothing on the contract and will only recover the value of the work |
|
|
Material Breach |
will discharge if causes substantial harm |
|
|
Impossibility contract |
not discharge if it merely imposed a financial burden |
|
|
Statute of Limitations |
Will limit the time within which the injured party may file a suit |
|
|
True Impossibility |
Something has happened making it utterly impossible to fulfill the promise |
|
|
examples of true impossibility |
Destruction of subject matter Death of promisor in a personal services contract Illegality |
|
|
Expectation Interest |
Designed to put the injured party in the position that they would have been if the contract was fully performed |
|
|
Reliance Interest |
Designed to put the injured party in the position they would have been if they never entered a contract |
|
|
Restitution Interest |
Designed to return to the injured party a benefit that he has conferred on the other party |
|
|
Equitable Interest |
When money is not sufficient to help the injured party, court may order transfer of property or issue an injunction |
|
|
Compensatory Damages |
direct damages, usually directly from contract |
|
|
Injured party for compensatory damages |
Injured party must prove the breach caused damages that can be quantified |
|
|
Consequential Damages |
resulting from the unique circumstances of the injured party |
|
|
Incidental damages |
relatively minor costs incurred when the injured party responds to the breach |
|
|
Specific Performance of Equitable Interests |
court will order the parties to perform the contract only in cases involving the sale of land or some other unique asset |
|
|
Injunction |
court order that requires someone to do something or refrain from doing something |
|
|
Reformation |
process in which a court will partially re-write a contract |
|
|
Mitigation of Damages |
party may not recover for damages that could be avoided with reasonable efforts |
|
|
Development of the UCC |
goal to draft a modern law of commerce, made in 1952 |
|
|
Article 2A of the UCC |
governs the leasing of goods |
|
|
Merchants |
routinely deals in the particular goods involved appears to have or uses agents with special knowledge or skill |
|
|
UCC holds a merchant |
to a higher standard of conduct than a non-merchant |
|
|
UCC 2-204 |
parties make a contract in any manner as long as there is an agreement commercially reasonable terms will be assumed by the courts |
|
|
UCC 2-201 must be in writing if sale for goods is worth more than $500 |
must be signed by the defendant |
|
|
Enforceable only to quality stated |
code will enforce the contract only up to the quality of goods stated in writing |
|
|
Incorrect or Ommited Terms |
court may enforce a bargain even though one or more terms were left open
|
|
|
Merchant Exception when two merchants make an oral contract |
one sends a confirming memo within a reasonable time
sufficiently definite memo is valid unless merchant objects in 10 days |
|
|
UCC 2-207 |
If offeree intends to accept and adds or alter terms than it will usually form a contract |
|
|
If offerer accepts new terms |
no new contract it is considered a new offer |
|
|
Additional terms |
those that raise issues not covered in the offer |
|
|
Different terms |
Contradict terms in the offer |
|
|
Conforming goods |
satisfy the contract terms |
|
|
Inspection |
the buyer generally has the right to inspect the goods before paying or accepting |
|
|
May reject non-conforming goods but |
the seller has the right to cure before the contract deadline |
|
|
Cover |
reasonably obtaining substitute goods buyer may obtain the difference between the contract price and the cover price |
|
|
Incidental and Consequential damages |
injured buyer is generally entitled to these damages |
|
|
Resale |
Seller may recover difference between the resale price and contract price, plus incidental damages, minus expenses saved |
|
|
Action for the Price |
Seller may recover the contract price if the buyer has accepted the goods or the sellers goods are conforming and he is unable to resell after reasonable effort |
|
|
Product Liability four main issues |
Warranty, Negligence, Strict Liability, and Fraud |
|
|
Product Liability |
when goods cause injury |
|
|
Warranty |
contractual assurance that goods will meet a certain standard |
|
|
Negligence |
unreasonable conduct by the defendant |
|
|
Strict Liability |
policy which holds the defendant liable regardless of his behavior |
|
|
Express Warranties |
One that the seller creates with his words or actions |
|
|
Express warranty can be created |
by any affirmation of fact or any promise
description of the goods sample or model |
|
|
Implied warranties |
are created by the Code |
|
|
Implied Warranty of Merchantability |
warranty that goods shall be merchantable is implied in a contract for their sale |
|
|
Implied Warranty of Fitness for a particular Purpose |
when seller knows about a particular purpose for which the buyer wants the goods and knows the buyer is relying on the seller's skill and judgement |
|
|
Disclaimer |
statement that a particular warranty does not apply |
|
|
Oral express warranties |
may be disclaimed by clear conspicuous writing |
|
|
Written express warranties |
may not be disclaimed |
|
|
Implied warranties of merchantability , diclaim |
may disclaim but must use word merchantability |
|
|
All implied warranties |
may be disclaimed by use of "As is" or other conspicuous writing |
|
|
Negligence cases, plaintiffs often raise these claims |
negligent design, negligent manufacture, and failure to warn |
|
|
Strict Liability need not prove |
that the defendant's conduct was unreasonable |
|
|
Strict liability may be imposed if |
defective condition unreasonably dangerous merchant seller physical harm |
|
|
Strict liability may be imposed even if |
seller exercised all reasonable care and if there is no contractual relationship |
|
|
Consumer expectation |
if the design causes the product to be less safe than expected |
|
|
Federal Trade Commision |
Created in 1915 to regulate business |
|
|
FTC may enforce the law by |
Voluntary Compliance Administrative hearings and appeals Penalties |
|
|
Consumer Financial Protection Bureau |
Created to regulate consumer financial products and services mortgages, credit cards, and private student loans |
|
|
Section 5 FTC act |
prohibits unfair and deceptive acts or practices |
|
|
Deceptive acts or practices |
Contains an important misrepresentation or omission that is likely to mislead |
|
|
Unfair practices |
causes substantial consumer injury harm of injury outweighs benefit consumer could not reasonably avoid the injury |
|
|
Bait-and-Switch |
practice where sellers advertise products that are generally unavailable to draw interested parties to buy other products |
|
|
Merchandise bought by mail, telephone, or online |
must be shipped when promised, or within 30 days if company cannot ship the product it must send the customer a notice with the new shipping date opportunity to cancel |
|
|
If the company cannot ship by the second shipment date |
must cancel the order unless the customer returns the notice |
|
|
Telemarketing |
prohibits calling any numbers on the do-not-call list |
|
|
Unordered merchandise |
anyone that receives unordered merchandise in the mail can treat it as a gift |
|
|
Door-to-Door sales |
salesperson is required to notify the buyer that they have the right to cancel the transaction prior to midnight on the third business day |
|
|
Consumer Credit penalty |
member may forfeit interest above the usury limit, all of the interest, or all of the loan and the interest |
|
|
Truth in Lending Act applies to a transaction if all of the following are met |
consumer loan loan has a finance charge or will be repaid in more than 4 installments less than $51,800 someone in business of offering credit |
|
|
Disclosure in all loans regulated by TILA |
must be clear and meaningful lender must disclose the finance charge creditor must also disclose the annual percentage rate (APR) |
|
|
Closed-end credit : Before finalizing the loan, the lender must disclose: |
cash price total down payment amount financed list of all charges number amount date of payments Total payments Late payment and pre payment penalties the lender's security interest in the item |
|
|
Mortgage loans for TILA |
TILA prohibits unfair, abusive, or deceptive home mortgage lending practices |
|
|
Subprime loan |
A loan that has an above-market interest rate because the borrower is high-risk |
|
|
Home loans TILA requires |
lenders to make good faith effort to determine whether a borrower can afford to repay the loan |
|
|
consumer must pay fees and points higher than 8% of total loan amount if |
APR is more than 10% higher than Treasury securities |
|
|
Home Loan Rescission |
consumers have the right to rescind a mortgage for up to 3 business days after the signing |
|
|
Credit Card disclosure |
TILA establishes disclosure rules called open-end credit |
|
|
before establishing an open end credit account the lender must disclose to the consumer |
when finance charge will be imposed how the finance charge will be calculated |
|
|
Credit card monthly statements lender must disclise |
amount owed dates of purchases finance charges date ill be paid |
|
|
Regulation of Credit Card debt |
Congress increased oversight of credit card companies by passing the Credit Card Act of 2009 |
|
|
Liability for stolen cards |
you are liable only for the first $50 in charges the thief makes before you notify the company |
|
|
Fair Credit Billing Act |
Credit card companies must acknowledge receipt of a complaint from a cardholder must investigate complaints and respond |
|
|
Liability for Stolen debit card |
much greater than credit card |
|
|
Overdraft Fees |
usually charge 20-30 dollars but under new rules must sign up for an overdraft plan |
|
|
Consumer reporting agencies |
businesses that supply consumer reports to third parties |
|
|
Consumer report |
any communication about a consumer's creditworthiness, character, general reputation, or lifestyle |
|
|
Fair and Accurate Credit Transactions Act |
consumers are entitled by law to one free credit report every year |
|
|
3 major credit reporting agencies |
Equifax
Experian Trans Union |
|
|
Identity Theft |
fraudster steals a victims personal information |
|
|
National Fraud Alert System |
permits consumers who feel they may be a victim of identity theft to place an alert in their credit files |
|
|
Fair Debt Collection Practices Act |
collectors may not call or write a debtor who wants no further contact, call or write a debtor who is represented by an attorney, call debtor before 8am or after 9pm |
|
|
Equal Credit Opportunity Act |
prohibits any creditor from discriminating against a borrower |
|
|
Consumer Leasing Act |
lessor must disclose payments, balloon payments, required insurance payments, annual mileage allowance |
|
|
Magnuson-Moss Warranty Act |
must put warranty in simple understandable language |
|
|
Consumer Product Safety Commission |
evaluates consumer products and develops safety standards |
