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59 Cards in this Set
- Front
- Back
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Define: Contract Law
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PBRPD
a promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law recognizes as duty |
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Define: Offer
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a manifestation of an intention to contract
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Offer: What are the terms of the Traditional Rule
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Terms =
--Traditional Rule : for a valid offer, all essential terms of contract have to be contained in the offer or the offer must provide a basis for determining such matters with reasonable certainty…essential = price, quantity, delivery date, etc. |
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2 Exceptions that can be missing from an offer: UCC
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-U.C.C. = 2 exceptions are (1) missing price term (2) missing quantity term (requirements or output)
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Preliminary Negotiations - Offers and Counter-offers:
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--- Counter-offer serves as a rejection of the preceding offer
--- Only offer that is open is the last offer |
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Example: Preliminary Negotiations
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Whitherspoon wants to sell his car to Drew who wants the car; there is a disagreement of price…Whitherspoon offers to sell for $25,000, Drew says he will buy it for $22,000; the negotiation continues until an agreeable price is met
-- Counter-offer serves as a rejection of the preceding offer --- Only offer that is open is the last offer |
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Advertisement
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An advertisement is not considered an offer, it is an invitation to come in and negotiate
--Exception = Ad is specific to quantity, price, and who can accept |
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Auction
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Making a bid is making an offer; it is accepted when it is sold; the bid can be taken back up until the gavel is struck
--Important to know if the auction is being conducted with reservation = the auctioneer does not have to accept high bid, there could be a limit |
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When does an offer take effect?
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an offer does not become effective until the offeror or his agent have actually communicated it to the offeree…offer does not take effect until it is received
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2 Things that Can Terminate an offer -
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1.Lapse of Time ---- reasonable amount of time to accept offer
2.Revocation = annulment or reversal---- effective upon receipt |
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Direct Termination of an Offer
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communicated directly with other party
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Indirect Termination of an Offer
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Example = Spoon offers sale to Leslie, but later that day he sells to Shane, later that day Leslie accepts contract before Spoon can tell her he sold it already
Indirect notice isn’t just selling, but if Leslie obtains knowledge of the sale then the offer is revoked |
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3 Methods of Rejection by the Offeree (Hint: OCC)
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Three ways:
1.)Outright 2.)Counter-Offer 3.)Conditional or qualified acceptance |
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Outright rejection by the offeree:
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rejection by saying NO
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Counter-offer by the offeree
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there only can be one offer on the table at anytime, with the exception of someone saying something like “Keeping your offer open or keeping your offer under advisement, I will pay $XXXX
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A conditional or qualified acceptance by the offeree - Traditional rule
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Traditional Rule ---- Example = Spoon has a tract of land he will sell for $100,000…response is that I’ll pay the 100,000 if you will clear the land, this response imposes an extra term or duty the contract…the original offer is terminated and a contract could be reached on the new terms on the table
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Conditional or qualified acceptance under the UCC is detailed in which process?
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Battle of the Forms
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Battle of the forms
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Purchase Order - Purchaser
Acknowledgement - Supplier Final Agreement - Everything from the first form combined with the terms stated in the second. --Arbitration Clause added in the 2nd form and if there is a dispute, then the 2 parties will not go to court to solve, they will find a neutral 3rd party who will mitigate |
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Example: Termination of an Offer because of death of the offeror prior to acceptance.
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Spoon has a boat and offers to sell it to me, I accept, but before I pay an its delivered, Spoon dies, in this case there is a valid contract…however, if Spoon dies before I have a chance to accept the offer in no longer valid
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Exceptions to termination of an offer because of death:
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(2) Part performance of an offer to enter into a unilateral contract
(1) Option Contract |
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Irrevocable offers: Traditional Rule - one way or the other, you are giving up something.
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Traditional = (Example) Spoon offers to sell Drew’s land for $13 million, Drew is interested but wants time to consider…Drew will offer to pay Spoon $50,000f or a 1 month option period --- If Drew doesn’t accept, he forfeits the 50,000…If Drew accepts, the 50,000 is subtracted from final total
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Irrevocable offers: UCC
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Example) Spoon goes to Lowe’s to look for riding lawn mowers…they are on sale from $2500 down to $1250 on sale to Oct. 1 …Manager tells Spoon in writing that he can purchase lawn mower up to Nov. 1 for the sale price… “Firm Offer Rule” – no requirement of consideration if the promise to keep the offer open is made in writing by a merchant
--- An offer to enter into a unilateral contract cannot be revoked if performance has already begun. |
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Define: Acceptance
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a manifestation of ascent to the offer; communicate the intention
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Power to Accept
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only the person to whom the offer is made has the power to accept
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The 3 Methods of Acceptance: (Hint: PAA)
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(1)Performance – where the offeror has made an offer to enter into a unilateral contract
(2)Acceptance by promise (3)Acceptance by silence – if both parties agree silence will be sufficient |
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Acceptance :Special Rules under the U.C.C.
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Nonconforming tender of goods - if the goods aren't according to those listed in the contract, they can be rejected.
Order for the prompt shipment of goods (promise or performance is sufficient) |
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When is Acceptance effective - Traditional Rule
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whether acceptance is effective on receipt or dispatch depends on whether the offeree used the authorized mode of communication (same mode as used in the offer)
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When is Acceptance Effective - UCC and Modern Trend
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the offeree may use any reasonable mode of communication (mail, mail services, fax along with a mailed acceptance) ; however, the offeror always can expressly condition acceptance on receipt or to the use of a particular mode of communication
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When is Acceptance Effective - Mailbox Rule
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acceptance at moment of posting a properly addressed and stamped envelope
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When is Acceptance Effective -Acceptance of a Unilateral Contract
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a)Acceptance effective on completion of performance
b)Offeree must act with knowledge of the offer and be motivated to act by it Monday – Mail Offer Tuesday – Offer is Received (Effective Offer) Wednesday – Mail revocation Thursday – Acceptance is mailed (Mailbox Rule) Friday – Revocation received (Effective Revocation) Saturday – Acceptance received |
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Reality of Consent - 5 Areas
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Misrepresentation
Fraud Duress Undue Influence Mistake |
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Reality of Consent - Misrepresentation
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an innocent misrepresentation of material fact justifiably relied on by the promisee
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Reality of Consent - Fraud
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an intentional misrepresentation of material fact justifiably relied on by the promisee
Options = (1) return car and demand refund (voidable contract) (2) Keep car and sue for difference (3) Punitive Damages = amount of money designed to punish the wrongdoings After discovery of Fraud (or misrepresentation) then there is only a reasonable time to bring suit Practical Problem --- proving a dealer made a misleading statement from a neutral 3rd party |
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Reality of Consent - Duress
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unlawful coercion exercised upon a person to do some act that he would not have done otherwise
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Reality of Consent - Undue Influence
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intended to protect the aged, the timid, the physically or mentally weak for the unscrupulous who gain their confidence and take advantage of them
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Reality of Consent - Mistake
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a)Mutual Mistake = if it goes to the heart of the bargain (examples include the physical condition of the good) it prevents formation, there will be no contract
b)Unilateral Mistake = will not prevent formation |
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Mistake - Types (Hint: SCIT)
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Mistake in Subject Matter
Mistake in Computation Mistake in Identity Mistake in Transmission |
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Latent Ambiguity
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The agreement may appear to be perfectly clear, but because of subsequently discovered fact the contract may reasonably be interpreted in either of two ways --- the one case in contract law that a subjective test is used rather than a objective test
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The 2 Rules on Latent Ambiguity
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Rules : (1) if both parties are unaware of ambiguity there will be no contract unless they happen to intend the same meaning (2) if one party is aware of ambiguity and the other is not, there will be a contract according to the intentions of the unaware party
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Bi-Lateral Consideration
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generally only the presence of valuable consideration on both sides of the bargain will make an executory bilateral contract fully enforceable from the moment of formation
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Elements of Consideration
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(1) Bargained for exchange (2) That which is bargained for must be considered of some legal value to the promisor or some determinant to the promisee
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Define: Preexisting Legal Duty Rule -
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((a) Traditional – a promise to perform or performance of an existing legal duty will not be sufficient consideration (b) U.C.C – the U.C.C. has abolished the Preexisting Legal Duty Rule
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Past or Moral Consideration
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if something has already been given before the promise was made it will not satisfy the requirements
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Adequacy of Consideration
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Courts generally do not look at this.
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Part payment as consideration for a promise to forgive debt is insufficient..Why?
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Still can sue for the remainder of consideration.
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Illusory Promises, lack of mutuality
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A contract that states Campbell will buy all they choose to order.
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Substitutes for Consideration
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Seal
Promises Made in Writing Promissory Estoppel - Spoon offers to give Campbell $50M to build Ultra Light Rail system-CU hires architects, etc. --- Spoon has to pay up. |
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5 Things Necessary for a Contract- Occasionally 6
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Offer
Acceptance Consideration Capacity Legality * Certain Types Must be in writing. |
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The 6 Types of Contracts:
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1.)Unilateral - Acceptance by performance
2.)Bi-Lateral- Acceptance made by promising to perform in the future 3.)Quasi-Contract - Not a contract at all - Designed to prevent unjust enrichment. 4.)Void Contract - Neither party can make the other party perform. 5.)Voidable Contract - One party has the option to get out. 6.) Unenforceable contract - Neither party can make the other party confirm. |
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Basic Rule of Contract Law -
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An offer can be taken back until it is accepted --- For a unilateral contract, there must be a reasonable amount of time given to complete the task.
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UCC
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Universal Commercial Code - controls contracts for the sale of goods.
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Incapacities
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Incompetent - Have voidability until they regain confidence
Underage - Voidable until 18 Intoxicated - Voluntary or involuntary intoxication |
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The 3 Illegal types of bargains: (Hint: CTPP)
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1.)Bargains to commit a crime
2.)Bargains in violation of tort law 3.)Bargains in violation of public policy |
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The 5 bargains in violation of public policy:
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1.)Bargains in violation of public service - (e.g. bribing a congressman)
2.)Bargains to influence fiduciaries (e.g. trustees) 3.)Bargains relieving liability for negligence - You can't make a bargain relieving you from negligence. 4.)Bargains in restraint of trade, not to compete * exceptions - Reasonable worker contract, non-compete Goodwill in the sale of a business 5.) Unconscionable bargains. 1 party in a greatly superior bargaining position. Bargain contained an unfair surprise. |
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Regulatory
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Contract is contingent upon you being licensed, and is for the general good of the public.
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Revenue Raising
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Ignores the public good, strictly a revenue raising method.
Cannot affect the validity of a contract. |
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Statute of Frauds
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States that some contracts must be in writing
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The 4 contracts that must be in writing:
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1.)Promise made by executor to pay debts of the decedent
2.)Collateral promise to pay the debt of another person. 3.)Contract made in consideration of marriage. 4.) Contract to sell interest in land. |
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Parole evidence rule
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You cannot use oral evidence to change the terms of a contract.
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