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73 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What is a promise? |
A declaration by a person (the promisor) that binds the person to do or not do a certain act. The person to whom the promise is made (the promisee) has a right to expect or demand that something either will or will not happen in the future. |
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What is a contract? |
A set of promises constituting an agreement between parties, giving each a legal duty to the other and the right to seek a remedy for the breach of the promises or duties. |
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Objective Theory of Contracts |
The view that contracting parties are only bound by the terms that can be objectively inferred from the promises they made. Includes... - What the party said when entering the contract - How the party acted or appeared - The circumstances surrounding the transaction. |
What things does the judge care about? |
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What are the 4 Requirements of a Valid Contract? |
- Mutual Agreement - Consideration - Capacity - Legality |
The first is mutual agreement. |
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What is agreement in a valid contract? |
Includes an offer and acceptance. One party must offer to enter a legal agreement, and another party must accept the terms. |
Includes two parts. |
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What is consideration in a valid contract? |
The promises made by the parties must be supported by legally sufficient and bargained-for consideration (something of value received or promised to convince a person to make a deal). |
Has to do with the things being exchanged. |
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What is capacity in a valid contract? |
Both parties entering the contract must have the capacity to do so. The last must recognize them as being competent (not minors, not intoxicated, and not insane). |
Has to do with ability of both parties. |
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What are the two defenses to the enforceability of a contract? |
- (lack of) Genuineness of Assent - Statute of Frauds |
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What is lack of genuineness of assent as a defense to a contract? |
The consent of both parties must be voluntary. It can't be formed from fraud, mistake, or duress (coercion). |
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What is Statute of Frauds as a defense to a contract? |
The contract should be in the form the law requires. For example, some contracts must be in writing. |
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What is a bilateral contract? |
A type of contract formed when a promise is given in exchange for a return promise. "promise for a promise" |
A promise for a... |
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In a bilateral contract, when does the contract come into existence? |
It happens the moment the promises are exchanged. No performance, such as the payment of funds or delivery of goods needs to take place. |
As soon as both parties have... |
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What is a unilateral contract? |
Type of contract that results when an offer can be accepted only by the offeree's performance. "promise for an act" |
A promise for a... |
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In a unilateral contract, when is the contract officially formed? |
When the act in the contract is substantially performed |
Only active when... |
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What is a formal contract? |
Contracts that require a special form or method of creation to be enforced. These include negotiable instruments, such as checks, drafts, promissory notes, and certificates of deposits. |
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What is an informal contract? |
Also called simple contracts, no special form is required (though some must still be in writing). Usually based on substance rather than form, this is what most contracts fall under. |
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What is an expressed contract? |
The terms of the agreement are full and explicitly stated in words, either oral or written. For example, a signed lease for an apartment or house. |
Has to do with the terms of the contract. |
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What is an implied contract? |
A contract formed by the conduct of the parties rather than words. |
Involves the parties' actions. |
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What are the 3 requirements for an implied contract? |
- The plaintiff furnished some service or property - The plaintiff expected to be paid for that service/property, and the defendant knew or should have known that payment was expected - The defendant had a chance to reject the services and did not |
Has to do with services or property being provided. |
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What is an executed contract? |
A contract that has been fully performed by both parties. |
The contract has already been... |
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What is an executory contract?
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A contract that has not been fully performed by the parties. A contract can be considered executed by one side and not the other, in which case it is still considered executory. |
The contract has yet to be... |
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What is a voidable contract? |
A contract that is valid, but can be avoided at the option of one or both parties. If it is avoided, both parties are released. An example is a minor in a contract, who can choose to avoid any contract. |
Does NOT mean it is void, but... |
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What is an unenforceable contract? |
A contract that can't be enforced due to legal defenses, but NOT because a party failed to satisfy the contract itself. |
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What is a void contract? |
No legal force or binding effect. Effectively, there is no contract. For example, because one party was determined by a court to be mentally incapable or the contract itself was illegal. |
The opposite of a contract. |
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What is a quasi contract? |
A contract imposed by a court only if there is no real contract, in order to prevent the unjust enrichment of one party |
Quasi means "not real" |
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What is quantum meruit and how does it relate to contracts? |
Latin phrase meaning "as much as he or she deserves" - Used in determining the extent of compensation owed under a quasi contract |
Involves unjust enrichment |
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What are the 3 requirements of an offer as part of an agreement? |
- Serious, objective intent by the offeror - The terms must be reasonably definite - Offer must be communicated to the offeree |
The first is serious, objective intent... |
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Outside of anger, jest, and excitement, what are examples of things that are generally NOT considered to be serious intent? (list 6) |
- Expressions of Opinion - Statements of Future Intent - Preliminary Negotiations - Advertisements, Catalogs, and Circulars - Agreements to Agree - Preliminary Agreements |
One of them is statements of future intent... |
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What are the 4 terms that make definiteness in an offer? |
- The identification of the parties - Identification of the object or subject matter (And quantity, when appropriate) - The consideration to be paid - The time of payment, delivery, or performance |
The first one is identification of both parties... |
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What is revocation? |
The act of withdrawing an offer. This can be done as long as it is communicated to the offeree before they've accepted. |
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What is a counteroffer? |
An offeree's response to an offer, in which they reject the original offer and at the same time make a new offer. |
Can only come after a rejection... |
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What is the mirror image rule? |
A common law rule that requires the terms of the offeree's acceptance to be exactly the same terms of the offeror's offer for a valid contract (nothing new can be added or changed). In acceptance, this is considered unequivocal acceptance. |
What does a mirror show? |
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What are the ways an offer can be terminated by operation of law? |
- Lapse of time - Destruction of the subject matter - Death or imcompetence of the offeror or offeree - Surpervening illegality |
These are automatically applied |
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What is lapse of time when dealing with terminating offers? |
An offer terminates automatically by law when the period of time specified in the offer has passed (if a day is specified, it is on midnight of that day). Otherwise, a reasonable period of time is decided in court. |
How would time affect a contract's ability to be upheld? |
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What is promissory estoppel? |
This makes an offer irrevocable because of the offeree's justifiable reliance on the offer. |
The words sound like "promise" and "stop" |
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What is an option contract? |
A contract where the offeror is paid in order to not revoke an offer for a certain period of time, because of payment or another type of consideration. |
Gives you some time to think about it |
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What is silence as acceptance? |
Generally, silence is not a form of acceptance. However, it can be if the offeree takes the benefits of an offer while having an opportunity to reject them. |
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What is the mailbox rule? |
Also called the deposited acceptance rule, this is a type of common law where an offer is accepted at the time the offeree dispatches the acceptance via the communication mode expressly authorized by the authoree. |
Involves sending an acceptance and when it would be considered accepted. |
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What is important about substitute methods of acceptance? |
The offeree can use another form of acceptance, but it is not effective until it is received by the offeror. |
Acceptance wouldn't be valid until... |
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What are the 2 parts of Consideration in forming a valid contract? |
- Something of legally sufficient value must be given in exchange for the promise (not necessarily fair market value) - There must be a bargained-for exchange |
Involves the exchange of things... |
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What 3 things can constitute legally sufficient value? |
-A promise to do something that you had no prior legal duty to do - Performance of an action that one is otherwise not obligated to do - Refraining from an action that one has a legal right to undertake |
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What is forbearance? |
The act of refraining from an action that a person has the legal right to undertake |
The word itself means 'restraint' |
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What is bargained-for exchange? |
The idea that the item of value must be given or promises in return for the promisee's performance or promise. If something is just given away for nothing in return, it is just a gift. |
Can't just be giving something away for free... |
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What is a preexisting duty? |
A promise to do what one already has a legal duty to do. For example, a sheriff can't collect a reward for information leading to the capture of a criminal if the sheriff already has a legal duty to capture the criminal. |
You already had an obligation to do it... |
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What is rescission? |
A remedy whereby a contract is canceled and the parties are returned to their original positions. |
Involves returning to normal |
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What is past consideration? |
An act that takes place before a contract is made. It cannot be later considered in respect to that contract. |
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What is a release? |
A contract in which one party gives up the right to pursue a legal claim against another. For example, after damaging your car, a person pays you $3,000 to be released from further liability. Even if you later find that repairs cost $4,000 you cannot recover the additional amount. |
"I'll pay you not to take me to court over this..." |
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What is promissory estoppel? |
A doctrine used to enforce a promise when the promisee has justifiably relied on the promise and justice is better served by enforcing the promise. For example, the James Davidson church donation mentioned in class. |
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What 5 elements are required for promissory estoppel to be enforced? |
- Must be a clear and definite promise - Promisor should have expected that the promisee would rely on the promise - Promisee reasonably relied on the promise by acting or refraining from some act - The promisee's reliance was definite and resulted in their substantial detriment - Enforcement of the promise avoids injustice |
One of them is that a party had substantial detriment |
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What is a minor? |
A person under the age of majority, which is usually 18 years old. Minority status can be emancipated, or lost, when a parent relinquishes the legal right to exercise control over them. |
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What's disaffirmance? |
When a minor legally avoids a contract. They must express, through words or conduct, their intent not to be bound. They must disaffirm the entire contract, not just a portion of it. |
Affirmance means accepting and continuing a contract, so disaffirmance means... |
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How does reasonable time work with minors disaffirming a contract? |
A contract can be disaffirmed any time during minority, but also for a reasonable time after reaching majority age. However, this time varies. If a reasonable time passes, a contract can be ratified. |
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What are necessaries? |
An exception to a minor's right to disaffirm a contract. If a minor enters into a contract for necessities (such as food, shelter, clothing, and medical attention), they can disaffirm the contract, but remain liable for the value of the goods. |
What do you need to live? |
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What is ratification of a contract? |
The acceptance or confirmation of an act or agreement that gives legal force to an otherwise unenforceable obligation. Can be through words or actions. |
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What 3 things can make a person lack the capacity to enter into a contract? |
- Minors - Intoxication - Mentally Incompetent |
One of them is intoxication... |
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What are the 2 primary ways a contract can violate the requirement of Legality? |
- Contracts Contrary to a Statute - Contracts Contrary to Public Policy |
Contracts contrary to... |
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What are the 4 main ways a contract can be contrary to a statute? |
- Contracting to commit a crime - Usury, or charging an illegal rate of interest - Gambling -Licensing statutes (such as a lawyer without a license) |
One of these is contracting to commit a crime |
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What are the 3 main ways a contract can be contrary to public policy? |
- Restraint of Trade (business) - Unconscionable Contracts - Exculpatory Clauses |
One of them is restraining of trade |
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What are the 4 ways a contract can lack genuine assent? |
- Fraudulent Misrepresentation - Mistakes - Undue Influence - Duress |
One of them is fraudulent misrepresentation |
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What is a bilateral mistake? |
A mistake on the part of both parties about a material fact. The contract can be canceled by either party in this case. |
What does "bilateral" mean? |
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What is a unilateral mistake? |
A mistake that occurs when only one parties is mistaken about a material fact. Usually doesn't give the mistaken party any right to relief from the contract. |
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What 3 elements make up fraud? |
- Misrepresentation of a material fact - An intention to deceive (you knew or should have known) - The innocent party justifiably relied on the misrepresentation. |
One of them is "intention to deceive" |
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What is misrepresentation by conduct? |
When a party takes specific action to conceal a fact that is material to the contract. By these actions, they prevented a buyer from learning an important fact. |
The way that you acted made the other person think... |
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Are statements of opinion subject to being claims of fraud? |
Generally, subjects of opinion are NOT subject to being claims of fraud For example, "This car will last for years and years" However, claims made by an expert can be considered fraud. For example, a dance school teacher saying that a person had potential when they clearly did not. The teacher is an expert and would have known early on. |
Think about the objective theory of contracts |
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Does misrepresentation of law constitute fraud? |
Generally, it does not. Under common law, people are assumed to know state and local laws. |
Does ignorance of the law relieve you from it? |
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Does misrepresentation by silence constitute fraud? |
Normally, it does not. Neither party has a duty to disclose facts. However, if the buyer asks, then the seller cannot lie. |
Are you obligated to tell everything on your own? |
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What are latent defects? |
Defects not obvious or readily known. Sellers must disclose these, but not regular issues. |
Patent defects are ones that are obvious, so latent must be... |
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What is scienter? |
Knowledge on the part of a misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive. |
Scienter means "knowledge" |
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Is injury to the innocent party required to prove fraudulent misrepresentation in a contract? |
No, because rescission returns the parties to their original positions. However, to recover damages, proof of harm is necessary. |
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What is undue influence? |
Persuasion that is not actual force, but induces a person to act according to the will of the dominating party. Most common in relationships with minors or elderly people. |
Usually involves a power imbalance in a relationship |
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What is duress? |
The use of force or threats to make a party agree to a contract. Must be wrongful or illegal, and must render the threatened person incapable of their free will. |
Also called coercion |
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What is the Statute of Frauds? |
The state statute that certain kinds of contracts must be in writing. |
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What kinds of contracts must be in writing? |
- Contracts involving interests in land - Contracts that, by their terms, can't be performed within a year. - Contracts for the sale of goods over $500 |
One of them is contracts involving land interests. |
