Contract, Chapter 9

Front 1

contract

Back 1

a legally binding agreement that obligates two or more parties to do something they were not already obligated to do or refrain from doing something to which they were legally emtitled

Front 2

contractual agreement

Back 2

a promise or set of promises for the breach of whih the law provides a remedy, or the performance of which the law recognizes as a duty.
-if a party makes a promise, obligated to perform.

Front 3

elements of a valid contract

Back 3

-2 parties
-parties w/ legal capacity
-manifestation of assent
-consideration that supports a legal and enforceable promise

Front 4

2 parties

Back 4

cannot enter into contract with onself unless one person acts as two distinct legal entities.

Front 5

contractual capacity

Back 5

the ability to ender into and be bound by a legal contract, which ability is not diminished by age of minority or adjudicated incompetence.

Front 6

age

Back 6

parties must be age of majority according to law

Front 7

mental capacity

Back 7

anyone not declared incompetent is responsible for any contractual agreements

Front 8

Theory of Restitution

Back 8

based on principle of fairness, one person accepts or takes a benefit from another who was not obligated to provide that nemefot. sp,e sprt of payment should be made

Front 9

Manifestation of assent

Back 9

in all contracts each party must signify acceptance of the terms
1 objective standard
2 circumstances
3 methods of creating assent

Front 10

objective standard

Back 10

third party must objectively look at contract and agree that parties agrered to the terms of the contract and intended to be legally bound by terms.

Front 11

Circumstances that will NOT give rise to creation of valid enforceable contract

Back 11

1.agreements made in jest or as jokes
2.Negotiations prior to the creation of an actual contract
3. Promises or indications of future gifts in excange for anothers promise of performance
4. promises for what a person is already legally obligated to do

Front 12

Agreements made in jest
obstacle
-not give rise to valid contract

Back 12

inability to prove that the party meant to be bound by the agreement. no real intent to form contract.

Front 13

Negotiations

Back 13

during negotiation there is no real intent to make a firm commitment, the intent of parties is to explore whether the parties can meet on common ground, if not no contract-- not bound by discussion

Front 14

Future gifts or performance

Back 14

in legal terms a gift has the quality of something that on is never required to grant. i ncontract it loses its gift quality and is required to be delivered. if not deelivered legal consequemce... performance of gift not legal obligation

Front 15

Legal Obligation

Back 15

Basis of contract must be voluntary acts, must get what not entitled. one partny not recieve in the absence of her probmise, no basis to spport her promise in agreement

Front 16

Offer

Back 16

manifestation of willingness to enter into a bargain, which creates in the offeree the power of acceptance.

Front 17

unilateral v. bilateral

Back 17

A unilateral contract is one in which the offeror is bargaining for a completed performance. For example an offer of a reward to catch a fugitive (or a fish) is an offer that looks towards the formation of a unilateral contract. A bilateral contract is one in which the offeror is bargaining for a promise to perform. Most contracts which have commercial significance are bilateral.

Front 18

what establishes manifestation of assent
3 element of valid contract

Back 18

Mutual assent is ordinarily established by a process of offer and acceptance.

Front 19

objective standard
part of manifestation of assent

Back 19

A party's intention will be held to be what a reasonable person in the position of the other party would conclude his manifestation to mean.

Front 20

Consideration
4 element of valid contract

Back 20

To be sufficient, the consideration must have some value. Something that is completely worthless cannot constitute sufficient consideration. Promises by the parties bargained for and given in exchange for each other constitute consideration.

Front 21

illusionary promise

Back 21

an agreement to do something that is so indefinite one cannot tell what is to be done or the performance is optional (usually because it is just a gesture and not a true agreement). Therefore, the other party need not perform or pay since he/she got nothing in what he/she may have thought was a contract. MAYYYY

Front 22

Second Element of of valid contract

Back 22

Competent Parties - For a contract to be valid, each side must have the capacity to enter into it. Most people and companies have sufficient legal competency. A drugged or mentally-impaired person has impaired capacity and chances are a court may not hold that person to the contract. Minors (e.g., usually those under eighteen) cannot, generally, enter into a binding contract without parental consent, unless it is for the necessities of life, such as food, clothing, or for student loan contracts.

Front 23

Third Element of a Valid Contract

Back 23

This means that each side must be clear as to the essential details, rights, and obligations of the contract. Putting the deal down on paper prior to signing it goes A LONG way to avoid future misunderstandings and disputes. Meeting of the minds sometimes can be expressed by words spoken or gestures made or can be inferred from the surrounding circumstances.

Front 24

Circumstances that DO NOT constitute a valid contract
4

Back 24

agreements made in jest
negotiations
future girfts
legal obligation, must not be legally required

Front 25

Fourth Element of a valid contract - cant be illegal

Back 25

a contract must fulfill three elements. First, there must be a bargain regarding terms of an exchange. Second, there must be a mutual exchange. In other words, both parties must get something out of the contract. Third, the exchange must be something of value.

Front 26

third party beneficiary
who result of collateral agreement

Back 26

person who is not a party to a contract but has legal rights to enforce the contract or share in proceeds because the contract was made for the third party's benefit.

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donee beneficiary

Back 27

can not sue the promisee, because the promisee's act is gratuitous. note promissee estoppel theory

Front 28

Creditor beneficiary

Back 28

this beneficiary can sue both the promisor and the promisee, but the beneficiary cannot recover against both.

Front 29

assignment and delegation acceptable unless

Back 29

1-parties have stipulated in the contract its not permissible
2-the assignment or delegation would sig alter the dity or rights of the other party to contact

Front 30

in assignment

Back 30

a party assigns the rights and benefits entitled to under contract

Front 31

to delegate

Back 31

the person accepting the duties must provide comprable performance.

Front 32

problems in enforcing contract

Back 32

terms of contract
unconscionable contracts
fraud
statute of fraud

Front 33

terms of contract

Back 33

definitions sometimes ambiguous goes to plain meaning unless trade or art

Front 34

unconscionable contracts

Back 34

Inequality in Bargaining Power, hurricane, broke, repair
Adhesion, duress- threat

Front 35

fraud in contracts 2 types

Back 35

fraud in fact and fraud in inducement

Front 36

fraud in fact

Back 36

trickery by leading ot believe contract is something different

Front 37

recision

Back 37

contract is treated as if never existed-- court restores paraties to original conditions

Front 38

fraud in inducement

Back 38

1.misinterpretation of a present or past fact that is false
2.party making the misrepresentation must know that what he or she is presenting is false and must intend for it to operate as inducement to another for entry
-reasonable both in belief that the pre is true and reliance on term as inducement
-misrep must be material elementin induc
-innocent party must suffer measurable damages bc reliance

Front 39

when fraud occurs, court dissaffirms

Back 39

walk away, no restore

Front 40

statute of frauds

Back 40

law that specifies what contracts must be in writing before they will be enfoced.

Front 41

statute of frauds types

Back 41

*Contracts involving the sale or transfer of land;
*Contracts to answer for the debt or duty of another;
*Contracts that, by its terms, cannot be completed within one year. (Please note that the fact that a contract is not completed within one year does not mean that it is voidable under a statute of frauds. For the statute to apply, the actual terms of the contract must make it impossible for performance to be completed within one year); and
*Certain contracts for the sale of goods, under the Uniform Commercial Code.

Front 42

defenses to breach of contract

Back 42

abssence of essential elements, unconcsionable, fraud, statute of fraud, accord and satisfactions, justifiable breach, impossibility.impract, frustration of purpose

Front 43

accord and satisfactions

Back 43

under this defense, the accord amends the orginal agree by sub a new performance, all parties agreed.

Front 44

justified breach

Back 44

one party breaches, second party excused from performance

Front 45

imposs/imprac

Back 45

contract cant be completed thru no fault of parties

Front 46

frustration

Back 46

through no action by parties, the purpose of the contract is destoryed, duty to perform ends.

Front 47

remedies for breach

Back 47

Compensatory Damages- money to reimburse you for costs to compensate for your loss.
Liquidated-specified in the contract that would be payable if there is a fraud.