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47 Cards in this Set

  • Front
  • Back
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
contractual agreement
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.
elements of a valid contract
-2 parties
-parties w/ legal capacity
-manifestation of assent
-consideration that supports a legal and enforceable promise
2 parties
cannot enter into contract with onself unless one person acts as two distinct legal entities.
contractual capacity
the ability to ender into and be bound by a legal contract, which ability is not diminished by age of minority or adjudicated incompetence.
parties must be age of majority according to law
mental capacity
anyone not declared incompetent is responsible for any contractual agreements
Theory of Restitution
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
Manifestation of assent
in all contracts each party must signify acceptance of the terms
1 objective standard
2 circumstances
3 methods of creating assent
objective standard
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.
Circumstances that will NOT give rise to creation of valid enforceable contract
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
Agreements made in jest
-not give rise to valid contract
inability to prove that the party meant to be bound by the agreement. no real intent to form contract.
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
Future gifts or performance
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
Legal Obligation
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
manifestation of willingness to enter into a bargain, which creates in the offeree the power of acceptance.
unilateral v. bilateral
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.
what establishes manifestation of assent
3 element of valid contract
Mutual assent is ordinarily established by a process of offer and acceptance.
objective standard
part of manifestation of assent
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.
4 element of valid contract
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.
illusionary promise
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
Second Element of of valid contract
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.
Third Element of a Valid Contract
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.
Circumstances that DO NOT constitute a valid contract
agreements made in jest
future girfts
legal obligation, must not be legally required
Fourth Element of a valid contract - cant be illegal
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.
third party beneficiary
who result of collateral agreement
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.
donee beneficiary
can not sue the promisee, because the promisee's act is gratuitous. note promissee estoppel theory
Creditor beneficiary
this beneficiary can sue both the promisor and the promisee, but the beneficiary cannot recover against both.
assignment and delegation acceptable unless
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
in assignment
a party assigns the rights and benefits entitled to under contract
to delegate
the person accepting the duties must provide comprable performance.
problems in enforcing contract
terms of contract
unconscionable contracts
statute of fraud
terms of contract
definitions sometimes ambiguous goes to plain meaning unless trade or art
unconscionable contracts
Inequality in Bargaining Power, hurricane, broke, repair
Adhesion, duress- threat
fraud in contracts 2 types
fraud in fact and fraud in inducement
fraud in fact
trickery by leading ot believe contract is something different
contract is treated as if never existed-- court restores paraties to original conditions
fraud in inducement
1.misinterpretation of a present or past fact that is false 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
when fraud occurs, court dissaffirms
walk away, no restore
statute of frauds
law that specifies what contracts must be in writing before they will be enfoced.
statute of frauds types
*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.
defenses to breach of contract
abssence of essential elements, unconcsionable, fraud, statute of fraud, accord and satisfactions, justifiable breach, impossibility.impract, frustration of purpose
accord and satisfactions
under this defense, the accord amends the orginal agree by sub a new performance, all parties agreed.
justified breach
one party breaches, second party excused from performance
contract cant be completed thru no fault of parties
through no action by parties, the purpose of the contract is destoryed, duty to perform ends.
remedies for breach
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.