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48 Cards in this Set
- Front
- Back
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What is the 1st element to a valid contract? |
Offer and Acceptance |
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What is a Counter Offer? |
an offer made in response to a previous offer by the other party during negotiations for a final contract. Making a counteroffer automatically rejects the prior offer, and requires an acceptance under the terms of the counter offer or there is no contract. Anything other than an exact duplicate returned automatically mean the prior offer was rejected. |
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What are the 3 components of a valid offer? |
Intent Terms Communicated to Offeree |
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What is Intent? |
A determination to perform a particular act or to act in a particular manner for a specific reason; an aim or design; are solution to use a certain means to reach an end. Must be Real intent Must be Present Intent Can make a contract to perform in the future |
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What are Terms? |
A contractual term is "Any provision forming part of a contract". Each term gives rise to a contractual obligation, breach of which can give rise to litigation. Not all terms are stated expressly and some terms carry less legal gravity as they are peripheral to the objectives of the contract. Contracts must contain definite terms Contracts must identify parties Contract terms the subject matter of what is being offered. |
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What is a "reasonable person, or "reasonable man?" |
The objective theory dictates the use of an independent, mystical interpreter of the expressions of contract. This dictates that a contract shall have the meaning that a reasonable person would give it under the circumstances under which it was made, if he knew everything he should plus everything he actually knew." A reasonable person must therefore be constructed on a case by case basis. This substituted contracting party possesses the intellect, sophistication, and good faith demeanor of the average reasonable person. The issue in dispute is then resolved by the application of this reasonable party. The subjective intent of the parties is replaced by the intent of this reasonable person applied ex ante. |
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What are the 3 requirements of an effective acceptance? |
1) Offeree must be the accepting party 2) Acceptance must be unconditional and unequivocal 3) Offeree must communicate the acceptance to the Offeror by the appropriate words or the appropriate act |
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What are some issues that can make offer and acceptance problematic. |
Communication The Battle of the Forms |
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What is the Mailbox Rule? (Common Law) |
The mailbox rule, which is the default rule under contract law for determining the time at which an offer is accepted, states that an offer is considered accepted at the time that the acceptance is mailed. If you use the U.S. Mail, then the U.S. Mail becomes your agent. If you use Western Union to accept, then the contract does not become effective until the Offeror gets it, because the U.S. Mail is the Offeror's agent. |
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How did the UCC change the Mailbox Rule? |
The UCC tried to liberalize the rule by saying that any reasonable form of communication from the Offeree, even if not the communication was not the same method used by the Offeror, is of no relevance and the accepted offer forms a legal contract, UNLESS otherwise stipulated. If the Offeror uses U.S. Mail and stipulates that the acceptance by the Offeree must use the the U.S. Mail to return the written terms and agreement to form a legally binding contract. |
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What is the Battle of the Forms? |
Battle of the forms refers to the not uncommon situation in which one business firm makes an offer in the form of a pre-printed form contract and the offeree responds with its own form contract. At common law, any discrepancy between the forms would prevent the offeree's response from operating as an acceptance. There would be no contract in such a case. In some cases, the battle is won by the person who fires the last shot. He is the person who puts forward the latest term and conditions; and, if they are not objected to by the other party, he may be taken to have agreed with them. |
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How is the Battle of the forms different in Common vs the UCC? |
Under Common Law, if a contract is sent back to the Offeror with different terms or addition to terms, the previous contract becomes null and the counter offer the Offeror becomes the Offeree and vice versa. Each counter offer is a new contract. In UCC, it changes common law and states that it is not a counter offer. Under the UCC the additional changes become proposals for additional terms, become additional terms to the same contract. |
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What is Performance? |
The fulfillment or accomplishment of a promise, contract, or other obligation according to its terms |
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Contracts are behaviors. What to acts of behavior are contracts? |
Omission |
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What is Omission? |
1) failure to perform an act agreed to, where there is a duty to an individual or the public to act (including omitting to take care) or is required by law. Such an omission may give rise to a lawsuit in the same way as a negligent or improper act. 2) inadvertently leaving out a word, phrase or other language from a contract, deed, judgment or other document. If the parties agree that the omission was due to a mutual mistake, the document may be "reformed," but this may require a petition for a court order making the correction if it had been relied upon by government authorities or third parties. |
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What is Comission? |
By commission is also understood an act performed, opposed to omission, which is the want of performance of such an act; is, when a nuisance is created by an act of commission, it may be abated without notice; but when it arises from omission, notice to remove it must be given before it is abated. |
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What are some of the Sellers remedies when the Buyer breaches the contract? |
The non breaching party is allowed to suspend their performance. (Seller or buyer) Not Pay: (Action for the Price) Suspends performance, start action for the price of the contract (lawsuit) + any incidental and consequential damages - money saved because of the buyers breach. Reject Goods: reject return of the goods, tell buyer to sell the goods, tell buyer to take the goods and give him an adjustment in purchase price. Insolvency: (Limited Remedy) Move to recover the goods within 10 days of finding out the buyer is insolvent. Possible recovery of recovery of goods in 3 months. |
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What are some common Buyer Performance breaches? |
Not pay Rejects goods and services claiming they are not compliant with the contract. Become insolvent |
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What are some Buyer Remedies when the Seller breaches the contract? |
Suspend Performance Cover |
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What is Cover? |
provides that a buyer may use cover for protection in an action for breach of a sales contract. The person may, in Good Faith, purchase substitute goods when a seller violates their contract by failure to deliver goods. The buyer may then recover the difference between the original goods or contract price and the cost of cover. |
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What are Liquidated Damages? |
Monetary compensation for a loss, detriment, or injury to a person or a person's rights or property, awarded by a court judgment or by a contract stipulation regarding breach of contract. A contract has been breached. but the extent of the damages are difficult to ascertain. You estimate what these potential damages could be and put it into the contract. |
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What are Punitive Damages? |
Monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses and that is intended to punish the wrongdoer. |
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What are Legal Damages? |
Monetary compensation that is awarded by a court in a civil action to an individual who has been injured through the wrongful conduct of another party. |
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Who is a Holder? |
An individual who has lawfully received possession of a Commercial Paper, such as a check, and who is entitled topayment on such instrumen |
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What is a Person? |
means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity. |
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What is a Party? |
as distinguished from "third party", means a person that has engaged in a transaction or made an agreement subject to the Uniform Commercial Code. |
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What is a Representative? |
means a person empowered to act for another, including an agent, an officer of a corporation or association, and a trustee, executor, or administrator of an estate. |
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What is a Record? |
means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. |
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What is a Purchaser? |
means a person that takes by purchase. |
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What does it mean to Send? |
in connection with a writing, record, or notice means: (A) to deposit in the mail or deliver for transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and, in the case of an instrument, to an address specified thereon or otherwise agreed, or if there be none to any address reasonable under the circumstances; or (B) in any other way to cause to be received any record or notice within the time it would have arrived if properly sent. |
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What is a Merchant? |
means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill. |
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What does "Between Merchants," mean? |
means in any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants. |
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What is an Organization? |
means a person other than an individual. |
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What is Larceny? (Criminal) |
The unauthorized taking and removal of the Personal Property of another by an individual who intends to permanently deprive the owner of it; a crime against the right of possession. |
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What is a Jurisdiction? |
The geographic area over which authority extends; legal authority; the authority to hear and determine causes of action. |
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What are some ways to dissolve disputes and select a forum for disputes? |
In the disputes clause: Court System (legal system) Arbitration |
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What is Arbitration? |
The submission of a dispute to an unbiased third person designated by the parties to the controversy, who agree in advance to comply with the award—a decision to be issued after a hearing at which both parties have an opportunity to be heard. |
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What are some limitations to courts? |
Commercial Disputes: Cannot sue someone in U.S. Court of Claims or Bankruptcy If you use the default provision, you have to pick a court that has Subject Matter Jurisdiction over the dispute in question, especially if in the dispute provision there is not previously a decided court and you decide to use the legal system instead of arbitration or other methods to manage the dispute. |
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What are some location options a person could use in their Disputes Clause? |
Home Court Advantage: Your state. It is much easier to try a case in your backyard than somebody else's backyard. You can tie up all the local law firms and push the other party into a second tier from that is not in conflict with your firm. It makes the entire process less expensive and gives you an economic advantage. First to Engage: If I start the litigation, I will go to your backyard, if you start the litigation you come to my backyard. This forces the future cost of litigation to rise up for each party creating a equilibrium in costs for each party. This helps incentive a business solution between the parties instead of a legal one. |
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After you select forum and location (jurisdiction) for the dispute, what are the "Magic Words," that must be in the Disputes Clause? |
"This clause is the sole and exclusive remedy relating to or arising under this contract." |
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What is another way to had a hoop for disputes in the Disputes Clause? |
"This clause is the sole and exclusive remedy relating to or arising under this contract and in no event shall any party bring in action unless the amount i dispute exceeds _______" |
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What is characteristic does Arbitration has that Court System's (litigation) do not. |
Arbitration has limited appeals (Fed Arbitration Act) Court System's appeals are unlimited |
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What are some techniques to establish and limited the terms of the contract? |
Tell a story: Date, Who's involved, Whats being done, Prices, What's at stake, How to treat issues that may come up, How the contract will be closed put Use Acronyms: They are concise, makes easier to read Use Published Definitions: Define your definitions and reference where it is used i.e., U.C.C 2-301 etc etc Incorporate U.C.C in contract: "Notwithstanding the fact that this may be a contract for the sale of other types of goods or service, we will interpreting this contracts as if it were the sale of goods utilizing the U.C.C Code re regarding saying _______" Effective Amendment Clause: If there is an amendment, change or modification to this contract, it must be singed in writing by the Offeror and Offeree |
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What is a Four Corners Clause? |
It says that this agreement is a summary of all negotiations that come before. If it was agreed to it is presented in the four corners of this contract. Four corners (law) is the meaning of a written contract, will, or deed as represented solely by its textual content. ... From the four corners of the document: as derived from the text of the agreement itself, without relying upon other resources or witnesses. |
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What is the Parol Evidence Rule? |
Although there may have been things that happened before the contract that are not inconsistent with the contract given, you cannot introduce that evidence to refute the contract, but you cannot use it to explain elements of the contract. Prevents the introduction of evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary the contractual terms of a written contract when the written contract is intended to be a complete and final expression of the parties' agreement. |
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What is used in a contract itself to allocate risk? |
Statement of Work: Use detailed information in SOW and increase the risk there Disputes Clause: how you set up forum, location etc etc Indemnity Clause: An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. Force Majeure Clause: relates to the law of insurance and is frequently used in construction contracts to protect the parties Whain the event that a segment of the contract cannot be performed due to causes that are outside the control of the parties,such as natural disasters, that could not be evaded through the exercise of due care. |
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What is a Statement of Work? |
A Statement of Work (SOW) is a document routinely employed in the field of project management. It defines project-specific activities, deliverable and timelines for a vendor providing services to the client. By increasing the job description in detail increase the risk of differing parties. |
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What does Acquiesce mean? |
occurs when a person knowingly stands by without raising any objection to the infringement of their rights, while someone else unknowingly and without malice aforethought makes a claim on their rights. |
