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25 Cards in this Set
- Front
- Back
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What is a contract? |
An agreement made between two or more persons that is enforceable at law. Can be written or verbal. |
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5 issues of contract validity |
1. Intention 2. Offer and Acceptance 3. Mutual Consideration 4. Capacity 5. Legality |
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Describe the issue of intention in regards to contract law |
If you don't have intention, it is not binding and it cannot simply be by words. You intend to be bound by your promise.
Two presumptions regarding intention: 1. Family members do not intend to enter into a legal contract or legal relationship 2. Non-family members do intend to enter into a legal contract or legal relationship |
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Describe the issue of offer and acceptance in terms of contract law |
It requires somebody to offer and somebody to accept.
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3 rules of Offer and Acceptance |
1. An offer my only be accepted by the offeree. Therefore, advertisements are not offers.
2. Must be communicated before it can be accepted
3. When you have an outstanding offer, you have a legal obligation if they agree to buy (within reason) |
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Offer |
A tentative promise subject to a condition |
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Acceptance |
A statement or act given in response to and in accordance with an offer |
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Mutual Consideration |
Something for something.
Something that has value in the eyes of the law, and which a promisor receives in return for a promise.
It can be for a present or future exchange
Adequacy is not an issue (he overcharged me) |
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What are the non-enforceable issues regarding mutual consideration? |
1. Gratuitous promise 2. Past consideration 3. Gratuitous reduction of debt |
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Gratuitous reduction of debt |
No exchange. Ex. You owe Visa $20,000. My mom will lend me $10,000 to cancel debt. Sign and written confirmation but it is still not valid. You can't offer what you already owe. Can get out of this by either paying early before due date with lender's consent or "I'll give you $10,000 and a pack of sugar". That's something for something |
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Past consideration |
Must be contingent on the other.
Ex. give a textbook (gift). 3 months later they give you a book. Unless discussion was made before the gift regarding other book, they are not related issues and no exchange has occurred. |
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Gratuitous promise |
When someone makes you a promise and it is not met. Non-enforceable. |
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What are the exceptions of mutual consideration? |
1. Seal - I promise to abide by this. Requires 'LS' at end of document or on dotted line. Can even write seal, it is now enforceable
2. Injurious reliance - Minor exception. Based on promise, expenses have been made. (Large gifts to charity/institutions) |
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Discuss capacity in terms of contract law. |
There could be a contract. You are obligated, they are not. No capacity occurs with minors (under 19, substance impaired, mentally incompetent |
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Executed contract |
Fully performed
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Non-executed contract |
Not fully performed |
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Implication of lack of capacity for fully executed contracts |
- You can repudiate only if you were taken advantage of
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Implication of lack of capacity for non-executed contracts |
- Can repudiate as long as there is a portion of the contract that is still owed
- One who repudiates is responsible for only willful damage (obvious)
- Cannot repudiate necessaries (station in life, renting apartments) or beneficial contracts of employment (good jobs, trained as an apprentice) |
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When can someone who was impaired, under 19, or was insane repudiate a contract? |
Promptly. When they become sober, before they turn 19, or when they become sane |
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Legality |
A contract must have a legal purpose - Courts will not enforce illegal contracts or reverse them - Gambling is illegal unless establishment is sanctioned by the gov't - All forms of insurance are gambling unless you have insurable interest (economic or family) - Competition Act: restraint of trade is illegal |
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Issues under the Competition Act and Exceptions |
Federal law that prohibits false advertising or if you do not sell at the lowest ticketed price. Other issues that fall under the act are: Price Fixing Agreements Not to Compete Acquisitions and Mergers
Exceptions: 1. Seller of a business will not compete for 5 years (including goodwill) 2. Key employee will not compete - reasonable |
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Quantum Meruit |
Amount Merited. When you do not have a price (no agreement) your obligation to pay is the going rate. Based of level of expertise. |
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Termination of an offer (7) |
1. Death (not a contract but an offer) 2. Bankruptcy 3. Mentally incompetent 4. Revocation (before they say yes) 5. Rejection (includes counter-offer) 6. Expiry of a preset time 7. Expiry of a reasonable time
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Unilateral contracts (2) |
Only one party is bound. 1. A reward (no obligation to return the cat) 2. A store promotion (no obligation to bring in the coupon) |
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Bilateral contracts |
Two or more parties bound in a contract
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