Contracts

Front 1

Parol evidence rule

Back 1

The parol evidence rule enacts a principle of the common law of contracts that presumes that a written
contract embodies the complete agreement between the parties involved; the document is the sole repository of the terms of the contract (Jacobs v. Batavia & General Plantations Trust Ltd [1924] 1 Ch 287). The rule therefore generally forbids the introduction of extrinsic evidence (i.e., evidence of communications between the parties which is not contained in the language of the contract itself) which would add or change terms of a later written contract.

There are a number of exceptions to the parol evidence rule. Extrinsic evidence can always be admitted for the following purposes:

To work out the subject matter of the contract.
To resolve an ambiguity in the contract.[1]
To show that an unambiguous term in the contract is in fact a mistaken transcription of a prior valid agreement. Such a claim must be established by clear and convincing evidence, and not merely by the preponderance of the evidence.
To show fraud, duress, mistake, or illegal purpose on the part of one or both parties.
To show that consideration has not actually been paid. For example, if the contract states that A has paid B $1,000 in exchange for a painting, B can introduce evidence that A had never actually conveyed the $1,000.
To identify the parties, especially if the parties have changed names.
To imply or incorporate a term of the contract.

Front 2

Test of acceptance

Back 2

Acceptance is a final and unqualified expression of assent to the terms of an offer.
The essential requirement is that there must be evidence that the parties had each from an objective perspective engaged in conduct manifesting their assent. This manifestation of assent theory of contract formation may be contrasted with older theories, in which it was sometimes argued that a contract required the parties to have a true meeting of the minds between the parties. Under the "meeting of the minds" theory of contract, a party could resist a claim of breach by proving that although it may have appeared objectively that he intended to be bound by the agreement, he had never truly intended to be bound. This is unsatisfactory, as the other parties have no means of knowing their counterparts' undisclosed intentions or understandings. They can only act upon what a party reveals objectively to be his intent. Hence, an actual meeting of the minds is not required.

Front 3

Answer format for a essay question on whether contract formation exists...

Back 3

In order to determine if a valid obligation exists between the parties, it must first be determined if a valid enforceable contract exists between the parties. To be enforceable, a contract requires mutual assent (offer and acceptance), consideration and there must be no valid defenses to contract formation.

Mutual assent?
Revocation?
Consideration?

Others>
Pre-existing legal duty
promissory estoppel.

Front 4

Postal acceptance rule

Back 4

As a rule of convenience, if the offer is accepted by post, the contract comes into existence at the moment that the acceptance was posted (Adams v. Lindsell (1818) 106 ER 250). This rule only applies when, impliedly or explicitly, the parties have in contemplation post as a means of acceptance. It excludes contracts involving land, letters incorrectly addressed and instantaneous modes of communication.

Front 5

Consideration

Back 5

Consideration is something that is done or promised in return for a contractual promise.
Consideration is what must be given up by each party when making an agreement; this may be by means of doing or not doing an act or just promising to do or not do an act. Consideration can be defined as being a benefit to one party while being a detriment.

TO BE VALID CONSIDERATION, THERE MUST BE A BARGAINED FOR EXCHANGE BETWEEN THE PARTIES; IN OTHER WORDS THE PROMISE MUST INDUCE A CURRENT EXCHANGE OF PERFORMANCE FROM THE OTHER PARTY.

Front 6

What is an illusory promise?

Back 6

An illusory promise, or one which the promisor actually has no obligation to keep, does not count as consideration. The promise must be real and unconditional. This doctrine rarely invalidates contracts; it is a fundamental doctrine in contract law that courts should try to enforce contracts whenever possible.

Front 7

What are exceptions to consideration?

Back 7

Promissory estoppel or, doctrine of detrimental reliance, may be applied only when:
1. The promisor's promise lacks consideration.
2. The promisor expects the promisee will rely only on that promise.
3. The promisee does rely on the promise and
4. Injustice can only be avoided by enforcing what was promised.

Front 8

Mirror image rule

Back 8

The mirror image rule states that an offer must be accepted exactly without modifications. The offeror is the master of his own offer. An attempt to accept the offer on different terms instead creates a counter-offer, and this constitutes a rejection of the original offer.

Front 9

Merchant firm offer

Back 9

Merchant firm offer allows merchants to make offers to buy or sell irrevocable for up to three months provided that the offer be put down in writing or otherwise authenticated. Such offers are defined by UCC § 2-205 of the Uniform Commercial Code of the United States.

A firm offer in effect creates an option contract without requiring any consideration from the prospective buyer. Because the firm offer holds the seller to a higher standard than the potential buyer, it reflects a change from traditional common law, which treated all parties to a contract the same way, to a more modern view that holds certain parties to a higher standard of behavior.

Front 10

Duress

Back 10

Duress has been defined as a "threat of harm made to compel a person to do something against his or her will or judgment; esp., a wrongful threat made by one person to compel a manifestation of seeming assent by another person to a transaction without real volition.

Front 11

Mistake, what are the three types?

Back 11

In contract law a mistake is an erroneous belief, at contracting, that certain facts are true. It may be used as grounds to invalidate the agreement. Common law has identified three different types of mistake in contract: unilateral mistake, mutual mistake, and common mistake.
-A unilateral mistake is where only one party to a contract is mistaken as to the terms or subject-matter.
-It is also possible for a contract to be void if there was a mistake in the identity of the contracting party.
-A mutual mistake occurs when the parties to a contract shared an erroneous belief concerning a fact.

Front 12

Describe mutual assent

Back 12

Mutual assent to be bound is an essential element of contract formation. Parties may achieve mutual assent through a bargaining process which involves an offer and an acceptance. So, identifying the offer and acceptance can be the method by which mutual assent is established.

Manifestation of mutual assent ordinarily takes place:

(i) by one party (the offeror) making an offer to another party (the offeree)

(ii) which the offeree accepts.

Front 13

What are three areas of indefiniteness?

Back 13

Indefiniteness can be divided into three general categories:

1. The parties purport to agree on a material term but leave it too indefinite or vague (indefinite term).

2. The purported agreement is silent on a material term (omitted term).

3. The parties agree to later agree on a material term (agree to agree).

Front 14

What happens under UCC if the terms are missing?

Back 14

In a contract for the sale of goods, the Uniform Commercial Code will provide many missing terms. The parties can conclude a contract even though the price is not settled. In such cases the price is a reasonable price at the time for delivery. U.C.C. § 2-305(1). Unless otherwise agreed, the delivery of goods is the seller's place of business or, if he has none, his residence. U.C.C. § 2-308(a). Finally, unless otherwise agreed, payment is due at the time and place at which the buyer is to receive the goods. U.C.C. § 2-310(a).

Front 15

OFFER

Back 15

An offer is defined as a manifestation of willingness to enter into a bargain so made as to justify another person in understanding that her assent to that bargain is invited and will conclude it. Offers can be oral, written, or implied by conduct.