Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
90 Cards in this Set
- Front
- Back
|
Elements of a Contract
|
The necessary elements of a contract are offer, acceptance, and consideration.
|
|
|
Mutual Assent
|
Mutual assent relates to the requirement of an initial agreement between the parties to enter into a contractual relationship and is established if a valid offer has been made by one party with a valid acceptance having been given by the other prior to the termination of the offer
|
|
|
Offer
|
An Offer is a manifestation of present contractual intent and is comprised of a promise to carry out the terms of a proposed transaction which bargains for an act, a forbearance to act, or a return promise to be given in exchange.
|
|
|
Acceptance
|
An unequivocal assent to the terms of an offer.
|
|
|
Consideration
|
Consideration is that which is bargained for and given in exchange for a promise. It may be an act, a forbearance to act, or a return promise on the part of the promisee.
|
|
|
Bilateral Contract
|
A Bilateral Contract results from an offered promise that is accepted by the giving of a return promise.
|
|
|
Unilateral Contract
|
A Unilateral Contract results from an offered promise that must be accepted by giving the performance specified. A mere promise to perform does not constitute acceptance in such case.
|
|
|
Adams v. Lindsell
|
The case of Adams v. Lindsell holds that an acceptance of an offer for a bilateral contract, dispatched by an authorized mode of communication, is effective when posted.
|
|
|
Option
|
An Option is an agreement supported by consideration that involves a promise to hold an offer open for a specified length of time.
|
|
|
Firm Offer
|
A Firm Offer is an offer which is irrevocable either because an option has been paid for by one of the parties or because it was made by a merchant pursuant to UCC Section 2-205, the merchant having signed the offer in writing giving assurance that the offer will remain open for a certain or reasonable length of time.
|
|
|
Caldwell v. Cline
|
The case of Caldwell v. Cline holds that when an offer states that it will be open for a certain number of days the first day is considered to be the day the offeree receives the offer.
|
|
|
Revocation
|
Revocation results from the canceling, annulling, or otherwise voiding of an offer.
|
|
|
Revocation Effective Upon receipt by Offeree
|
A revocation is deemed to be effective upon its receipt by the offeree. A minority view holds that the revocation becomes effective when sent by the offeror.
|
|
|
Unilateral Contract: Revocation of Offer Rule
|
The offeror in a unilateral contract may not revoke the offer for the time stated in the offer or if no time is stated in the offer, then for a reasonable length of time if the offeree begins performance.
|
|
|
Rejection
|
A rejection is a manifestation by the offeree that he or she does not intend to accept the offer or give it further consideration.
|
|
|
Rejection Effective when Received
|
A rejection becomes effective upon receipt by the offeror.
|
|
|
Counteroffer
|
A counteroffer is an offer by the original offeree regarding the same transaction but containing terms that differ from those proposed in the original offer made by the offeror.
|
|
|
Counteroffer as an Implied Rejection
|
A counteroffer is an implied rejection of the original offer. It is, in effect, a new offer available for acceptance.
|
|
|
Illusory Promise
|
An illusory promise is an expression which resembles promissory terms, but in actuality imposes no obligation upon the party making it.
|
|
|
Promissory Estoppel
|
The doctrine of Promissory Estoppel provides a substitute for the element of consideration under certain circumstances involving foreseeable detrimental reliance upon a gratuitous promise, where a remedy against the non-performing promisor may be necessary in order to avoid injustice in the particular case.
|
|
|
Moral Obligation Rule
|
The doctrine of "Moral Obligation" applies where the promisor has received something from the promisee of value in the form of money or other material benefits under such ccircumstances as to create a moral obligation to pay for what they have received, and a later promise to do so, resulting in a finding of consideration for such a promise. The doctrine most often applies in situations involving promises to pay for previously entered gratuitous services, promises to pay debts barred by the statute of limitations and promises to pay debts discharged in bankruptcy. The promise can be implied by a mere acknowledgment of a debt or by part payment of the debt. Use of the doctrine supplies the element of consideration in situations where it would otherwise be missing from the bargain.
|
|
|
Legal Detriment
|
A legal detriment is a promise to do something that one is not legally obligated to do or to refrain from doing something that one is legally privileged to do.
|
|
|
Failure of Consideration
|
Failure of consideration occurs when one of the parties to a contract fails to perform as required by the terms of the contract or the subject matter of the consideration ceases to exist or becomes worthless even though valid consideration was present when the parties first contracted.
|
|
|
Want of Consideration
|
Want of consideration refers to the parties' failure to make a contract because there was no consideration present from the beginning of the transaction.
|
|
|
Sufficiency of Consideration
|
Generally, courts do not require that the consideration benefit the offeree, or that it be of any substantial value, as long as it serves as an inducement for the promise of the other party. However, some courts have held that nominal consideration may not constitute a valid contract if the promisor's promises are valued considerably higher than those of the promisee.
|
|
|
Executed Contract
|
An executed contract is a contract that has been fully performed by all of the parties to the contract.
|
|
|
Executory Contract
|
An executory contract is a contract that remains to be completed in the future by at least one of the contracting parties.
|
|
|
Meeting of the Minds
|
Most jurisdictions hold that a contract is not formed until there has been a "meeting of the minds" according to the intentions of the parties.
|
|
|
Outward Manifestation Theory
|
Other jurisdictions apply the "Outward Manifestation" theory stating that contracts are formed according to outward manifestations in accordance with the understanding of the supposed "reasonable man."
|
|
|
Merit Music v. Sonneborn
|
In the case of Merit Music v. Sonneborn the court held that in the absence of fraud duress or material mistake a party to a contract with the capacity to understand a written document will be bound by his or her signature whether or not they read the document
|
|
|
Express Contract
|
An Express Contract is one which is manifested by words either written or oral.
|
|
|
Implied in Fact Contract
|
An implied in fact contract is one that is inferred by the law because the acts or conduct of the parties and the surrounding circumstances make it reasonable to assume that a contract exists between them even though the contract is never manifested by words.
|
|
|
Implied in Law Contract (Quasi Contract)
|
An implied in law contract is one that is imposed by operation of law to do justice even though it is clear that no promise was ever manifested by words or ever intended. The creation of such a contract will occur where one party accepts or retains benefits that have been conferred upon him by another party who expected to be paid and who was not a volunteer.
|
|
|
Quantum Meruit
|
Quantum meruit refers to the reasonable value deserved for one's labor.
|
|
|
Quantum Valebant
|
Quantum valebant refers to reasonable value that is deserved as payment for goods.
|
|
|
Requirement Contract
|
A requirement contract is a contract to supply all of a certain type of goods or merchandise that a particular party may have a need for over a certain period of time.
|
|
|
Output Contracts
|
An output contract is a contract to supply all of a certain type of goods or merchandise that a particular party may produce.
|
|
|
Option Contract
|
An option contract is a contract wherein the promisor for consideration agrees to make a certain offer irrevocable.
|
|
|
Void Contract
|
A void contract is a contract which cannot be enforced by either of the parties.
|
|
|
Voidable Contract
|
A voidable contract is a contract that can be disaffirmed by one or more of the parties for reasons related to legal immaturity or mental incapacity.
|
|
|
Power of Disaffirmance
|
A legally immature or mentally incapacitated person has the power to disaffirm a contract but for all other purposes the contract is valid unless and until it is disaffirmed. The disaffirmance occurs when the legally immature or mentally incapacitated person manifests to the other party an unwillingness to continue to be bound by the contract.
|
|
|
Exculpatory Clause
|
An exculpatory clause is a provision in a contract that is intended to remove liability from one or more of the contracting parties that may result from certain acts or events.
|
|
|
Contract of Adhesion
|
A contract of adhesion is one wherein the provisions have been drafted giving one party an unequal bargaining power.
|
|
|
Unconscionable Contract
|
An unconscionable contract is a contract with a provision that no fair and honest person would make and no person in his or her right mind would accept. Such contracts are usually agreed to through "oppression" in that the promisee knows that he or she is giving up his or her rights but is forced to if he or she wishes to purchase the subject product. Or, he or she is not aware of the rights that are being given up but through "unfair surprise" (such as small print or vagueness in terms) signs the contract anyway.
|
|
|
Condition
|
A condition is an act or event, other than a lapse of time, which affects a duty to render a promised performance. A condition may be a condition precedent a condition concurrent or a condition subsequent.
|
|
|
Condition Precedent
|
A condition precedent is related to an event which must occur before a duty on the part of the defendant will arise. It may arise out of an express or implied term of the contract, or by operation of law under the doctrine of constructive conditions.
|
|
|
Condition Concurrent
|
A condition concurrent is a type of condition precedent which exists when the parties to a contract are bound to render performance at the same time.
|
|
|
Condition Subsequent
|
A condition subsequent is related to an event which, by agreement of the parties, operates to terminate a duty of performance after it has arisen.
|
|
|
Express Conditions
|
Express conditions arise out of a stated provision in the contract.
|
|
|
Implied in Fact Conditions
|
Implied in fact conditions are those which are necessary to the performance of the contract between the parties and therefore are deemed to have been intended by the parties, but are not expressly stated.
|
|
|
Constructive Conditions
|
Constructive conditions are those that the law will imply even though the parties did not and possibly would not have included them in the contract. Such conditions will be implied by the law to promote justice.
|
|
|
Doctrine of Constructive Conditions
|
The Doctrine of Constructive Conditions holds that the fulfillment of a promise in a bilateral contract can be construed to be a condition of the other party's performance even in the absence of an express provision to that effect.
|
|
|
Substantial Performance
|
The doctrine of Substantial Performance holds that a plaintiff who has failed to perform a constructive condition in some minor or immaterial respect may nevertheless recover on the contract.
|
|
|
Implied Condition of Cooperation
|
An Implied Condition of cooperation is implied in a contract whenever the cooperation of the promisee is necessary for the performance of the promise.
|
|
|
Waiver of Condition
|
waiver of condition results when a party to a contract voluntarily relinquishes his or her known right to assert the non-performance of a condition. Such waivers can be given by express agreement or through the conduct of a party.
|
|
|
Excuse of Conditions
|
An excuse of conditions occurs when one party's failure to perform a condition occurred because said party was reacting to a material default on the part of the other party. Accordingly, the other party is barred from asserting the failure of a condition or conditions as a defense against the first party (usually the plaintiff).
|
|
|
Assignment
|
An assignment is a transfer of a contractual right. An assignment is not a contract involving a promise to do something in the future, but is a present transfer of intangible property. This intangible property is a contractual right called a “chose in action.” When a valid assignment has been made the person receiving the transfer, the assignee, steps into the shoes of the person making the transfer, the assignor, and is now the proper party to enforce the contractual rights. An assignment only involves the transfer of a contractual right and not a contractual obligation. The transfer of a contractual obligation is a separate issue which is handled under the title of delegation and assumption of duties.
|
|
|
Divisible (or Severable) Contracts
|
A divisible or severable contract is a bilateral contract wherein the performance is divided into two or more separate units, either as to subject matter or time, and performance of each part by one party is the agreed exchange for a corresponding part by the other party. Examples are construction contracts, contracts for the sale of goods and employment contracts.
|
|
|
Lawrence v. Fox
|
The landmark case of Lawrence v. Fox held that a third party beneficiary has the right to enforce the contract which will confer a benefit upon said third party.
|
|
|
Delegation and Assumption of Duties
|
A delegation and assumption of duties involves a situation in which the assignor transfers his or her duty of performance to another. The person transferring the duty of performance is known as the delegator and the person who assumes the duty is known as the delegatee.
|
|
|
Creditor Beneficiary
|
A creditor beneficiary is one who receives the benefit of a contract in satisfaction of an actual or supposed debt or obligation that existed between the third party beneficiary and the promisee to the contract.
|
|
|
Third Party Beneficiary Contract
|
A third party beneficiary contract is a contract wherein performance by one party, the promisor, will confer a benefit upon third party beneficiary, that is, a person or entity other than the promisee.
|
|
|
Donee Beneficiary
|
A donee beneficiary is one who receives the benefit of a contract wherein the promisee has expressed intent to bestow a gift upon said beneficiary.
|
|
|
Intended Beneficiary
|
An intended beneficiary is one in whom the creation of an obligation in his or her favor was contemplated by the original parties to the contact. A third party must be an intended beneficiary in order to have a "Standing to Sue" when attempting to enforce the provisions of the contract.
|
|
|
Incidental Beneficiary
|
An incidental beneficiary is one who may receive the benefit of the performance of the contractual provisions only incidentally and was neither intended to receive the performance as a gift nor in satisfaction of a debt. An incidental beneficiary does not have standing to sue for purposes of attempting to enforce the contract.
|
|
|
Distinguishing between Donee and Creditor Beneficiary
|
The reason for distinguishing between donee and creditor beneficiary is related to the rules of "vesting." The First Restatement of contracts held that the donee's rights vested upon the making of the contract, and that the creditor's rights vested when he brought suit or otherwise materially changed his position in reliance upon the third party beneficiary contract. However, the majority rule today is that the rights of both the donee and creditor vest upon the beneficiary's learning of the third party beneficiary contract and manifesting assent thereto. Therefore, the original parties retain the power to defeat or alter the beneficiary's rights up until the time that the beneficiary 1) materially changes his or her position including the bringing of a lawsuit or 2) manifests his or her assent to the contract after learning of its existence.
|
|
|
Rights Against the Promisee
|
A third party "donee" beneficiary has no rights against the promisee by reason of the promisor's failure to perform the contract. The "creditor" beneficiary, however, can sue the promisee on the original obligation since it remains unaffected by the third party beneficiary contract.
|
|
|
Guaranty
|
A guaranty is a promise to answer for the debt, default, or miscarriage of another.
|
|
|
Statute of Frauds
|
The doctrine of the Statute of Frauds was enacted in England centuries ago and remains in effect today by statute. It was established to guard against fraud and perjury in contract actions by requiring that certain types of contracts be evidenced by a writing signed by the party to be charged, the defendant in a civil action. Those contracts which are customarily within the Statute of Frauds are as follows:
a) a contact which by its terms is not to be performed within one year from the making thereof, b) a promise to answer for the debt or default of another, c) a promise in consideration of marriage, d) a contract for the sale at real property, e) a contract for the sale at goods of a value in excess of a certain amount. |
|
|
Parol Evidence Rule
|
The Parol Evidence Rule provides that where the parties have entered into an agreement that has been reduced to writing with the intent being to make that writing a final and complete expression of their contract, no evidence of a prior or contemporaneous agreement can by introduced to change the terms of that writing. Even though the term "Parol" is generally used to mean the same thing as "oral," the Parol Evidence Rule as traditionally applied makes it such that any evidence of a prior or contemporaneous agreement whether written or oral cannot be introduced to change the terms of the written agreement. Therefore, the purpose of the rule is to lend certainty to the terms of written contracts by making it such that the parties to the contract are prevented from later contending that the contract did not really represent the full understanding of the parties.
|
|
|
Modification
|
A modification is a subsequent agreement entered into for consideration for purposes of modifying the prior contract. Only evidence related to agreements made prior to or at the same time as the written contract will be excluded as inadmissible under the previously mentioned Parol Evidence Rule. Therefore, the Parol Evidence Rule does not apply to modifications
|
|
|
The Collateral Agreement Doctrine
|
The Collateral Agreement Doctrine holds that additional terms included in a separate agreement and which were, in fact, intended by the parties even though they were not included in the original written contract may be enforced if this "Collateral Agreement" is one which 1) does not contradict any express provision of the main agreement, and 2) might naturally be made as a separate agreement between the parties. Therefore evidence related to a Collateral Agreement will not be excluded as inadmissible under the Parol Evidence Rule.
|
|
|
Termination by Accord and Satisfaction
|
An accord is an agreement to compromise an existing obligation which has become the subject of a good faith dispute. Satisfaction is the acceptance by one party to a contract of the agreed compromise, or accord. This acceptance of the accord results in the satisfaction, meaning that the original obligation has been terminated with the accepting party no longer being able to charge the performing party with a breach of contract.
|
|
|
Termination by Novation
|
A Novation is a new contract that is, in effect an immediate discharge of a preexisting contractual duty which creates a new duty in its place. It requires the replacement of one of the previously contracting parties with a new party to this new contract one who neither owed the previous duty nor was entitled to its performance.
|
|
|
Termination by Release
|
A Release at common law was a complete discharge of existing contractual obligations given by one party to the contract to the other in a written document under seal. Modernly, in those jurisdictions that do not use the formal seal, a Release is generally considered valid if supported by consideration.
|
|
|
Merger
|
A merger is said to have occurred in a contractual situation when one contract supersedes or incorporates another.
|
|
|
Termination by Mutual Recision
|
A mutual rescission is an agreement by the parties to an existing executory (non-performed) contract to consider their contract null and void. This rescission is a contract in itself and requires mutual assent and consideration. The consideration for rescission is usually found in the fact that each party incurs a legal detriment by giving up their right to sue the other. In a case involving an executed (already performed) contract or a unilateral contract, an attempted rescission by mutual agreement would be lacking in consideration. Since the party who has received full performance is not giving up any right against the other, he or she is incurring no legal detriment. And, remember that as to the unilateral contract, the offeror has the power to revoke the offer and terminate all obligations if revocation of the offer is communicated to the offeree before the offeree has materially changed his or her position in reliance upon the offer.
|
|
|
Breach of Contract
|
A breach of contract occurs when one party to a contract fails to perform pursuant to the terms of the contract.
|
|
|
Termination by Impossibility of Performance
|
A party to a contract will be released from an obligation to perform pursuant to the terms of a contract when neither from his or her act nor from his or her neglect and prior to being in default, it has become impossible for said party to perform.
|
|
|
Anticipatory Breach
|
An anticipatory breach is an unequivocal repudiation of the contract before performance has become due. The promisee may elect to sue immediately for damages or may wait until after performance has become due to then file suit.
|
|
|
Material vis-a-vis Minor Breach
|
If the breach is material in nature, the plaintiff is justified in treating the entire transaction as ended and may thereafter sue for damages. However, if the breach is minor in nature the plaintiff has a cause of action for damages caused by the breach; but the contract remains in effect.
|
|
|
Termination by Economic or Commercial Impracticability
|
A party to a contract will be freed from an obligation to perform even in situations where performance has not become totally impossible, yet unanticipated difficulties have made the performance vastly different than that intended by the parties.
|
|
|
Prospective Failure of Condition
|
A prospective failure of condition occurs when an anticipatory breach is present and will excuse the non-breaching party from his or her performance
|
|
|
Termination by Frustration of Purpose
|
A party to a contract will be freed from an obligation to perform in situations where the performance is still possible but because of unexpected events which have occurred after the formation of the contract, the main purpose of the parties has become so frustrated to make it such that the benefit to be received by one party from the other party is now totally destroyed or materially impaired.
|
|
|
Liquidated damages
|
Liquidated damages are those damages that are agreed to in a contract in advance of any breach of contract and will be enforced by the courts if deemed reasonable.
|
|
|
Compensatory Damages
|
Compensatory damages are those damages that are awarded to the nonbreaching party to place that party back into the same position that he or she would have been in had the contract been performed as agreed to.
|
|
|
Consequential Damages
|
Consequential damages are no different than compensatory damages. The terms mean the same thing. However, this term reflects the "foreseeability" requirement that arose out of the case of Hadley v. Baxendale years ago in England. It was held in this case that compensation in a breach of contract case should be given only for those injuries that the defendant, at the time the contract was made, had reason to foresee as the probable result of his or her breach. Therefore, consequential or compensatory damages are those that normally follow the breach. Damages that do not normally follow such a breach may be held to be unforeseeable and therefore uncollectible.
|
|
|
Nominal Damages
|
Nominal damages are those damages that are awarded by the court to a non-breaching party who has suffered no damages or who has been unable to prove such damages at the trial, but who nevertheless have been wronged and is entitled to a judgment for technical breach of contract.
|
|
|
Mitigation of Damages
|
Mitigation of Damages refers to efforts of the non-breaching party to mitigate, or limit, his or her damages that could occur from the other party's non-performance. The law requires that the non-breaching party make an effort to mitigate damages.
|
|
|
Punitive or Exemplary Damages
|
Punitive damages, which are also called Exemplary Damages, are damages that are granted to a plaintiff in lawsuit for purposes of punishing the defendant for malicious or wanton or willful conduct and are awarded to make an "example" of the defendant's conduct; so that such conduct will not be repeated again. Punitive or exemplary damages are traditionally not allowable in cases related to causes of action for breach of contract.
|
