Fundamentals Of Business Law - Chapter 7

Front 1

Bilateral Contract

Back 1

A type of contract that arises when a promise is given in exchange for a return promise

Front 2

Executed contract

Back 2

A contract that has not yet been fully performed by both parties

Front 3

Executory Contract

Back 3

A contract that has not as yet been fully performed

Front 4

Express Contract

Back 4

A contract in which the terms of the agreement are stated in words, oral or written

Front 5

Formal contract

Back 5

A contract that by law requires a specific form, such as being executed under seal, for its validity

Front 6

Implied contract

Back 6

A contract formed in whole or in part form the conduct of the parties (as opposed to an express contract). Also know as an implied-in-fact contract)

Front 7

Informal contract

Back 7

A contract that does not require a specified form or formality to be valid

Front 8

Offeree

Back 8

A person to whom an offer is made

Front 9

Offeror

Back 9

A person who makes an offer

Front 10

Promise

Back 10

An assertion that something either will or will not happen in the future

Front 11

Promisee

Back 11

A person to whom a promise is made

Front 12

Promisor

Back 12

A person who makes a promise

Front 13

Quantum meruit

Back 13

An expression (meaning "as much as he deserves") that describes the extent of liability on a quasi contract. An equitable doctrine based on the concept that one who benefits form another's labor and materials should not be unjustly enriched by them but should be required to pay a reasonable amount for the benefits received, even if there is no contract

Front 14

Quasi contract

Back 14

A fictional contract imposed on the parties by a court in the interests of fairness and justice; usually imposed to avoid the unjust enrichment of one party at the expense of another

Front 15

Unenforceable contract

Back 15

A valid contract rendered unenforceable by some statute or law

Front 16

Unilateral contract

Back 16

A contract that results when an offer can be accepted only by the offeree's performance

Front 17

Valid contract

Back 17

A contract that results when the elements necessary for contract formation (agreement, consideration, legal purpose, and contractual capacity) are present

Front 18

Void contract

Back 18

A contract having no legal force or binding effect

Front 19

Voidable contract

Back 19

A contract that may be legally avoided (cancelled, or annulled) at the option of one or both of the parties

Front 20

Sources of Contract Law

Back 20

The common law governs all contracts except when it has been modified or replaced by statutory law (Uniform Commercial Code)

Front 21

The Function of a Contract

Back 21

To provide stability and predictability for both buyers and sellers in the marketplace

Front 22

The Definition of a Contract

Back 22

(An agreement that can be enforced in court. It is formed by two or more parties who agree to perform or refrain from performing some act now or in the future)

-A promise or set of promises,
-for upon breach,
-provides a remedy,
-or, the performance of which the law recognizes a duty

Front 23

The Objective Theory of Contracts

Back 23

Intent is determined by what is referred to as the objective theory of contracts, not by the personal or subjective intent/belief of a party.

Objective facts include:
1. What the party said when entering into the contract
2. How the party acted or appeared
3. The circumstances surrounding the transaction

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Requirements of a Valid Contract

Back 24

1. Agreement - an offer and an acceptance
2. Consideration - bargained-for-consideration (something of value received or promised to convince a person to make a deal.
3. Contractual capacity - both parties must possess characteristics that that qualify them as competent parties
4. Legality - the contract's purpose must be to accomplish some goal that is legal

Front 25

Defenses to the Enforceability Contract

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1. Voluntary Consent
2. Form - some contracts must be in writing

Front 26

Bilateral versus Unilateral Contracts

Back 26

(depends on what the offeree must do to accept the offer and bind the offeror to a contract)

Bilateral Contracts - if the offeree can accept simply by promising to perform ("promise for a promise")

Unilateral Contracts - if the offer is phrased so that the offeree can accept only by completing the contract performance ("promise for an act")

--> Revocation of Offers for Unilateral Contracts - when the promisor attempts to revoke (cancel) the offer after the promisee has begun performance but before the act has been completed

Front 27

Formal versus Informal Contracts

Back 27

Formal Contracts - require a special form or method of creation (formation) to be enforceable (WRITING)

Informal Contracts - (simple contracts) require no special form (except for certain tupes of contracts the must be in writing)

Front 28

Express versus Implied Contracts

Back 28

Express Contract - oral or written

Implied Contract - the conduct of the parties, rather than their words, creates and defines at least some of the terms of the contract Conditions:
1. Plaintiff furnished some service or property
2. Plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected
3. Defendant had a chance to reject the services or property and did not

Front 29

Limitations on Quasi-Contractual Recovery

Back 29

A party who has conferred a benefit on someone else unnecessarily as a result of misconduct or negligence cannot invoke the doctrine of quasi contract

Front 30

Quasi Contract when an actual contract exists

Back 30

The doctrine of quasi contract cannot be used when an actual contract covers the area in controversy

Front 31

The Plain Meaning Rule

Back 31

When a contract's meaning is clear and unequivocal, a court will enfore it according to its obvious terms.

If a contract's words appear to be clear and unambiguous, a court cannot consider extrinsic evidence, which is any evidence not contained in the document itself

Front 32

Other Rules of Interpretation

Back 32

A court will interpret the language to give effect to the parties' intent as expressed in their contract

A court will not make or remake a contract, nor will it interpret the language according to what the parties claim their intent was when they made the contract

Courts use rules in interpreting contractual terms:
-Evidence of trade usage, prior dealing, and course of performance may be admitted to clarify the meaning of an ambiguously worded contract