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63 Cards in this Set

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General rule of oral contracts

enforceable unless there is a law requring written evidence of existece of contract

Purpose of statute of frauds

to avoid frauds; provide courts with best possible eveidnce of existence of a contract in situations where oral contracts problematic; difference between unenforabcle contract and void contract
6 categories of statue of frauds
in consideration of marriage; debt to another; by executor to pay estate debts from personal funds; cannot be performed in a year; transer of interest in real estate; sale of goods greater than 500
Statue of frauds: answer for the debt of another
"if he doesn't pay, I will"; watch out for the main purpose or leading object rule; if promise is made prinicpall in order to secure some benefit for himself, the coontract may not fall under this description (and therefore is enforcable even if oral)
Statue of frauds: transfer of interest in real property
includes leases of one year or more in length; exceptions:1. perfromance by seller - seller has already signed a deed and given it to buyer; 2. part performance by buyer - if buyer has paid part of purchase price and has entered onto land or made some substantial improvements
Statue of frauds: writing requriement
not necessarily a written contract, but a writing evidencing existence of contract; name subjet matter, all essential terms; signuatre of party against whom enforcement is being sought; U
UCC Rules
writing need only indicate existence of cntract; quantity and signautre requried
Parol evidence rule
Parol evidence - statements not contained in written contract; when parties enter into a written contract that they intend as a complete integration then evidence of prior or contemporary statemtns may not be used to add to, alter, or contradict the written contract
Exceptions ot parole evidence rule
partial or incomplete integation, explaining ambiguities, cirumstances invalidating the contract, existence of condition precedent, subsequent agreements/ modifications, course of dealing, usage of trade or industry
Third party rights
third parites may aquire rights in a contract if they are intended beneficiaries. Persons who are incdidentally benefited to not aquire rights in a contract
How to determine if intended or incidental
was the 3rd party identified in k; was performance to be made directly to the 3d party; does the 3rd party have any rights to direct the manner or means of performance; does the 3rd party have arelationship with the promisee such that an intent to benefit the 3rd party can be inferred
General rule of assignment of contract rights
generally all contract rights (the right to receive a performance) may be assigned, with certain significant exceptions
Exceptions to general rule of assingemnt of contract rights
Personal service contracts, contracts that substantially alter the obligors risk (i.e. insurance policies or extensions of credit), assignemnts against public policy
pre-judgement wage assignments
If you cant make credit card bills and credits tell you to let them have part of your wages from your employer every week; this is generally illegal; post judgement is legal - if a court sues you and wins then the creditor may apply to the court for an attachement of your wages
How is an assignment carried out?
there is no formal requirement. If the assignment is of a contract that is erequired by the statue of frauds to be in writing then the assingment may have to be in writing as well
Exceptions ot general rule of delegation of duties
Duties involvign personal judgement or skill, delegations that would change the obligee's expectation (i.e. requirements and outputs contracts); Delegations that are against public policy (i.e. public works jobs on bid)
Is a provision in a contract prohibiting delegation of duties usually enforceable?
Yes
Who is liable for non performance if duties are delegated?
Both or either of parites can be held liable
How can obligor exricate himself from the obligation to perfrom
secure a novation (new contract)
Is a provision in a contract that prohibists assignement
usually not effective to negate any assignement
Condition
an event, other than the passage of time, the occurance or non occurrence of which will create, limit or extinguish the absolute duty to perform under the contract
Condition precednet
one which must occur before an absolute duty of perfroamnce arises in the other party
Condition subsequeent
one which cuts off an already existing duty to perfrom
conditions concurrent
those which are caable of occuring together and the paries are bound to perfrom at the same time (neither is obligated to peform unless the other also concurrently performs
4 ways an obligation can becoem discharged
performance, material breach, agreement, operation of law
substantial performance
in many service contracts, espeicallly those involing significant services where perfect performance is difficult to measre or prove, the law merely requires substantial performance to discharge contractual obligations
Material breach
discharges a contract and extinguishes the promisees obligation to perform; may sue for damages
minor breach
does not relive the promisse from the obligation to perform, although a deduction for damages is appropriate
anticipitory breach
breach which is effective (it releases theothe party) prior to the scheduled date for the promisors performance; date that other party tells you they will not perfrom is the date the contract is breached
Time is of the essence
failure to perfrom on time, in and of itself, does not constitute a material breach unless "time is of the essence" - either expressly stated or implied
subjective standard of personal satisfaction
only applies when contract performance involves personal feelings, taste or judgement AND contract speficically demanded personal satisfaction
recission
only applicable where the contract is voidable for some defect
Restitution
typically required; putting the parties back in the position that they would have been in had there been no contract - paying for performance received or giving back consideration received; the non breaching party doesn’t want benefit of her bargain, they want to go back to where she was before contract was entered into; like a rewind button
novation
Substituion of a third partys performance with release of liabilty for original
Settlement agreement
where there has been a legitimate dispute over the extent, quality, circumstances, etc othe promised performance
unilateral material alternation of a written contract
discharges the innocent, non altering party
Impossibility of performance
discharges the obligation to perform; destruciton os subject matter, death of promisor (personal service contract), subsequent illegality
Commercial impractibility
may discharge the obligation to perform if: some even occurred which neither party anticipated (the non occurrence of which the parties relied upon) AND performance would be extraordinarily difficult and unfair
frustration of purpose
may discharge the obligation to perform some event occurred which neither party anticipated, rendering the contract valueless to one party; reserved for use in very rare situations
general theory of remedies
grant the non breaching party the "benefit of her bargain"; put them in the same place thtey would have been in if other party had not breached contract; money damages can never be the same as performance, but attempts to approximate ti
3 tpes on interests for remeides
expectation interests; reliance or (anticipatory) interest; restiutiton interest
expectation interests
Would would the party have gotten out of contract had it not been breached; compensatory damages, specific performance and injunctive relief are applicable

Reliance (or Anticipiatory) interest

Applies where expectation interest is too speculative to compensate.


Instead of putting non breaching party in position they would have been in; court tries to compensate party for investment or loss in anticipation of the contract beign performed

Instead of putting non breaching party in position they would have been in; court tries to compensate party for investment or loss in anticipation of the contract beign performed
Restitution interest (equitabel remedies)
Sometimes court must do more than reward money damages. In appropriate circumstatnces court can rescidn otherwise valid contract. It may be neccesary to order that a party who has gained a benefit at the expense of another to pay restitution damages to compensate the financially inured party
Forumula for money damages
Compensatory damages + Consequential damages + incidental damages - costs avoided
purpose of compnesatory damages
put the non breaching party into the position she would have been in had there been no breach
Standard measure of compensatory damages
Value of erformance promised or expected - value of performance received
incidental damages
losses resulting from attempts to mitigage (reduce, limit) damages or losses as a result of the breach; example: company decides not to hire you and as a result you hire a employment agency. The employment agency fees would be incidental damages
consequential damages
losses specifially incrurred by this particular party as a consequence of the breach, inlucind lost profits; should be considered if: they are not speculative AND they could have been reasonably forseen by the breaching party
Liquidating damages
attempts to determine the amount of damages wthat will be paid upons some future breach. Courts will enforce if: at time of entering into contract, it is difficult to estimate actual damages AND the liquidated damages are a reasonable attempt to approximate actual damages
Mitigation of damages
In all instances, the non breachign party cannot recover for damages that could have been avoided with reasonable effort
Specific performance
a court order that a breaching party actually render the performance, rahter than pay damages; extraordinary remedy and will be given only when money damages are insufficient to compensate the non breaching party; example- contracts for sale of real property; the law considers all real estate to be unique
injunction
An order requiring someone to do something or refrain from doing something; courts do not enter into injuctions lightly
Reformation
allows the court to rewrite certain aspects of a contract to cure an ambiguity or remove an illegality
Punitive Damages
extremely rare in contract cases, but may be rewarded for bad faith conduct by the breaching party to dscoruage such conduct by others. Usually some tort is involved in addition to the contract breach
Negligence elements
duty, breach of care, causation, injury
To who is accoutants duty owed?
the client; known user or class of users (known persons or known uses) (most states); anyone whose reliance could be reasonably foreseeable (even if unkonwn) (some states)
Fraud
false representaion of fact that is material made with knowledge of its falsity and intetnion to deceive (scienter) is justifiably relied on, causes injury
Constructive fraud
because of professional status of accountants, constructive fraud may be found from gross negligence even in the absence of scienter
1933 securities act
civil liability for any untrue satemetn or omission of fact in financial satement; liable ot anyone who purchases the securities without knowledge of the falsity
Defendant accounts burdan of proof
due dilligence
1933 act penalites
civil liability for negligence; criminal liability for intentional violation
1934 ssecurities act

covers more than fincial statemtns in registered filings; imposes liability for false stateemtsn; defense is good faith - which can even include negligetn acts