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138 Cards in this Set

  • Front
  • Back
What are the six sources of law?
1. administrative
2. case law
3. executive orders
4. constitutional
5. propositions
6. legislation
What are four types of contracts?
1. express
2. implied
3. unilateral
4. bilateral
What is an express contract?
contract based on words, written or oral
What is an implied contract?
contract based on conduct or understanding (like getting on a bus, or paying bill at restaurant)
What is a unilateral contract?
contract based on a promise for an action, in that it only goes one way and the only way to accept is to perform
What type of contract contains a promise for a promise?
bilateral contract
How does the UCC define goods?
movable personal property
How does the UCC define personal property?
any type of property other than interest in real property (land)
What matters does UCC not apply to?
employment contracts, service contracts, insurance contracts, contracts involving real property (land and anything attached to it), and contracts for sale of intangibles such as patents and copyrights
What are the four basic requirements for a contract?
1. mutual assent
2. consideration
3. legality of object
4. capacity
What is mutual assent?
the parties to a contract must manifest by words or conduct that they have agreed to enter into a contract. the usual method of showing mutual assent is by offer and acceptance
What is consideration?
Each party to a contract must intentionally exchange a legal benefit or incur a legal detriment as an inducement to the other party to make a return exchange
What is legality of object?
The purpose of a contract must not be criminal, tortious, or otherwise against public policy.
What is capacity?
The parties to a contract must have contractual capacity.
What's an example of the difference between bilateral and unilateral contracts?
"If you will mow my lawn, I will pay you ten dollars." (unilateral)
"I will pay you ten dollars if you will mow my lawn." "OK I will mow your lawn." (bilateral)
An agreement that does not meet all of the requirements of a binding contract is...
What makes a contract voidable?
A contract for which, because of the manner in which it was formed or a lack of capacity of a party to it, one or more of the parties can avoid the legal duties the contract creates is...
A contract for the breach of which the law provides no remedy...
What's the term for a contract performed by all of the parties to it? What about for a contract where this hasn't happened?
executed contract; executory contract
What do we call an agreement without mutual consideration?
What are two types of judicial remedies?
1. promissory estoppel
2. quasi contract
What's another term for quasi contracts?
"contract implied in law"
What are the three requirements for promissory estoppel?
1. detrimental reliance
2. substantial reliance
3. justifiable/reasonable reliance
What term refers to the reason someone sues someone else?
cause of action
What are the two requirements for something to be a "good" under UCC?
1. moveable
2. toucheable
What's a classic example for promissory estoppel?
What's a quasi contract?
You received a benefit and it would be unjust for you to keep it.
What test asks what the main issue or matter of an agreement is?
predominant thrust test (as in screw coating, service vs. good)
What are the two components to mutual assent?
1. offer
2. acceptance
What are the three requirements for an offer?
1. communication
2. intent
3. definiteness
What's another subset of communication that's required for an offer?
the communication must be made or authorized by the offeror
Can someone accept an offer without having had knowledge that it existed?
What test is very applicable to the intent requirement of an offer?
reasonable person test
What two issues comes up a lot in the intent category of an offer?
jokes, obvious excitement/emotional strain
It's important to distinguish language that constitutes an offer from that which merely...
solicits or invites offers
What does common law require to be definite in a contract?
price, quantity, parties, subject matter
What is the only requirement under the UCC for definiteness?
Does advertising the sale of goods constitute an offer?
no (may run out. but other laws enforce). unless very definite and clear of something in exchange for something.
In an auction, what's the offer and what's the acceptance?
offer - persons attending bidding
acceptance - hammer falling
What must be present if few terms are set definitively in a contract under the UCC?
good faith
What's the exception to the requirement for definiteness in quantity?
output and requirements contracts
What are the seven ways to kill an offer?
1. lapse of time
2. revocation
3. rejection
4. counteroffer
5. death or incompetency of offeror or offeree
6. destruction of subject matter
7. subsequent illegality
For how long is an offer open?
the specific amount of time. or, if unspecified, for a reasonable amount of time
When is revocation effective?
upon knowledge of the offeree
What is an option contract?
A contract in which the offeror is bound to hold open an offer for a specified period of time
___ survive deaths, ____ don't
contracts; offers
Under the UCC, what kind of offer must be open for 3 months?
firm offer
What are the components of a firm offer?
1. merchant
2. written
3. signed
How long is a firm offer good for?
30 days
By commencing the act required to accept a unilateral offer, does that prevent its revocation?
nope. (except when the offeree spent time and effort, the offeror is obligated not to revoke for a reasonable time)
When is a rejection effective?
receipt by the offeror
A counteroffer operates as both a...
rejection and an offer
When is a counteroffer effective?
receipt by the offeror
What is conditional acceptance?
the type of acceptance which purports to accept an offer but expressly makes the acceptance conditional upon the offeror's assent to additional or different terms
What is the exception to a counteroffer?
mere inquiry
What words are signature of a mere inquiry?
wish, hope, wonder
For a unilateral contract, does fulfilling the act alone constitute acceptance of the offer?
No, must also have intent to accept
When is acceptance effective?
upon dispatch ("mailbox rule") (unless otherwise specified)
What is a feature required of an acceptance in order for it to be valid under common law?
mirror image
What is the mirror image rule?
positive and unequivocal, has to be exact copy
If the mirror image isn't abided by, what does that constitute?
Does the UCC have the mirror image rule?
If a rejection is sent and then an acceptance, which one wins?
first to arrive
When is an offer effective?
upon receipt
What are the two requirements of the mirror image rule?
positive, unequivocal
If there are differences between offer and acceptance, under UCC what happens?
the contract will be formed without the different terms (unless a bunch of things)
In addition that the offer and acceptance be satisfied, the law also requires that an agreement be both...
voluntary and knowing
Define duress.
Any wrongful or unlawful act or threat that overcomes the free will of a party
What are the two types of duress?
physical compulsion and improper threats
Physical compulsion makes a contract ____ while improper threats make it _____.
void; voidable
What is missing in the case of physical duress that makes a contract void?
meeting of the minds
What two types of duress fall under improper threats?
economic and social duress
What are the two key elements of duress?
1. improper threat
2. no reasonable alternative
Does duress have to be unlawful to make a contract voidable?
Is a contract made under threat of criminal prosecution voidable?
Is a contract made under threat of civil remedies voidable?
Define undue influence.
UNFAIR PERSUATION of a person by a party generally in a DOMINANT POSITION based upon a CONFIDENTIAL RELATIONSHIP
A transaction induced by unfair influence on the part of the dominant party is...
Undue influence generally arises when one party is...
...in a position of dominance
What are three factors key to determining whether or not there was undue influence?
1. whether or not the dominant party made full disclosure of all relevant information known at the time.
2. whether the consideration was adequate
3. whether the dependent party received competent and independent advice before completing the transaction
What is a key factor in undue influence?
the dominant party gaining at the other party's expense
What are the two types of fraud?
fraud in the execution; fraud in the inducement
What is fraud in the execution?
misrepresentation that deceives the defrauded person as to the very nature of the contract. when the person does not know, or does not have a reasonable opportunity to know, the character or essence of a proposed contract because the other party misrepresents its character or essential terms
A contract that results from fraud in the execution is...
What two terms does "fraud in the inducement" also go by?
fraud or deceit
What is fraud in the inducement?
an intentional misrepresentation of material fact by one party to the other, who consents to enter into a contract in justifiable reliance upon the misrepresentation
Fraud in the execution renders a contract ____, whereas fraud in the inducement renders a contract _____.
void; voidable
What are the 5 elements of fraud in the inducement?
1. a false representation
2. of a fact
3. that is material and
4. made with knowledge of its falsity and the intention to deceive and
5. which representation is justifiably relied upon
What is the term for intention to deceive?
False representation (under fraud) can also be indirect through...
concealment (an action intended or known to be likely to keep another from learning of a fact of which he otherwise would have learned)
In general, does silence or nondisclosure alone amount to fraud?
In what situations does nondisclosure constitute a misrepresentation?
1. a person fails to disclose a fact known to him
2. he knows that the disclosure of that fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract
3. non-disclosure of the fact amounts to a failure to act in a good faith and in accordance with reasonable standards of fair dealing
Silence may constitute fraud in transactions involving a...
What is a fiduciary?
a personal in a confidential relationship who owes a duty of trust, loyalty, and confidence to the other
Fraud requires fact. But do the courts offer relief in the cases of opinion when the party is one who holds himself out as having expert knowledge?
In addition to opinion, what else does not constitute fact in the context of fraud?
predictions of the future
What two requirements make a misrepresentation material?
1. it would be likely to induce a reasonable person to manifest his assent
2. the maker knows that it would be likely to induce the recipient to do so
What are three possible forms of scienter?
1. actual knowledge
2. lack of belief in the statement's truthfulness
3. reckless indifference as to its truthfulness
What are the two types of mistakes?
mutual and unilateral
What is mutual mistake?
when both parties are mistaken as to the same set of facts
A mutual mistake makes a contract...
voidable (by the adversely affected party)
What is required for a mutual mistake to be voidable? (two elements)
if the mistake relates to a basic assumption on which the contract is made and has a material effect on the agreed exchange
What's the rule with unilateral mistakes?
you generally cannot take advantage of others' mistakes. relief will be granted if the nonmistaken party knows, or reasonable should have known, that such a mistake has been made
What happens if the two parties attach different meanings to the same agreement, in good faith?
no contract
What is an example?
Peerless ships
What are the two basic elements of consideration?
1. legal sufficiency (something of value)
2. bargained-for exchange
What are the two ways for there to be legal sufficiency?
1. legal detriment to the promisee
2. legal benefit to the promisor
(the promisee must give up something of legal value or the promisor must receive something of legal value)
What are the two ways for there to be legal detriment?
1. doing (or promising to do) something that you weren't required to do before
2. not doing (or promising not to do) something which you were not previously restricted from doing
What is legal benefit?
getting something which you had no prior right to get
Is it common for cases involving legal detriment to also have legal benefit?
What do courts not recognize or care about?
What is mutuality of obligation?
a relationship in a bilateral contract in which each promise is the consideration for the other. each promisor in a bilateral contract must be bound, or neither is bound
What is an illusory promise?
A promise that makes the performance of the purported promisor entirely optional and thus constitutes no promise at all. a statement that is in the form of a promise but imposes no obligation upon the maker of the statement.
What kind of words does an illusory promise have (such as for the articulation of quantity of goods)?
desire, want, wish to buy
What are two exceptions to the requirement that a contract be definite in terms of quantity?
output contract, requirements contract
What is an output contract?
a seller's agreement to sell her entire production to a particular purchaser
What is a requirements contract?
a purchaser's agreement to buy from a particular seller all the materials of a particular kind he needs
Can a requirements contract allow the purchaser to buy as much as she wants?
no. the key is need, not want
What's a key concept that applies to output contract and requirements contract?
good faith
What two types of duties cannot qualify for consideration?
public duty; preexisting contractual duty
Does past consideration count?
What is required under common law for modification of an existing contract?
new mutual consideration
Does UCC require new consideration for modification of a contract?
Which type of license is enforceable: regulatory or revenue?
Are gambling agreements enforceable?
no (but wagers are)
What is a usury statute?
a statute that states the maximum amount of interest that can be charged
What are examples of issues of public policy?
1. restrain trade
2. exempt or exculpate a party from liability for his own tortious acts
3. are unconscionable
4. involve tortious conduct
5. tend to obstruct the administration of justice
6. tend to corrupt public officials or impair the legislative process
7. impair family relationships
What is restraint of trade?
any contract or agreement that eliminates or tends to eliminate competition or otherwise obstructs trade or commerce
What is one type of restraint of trade?
covenant not to compete
What are three areas courts look to to determine the fairness of a restriction on someone's work?
1. time
2. geography
3. subject matter
What interests does the court try to balance in judging on restrictions to employment?
employer vs. employee
Are exculpatory clauses enforceable?
generally no
When might an exculpatory clause be enforceable?
when the service in question is necessary
What are the two types of unconscionability?
procedural unconscionability; substantive unconscionability
What is procedural unconscionability?
looks to "bargaining naughtiness," whether negotiations were fair
What is the exception to the court's not caring for adequacy?
substantive unconscionability
What is substantive unconscionability?
oppressive or grossly unfair provisions, such as an exorbitant price or an unfair exclusion or limitation of contractual remedies
What is the general result of illegality of a contract?