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65 Cards in this Set

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Types of Contracts

Bilateral


Unilateral


Gift Promise/ donative contract

Bilateral contract

a promise to do something is exchanged for a promise

Unilateral Contract

a promise to do something in exchange for an act.


k arises when the act is done

Gift Promise / Donative Contract

in this contract there is no consideration

Promissory Estoppel



when a promisor makes a reasonable promise, such that the person who hears the promise reasonably relies on that promise and acts to their detriment, then the promise must be kept open if it is the only way to avoid injustice

Mailbox Rule

an offer or revocation is effective when received


acceptance is effective when sent

3 Parts of a contract

offer, acceptance, and consideration

The Offer

it is an option.


it must have reasonably definitive terms.


must be communicated to the offeree.


must have an intent to be bound / is an invitation to negotiate.


there is always a set period of time during which the offer is open.

An Option

an opportunity to do something that a person must keep open for you, for a price

How to stop an offer

Revocation must happen before acceptance or


subsequent illegality

Subsequent illegality

When the offer is asking someone to do something illegal it invalidates the contract

The Acceptance

Must happen within the time frame of the offer.


Must be according to the terms of the offer.


Contractual Capacity

Contractual Capacity

does the person have the mental capacity to enter a contract?


non compis mentis (no longer of sound mind)


intoxication

Minors & contracts

Minors enter Voidable contracts except for food, clothing and shelter.

Consideration

something of value in exchange for the thing in the contract.


(often Money)

Statute of Fraud

contracts concerning real-estate and wills must be in writing

Conduct which affects Contracts

Novation


Mistakes


Fraud Misrepresentation

Novation

The right to negotiate a new contract if both parties agree

Mistakes & Contracts

generally, a unilateral mistake does not affect the contract, unless the non-mistaken party knows about the mistake, or if the mistake is mathematical in nature and of such a size that a reasonable person would recognize the error.

Fraud Misrepresentation

misrepresentation of a fact that is materially wrong ( a statement of fact that is inaccurate which forms the basis of the contract.


fraud by word ( a lie)


Fraud by silence (dont tell something you are supposed to tell)


Fraud by marketing materials


this is fraud in the inducement

Terms of a contract

Parole evidence rule


Course of performance


Usage of Trade



Parole Evidence Rule

when an agreement is reduced to a full and comprehensive writing, signed by the parties, then evidence of prior (or contemporaneous) oral or written agreements are not used to interpret the contract.

Course of Performance

in a contract with multiple performances done and accepted by the party that can object but does not, then that performance constitutes the terms of the agreement.

Usage of Trade

when a term and its meaning is so universally accepted in a trade that it does violence to the word to change its meaning, then that is what the term means

Discharge of contract obligations

By performance


commercial impracticability


Repudiation

Discharge of K obligations by Performance

all part of the contract have been completed and delivered on

Discharge of K by commercial impracticability

the occurrence of an event, the non occurrence of which was the basis of the bargain, which makes performance economically not feasible

Discharge of K by Repudiation

a clear and unequivocal statement or action indicating that the other party either can not or will not preform on the contract.


this is an immediate cause of action as it may constitute a breach

Breach of Contract

can be a major or minor breach, results in damages

Major Breach

the non breaching party does not get substantially what he or she bargained for.


Substantial non performance


You may have immediate cause of action

Minor Breach

The non breaching party gets most of what they wanted.


Non breaching party must preform on their end of the contract but may hold back the % of performance that is needed to remedy the loss

Kinds of Damages and Remedies

Compensatory / General


Consequential Damages


Liquidated Damages


Reliance Damages


Specific Performance

Duty to mitigate damages

Non breaching party must make a reasonable effort not to suffer damages

Compensatory / General Damages

in this case, the breaching party must put the non breaching party in the position they would be in if there had been no breach

Consequential Damages

Damages which follow naturally and probably from the original breach, generally where the breaching party is aware of the law. the breaching party must pay the damages

Liquidated Damages

a $ amount specified in a K and signed by the parties determining monetary damages in the case of a breach

Reliance Damages

Compensate the relying party for any reasonable damages created by relying on the original promise


(promissory Estoppel)

Specific Performance (remedies)

occurs when the court requires the breaching party to do what the original contract required

Food Related Injury (Common Law)

if the source of the injury is foreign, then the provider is negligent


if the source of the injury is natural then the provider is not negligent





Food Related Injury (statute)

the warranty theory


this is basically the reasonable expectations test. if you can reasonably expect to find the source of the injury where it was found, then the provider is not negligent

the warranty theory

this is basically the reasonable expectations test. if you can reasonably expect to find the source of the injury where it was found, then the provider is not negligent

Alcohol related injury (common law)

it is the consumption of alcohol, not its sale or provision which is the proximate cause of injury


*this is based of the abel bodied man theory




**the exceptions to the common law are minors and known intoxicants

Alcohol related injury (Dram shop law / statutory law)

This law prohibits the sale of alcohol to minors, known intoxicants, clearly or obviously intoxicated people.




most states have some sort of dram shop law

Bailments

The transfer of title in which the baillee gets legal possession and control, but the bailor maintains ownership of the title.

Duty of the baillee

Must return the bailed object to the bailor at the end of the bailment in the same or similar conditions.

Conversion (of bailed objects)

when the bailee fails to return the object, it has been converted.


the bailee is liable to the bailor for the full market value of the bailed object minus depreciation

constructive bailments

Involuntary bailments




The bailee is responsible for returning the item to the owner of the best legal title

Duty of care for bailments (carefulness quotient)

Personal instances


for the benefit of the bailor; bailee must exercise slight care


for the benefit of the bailee; bailee must exercise more than reasonable care


Business instances


For mutual benefit; bailee must exercise reasonable care.

The reasonable expectations test for bailed objects

the bailee is responsible for anything you could reasonable expect to find within the bailed object


for example: a wallet in a coat pocket

Bailment Example: coat check

an unattended coat check room is not a bailment unless you pay for coat check or it is an attended coat check room. the establishment would be smart to post a sign removing them of all responsibilities

Bailment Example: Cars

Parking lots are not bailments, rather temporary leases, unless there is a transfer of keys

property of hotel guests; Valuables

Expensive jewelry, valuable securities, large sums of cash

Hotel guests property, common law

The innkeeper is absolutely responsible for lost or stolen property


exceptions include;


an act of god


an act of public enemy


contributory negligence by the owner of the item

Statute limiting liability (sll) for the innkeeper

the innkeeper must provide a safe for valuables and post a notice of the SLL stating the duty of the guest to hand over valuables and the statutory limit of the hotels liability.




in some states liability is limited to the statute unless the item was lost due to the hotels negligence, in other states the limit is still set even iff the hotel was negligent.

Equitable estoppel, and waiving the SLL

the SLL can be waived if both parties are in agreement.


this can be done in 2 ways




implicit waiver: verbally waived, there can be no trickery


Explicit waived: done with a signed document.

Explicit Waiver for SLL

a signed document waiving the limit of liability for a guests valuables

3 kinds of Warranties

Express


Implied


Warranty of Title

Express Warranties

any statement of fact attaching to your product or service that is relied on and becomes part of the basis for the bargin

Implied Warranties

a merchant warrants that the product or service provided is of fair or average quality in the trade, is appropriate for its intended use, and meets all labeling stipulations. This warranty applies to merchants within that business. this warranty can be waived if it is written that the warranty is limited.

Warranty of title

a seller warrants the buyer that the title is clear and that its transfer is lawful. the seller can only transfer a title that he or she owns

3 kinds of business organizations

Sole Proprietorship


Partnership


Corporation

The corporate veil

an imaginary divide between shareholders and investors that protects shareholders. makes it so that shareholders are not liable for anything but investors are.

Sole Proprietorship

Identity: The owner


Liability: falls to the owner and the company as one individual


Taxes: only ordinary income taxes are paid


Dissolution: the owner just stops the company.

Partnership

Partners share in profits and losses


identity: The partners


Liability: both partners are jointly liable. if one partner can not pay his full share, then the other partner is liable for the difference.


Taxes: Ordinary income taxes


Dissolution: Both parties must agree to stop working. the goods are divided among the partners.

Corporation

Created by the state


Identity: the corporation is viewed as one identity


Liability: extends through the corporation. (stops at corporate veil)


Taxes: corporate taxes are paid by the company. shareholders pay taxes on dividends.


Dissolution: the board of directors and the shareholders must approve a dissolution.