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Four elements for contract formation
1. an agreement
2. supported by legally sufficient consideration
3. for a legal purpose
4. made by parties who have the legal capacity to enter into the contract
A voidable contract
A valid contract that can be avoided at the option of one or both of the parties.
Accord and Satisfaction
A debtor offers to pay, and a creditor accepts, a lesser amount than the creditor originally claimed was owed.
A contract in which one party forfeits the right to pursue a legal claim against the other party
Covenant Not to Sue
The parties simply substitute a contractual obligation for some other type of legal action based on a valid claim.
When a child's parent or guardian relinquishes the legal right to exercise control over the child.
The act of accepting and giving legal force to an obligation that previously was not enforceable.
Covenants Not to Compete
Promises not to compete are often contained as anccillary (secondar, or subordinate) clauses in contracts concerning the sale of an ongoing business
Relates to factors bearing on a party's lack of knowledge or understanding of the contract terms
One written exclusively by one party( thee dominant party, usually the seller or creditor) and presented to the other on a take it or leave it basis
Characterizes those contacts, or portions of contracts, that are oppressive or overly harsh
Clauses that release a party from liability in the event of monetary or physical injury (no matter who is at fault)
Blue Sky Laws
State laws that regulate the offering and sale of securities for the protetion of the public and state statutes regulating the sale of insurance
Severable (divisible) contract
Consists of distinct parts that can be performed separately, with separate consideration for each part
Fraud Involves three elements
1. A misrepresentation of a material fact must occur
2. There must be an intent to deceive
3. The innocent party must justifiably rely on the misrepresentation
Statute of Frauds
A statute which stipulates what types of contracts must be in writing or be evidenced by a record
The One-Year Rule
Contracts that cannot, by their own terms, be performed within one year from the day after the contract is formed must be in writing to be enforceable
Collateral Promise (Secondary Promise)
is one that is ancillary (subsidiary) to the principal transaction
Agreement made before a marriage that define each partner's ownership rights in the other partner's property
Privity of Contract
Establishes the basic principle that third parties have no rights in contracts to which they are not parties.
Third Party Beneficiary Contract
Exceptions to the rule must be made when justice cannot be served by adherence to a rule of law
A possible future event, the occurence or nonoccurrence of which will trigger the obligation under a contract
When each party's absolute duty to perform is conditioned on the other party's duty to perform
A party who in good faith performs substantially all of the terms of a contract
Anticipatory Repudiation of a Contract
Before either party to a ontract has a duty to perform, one of the parties may refuse to perform his contractual obligations
Discharge by Novation
The process of novation substitutes a third party for one of the original parties
The requirements of a novation
1. The existence of a previous, valid obligation
2. Agreement by all of the parties to a new contract
3. The extinguishing of the old obligation (discharge of the prior party)
4. A new, valid contract
Discharge by Accord and Satisfaction
The parties agree to accept performance different from the performance originally promised.
An executory contract (one that has not yet been performed) to perform some act to satifsfy an existing contractual duty that is not yet discharged
The law allows an innocent party to be discharged when one party has materially altered a written contract without their knowledge or consent
Statutes of Limitations
Limit the period during which a party can sue on a particular cause of action
A proceeding in bankruptcy attempts to allocate the debtor's assets to the creditors in a fair and equitable fashion
Impossibility of Performance
After a contract has been made, performance may become impossible in an objective sense.
Grounds for discharge by impossiblilty of performance
1. When a party whose personal perfomance is essential to the completion of the contract dies or becomes incapacitated prior to performance
2. When the specific subject matter of the contract is destroyed.
3. When a change in the law renders performance illegal.
Courts may excuse parties from their performance obligations when the performance becomes much more difficult or expensive
Frustration of Purpose
In principle, a contract will be discharged if supervening circumstances make it impossilbe to attain the purpose both parties had in mind when making the contract
1. Compensatory (to cover direct losses and costs)
2. Consequential (to cover indirect and foreseeable losses)
3. Punitive (to punish and deter wrongdoing)
4. Nominal (to recognize wrongdoing when no monetary loss is shown)
Is an equitable remedy used when the parties have imperfectly expressed their agreement in writing
Requirements of Quasi Contract
1. The party conferred a benefit on the other party.
2. The party conferred the benefit with the reasonable expectation.
3. The party did not act as a voluteer in conferring the benefit.
4. The party receiving the benefit would be unjustly enriched by retaining the benefit without paying for it.
Online Agreements Should Include
1. A clause that clearly indicates what constitures the buyer's agreement to the terms of the offer, such as a box containing the word "I accept" that the buyer can lik on to indicate acceptance.
2. A provision specifying how payment for the goods (including any applicable taxes) must be made.
3. A statement of the seller's refund and return policies.
4. Disclaimers of liability for certain uses of the goods. For example, an online seller of business forms may add a disclaimer that the seller does not accept responsibility for the buyer's reliance on the forms rather than on an
5. A provision specifying the remedies available to the buyer if the goods are found to be defective or if the contract is otherwise breached. Any limitation of remedies should be clearly spelled out.
6. A statement indicating how the seller will use the information gathered about the buyer.
7. Provisions relating to dispute settlement, such as an arbitration clause, a choice-of-law clause, or a forum-selection clause
Indicates the forum, or location, for the resolution of any dispute arising under the contract
An agreement whose terms are expressed inside a box in which the goods are packaged
Do not require an internet use to assent tot he terms before, say, downloading or using certain software.
an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record
A seller and a buyer who frequently do business with each other agree in advance on the terms and conditions that will apply to all transactions subsequently conducted electronically
The Uniform Electronic Transactions Act, adopted at least in part, by forty-eight states. The UETA declares that a signature may not be denied legal effect or enforceability solely because it is in electronic form.
The E-SIGN Act of 2002
refers explicitly to the UETA and provides that if a state has enacted the uniform version of the UETA, it is not preempted by the E-SIGN Act
In electronic transactions, attribution refers to the procedures that may be used to ensure that the person sending an electronic record is the same person whose
e-signature accompanies the record.
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