Upgrade to remove ads
Terms in this set (96)
Elements of a Contract: The necessary elements of a CONTRACT are Offer, Acceptance and Consideration.
Elements of a Contract:
Mutual Assent: Mutual Assent relates to the requirement that the parties agree to enter into a contractual relationship, including terms and conditions. It is usually proved by showing that one party made a valid offer and the other party made a valid acceptance.
Offer: An offer is a manifestation of contractual intent which includes certain and definite terms; is communicated by the offeree; proposes a bargain in which include the offeror's act, forbearance to act, or promise is exchanged for the offeree's act, forbearance to act, or return promise; and creates a power of acceptance in the offeree.
Acceptance: An acceptance is an unequivocal assent to the terms of an offer.
Consideration: Consideration is that which is bargained for and given in exchange for a promise. It may be an act, a forbearance to act, or a return of a promise on the part of the Promisee, but must include a legal detriment to both parties in order to be valid.
Bilateral Contract: A Bilateral Contract results from an offered promise that accepted by giving of a return promise.
Unilateral Contract: A Unilateral Contract results from an offered promise that must be accepted by giving the performance specified. A mere promise to perform does not constitute acceptance in such a case.
Adams v. Lindsell: [UCC] Involves the Sale of Wool; Adams brought suit against Lindsell for Breach of Contract. The Trial Court Held That Adams' Acceptance was Valid when placed by Adams in the Mail, and that Any Delay in Receiving the Acceptance was Caused by Lindsell's Failure to send the Initial Offer to the Correct Address.
Adams v. Lindsell:
Option: An Option is a purchased right to perform or to require performance of the terms of a contract within a specific length of time.
Firm Offer: [CL] a Firm Offer is an offer which is irrevocable because an option has been paid for by one of the parties. [UCC] An option need not be paid for if the Firm Offer was made by a Merchant who signed it in writing giving assurance that the Offer will remain open for a certain or reasonable length of time not to exceed three months.
Caldwell v. Cline: Under Caldwell vs Cline, if an offer states that it will be open for a certain number of days, the first day is the day the offoree receives the Offer.
Caldwell v. Cline:
Revocation: Revocation results from the cancelling, annulling, or otherwise Voiding of an Offer. An offer may freely be revoked by the offeror unless 1) the Offer was a Unilateral Contract and Offeree has already began Performance, 2) the offer was a Firm offer, in which case it terminates at end of the Time stated without the need for further action by party, or 3) the Offeree Detrimentally Relied on the Offer.
Revocation Effective Upon receipt by Offeree:
Unilateral Contract: Revocation of Offer Rule: The offeror in a Unilateral Contract may NOT Revoke the offer for the time stated in the offer or, if no time stated in the offer, then for a reasonable length of time if the offeree begins performance.
Rejection: A Rejection is a manifestation by the Offeree that he or she does Not Intend to accept the Offer Nor give it further Consideration.
Rejection Effective when Received: A Rejection becomes effective upon receipt by the Offeror.
Counteroffer: A Counteroffer is an Offer by Original Offeree regarding the same transaction but containing Terms that Differ from proposed in the Original Offeree made by the Offeror.
Counteroffer as an Implied Rejection: A Counteroffer is an Implied Rejection of the Original Offer. It is, in effect, a New Offer Available for Acceptance.
Counteroffer as an Implied Rejection:
Illusory Promise: An illusory Promise is an expression, resembles Promissory Terms, but in actuality imposes No Obligation upon the party making it so that the Element of Legal Detriment is Lacking.
Promissory Estoppel: The Doctrine of Promissory Estoppel provides a substitute for the Element of Consideration when there has been a Foreseeable and Detrimental Reliance by Promisee upon the Gratuitous Promise made by the Promisor.
Moral Obligation Rule: Under the Moral Obligation Rule, Consideration may be found if the Promisor has received something of Value from the Promisee under such Circumstances as to create a moral obligation for the Promisor to pay for what she or he has Received, and if the Promisor has later promised to pay. . The Rule most often applies in situations involving promises to pay for previously provided gratuitous services, promises to pay debts barred by the Statute of Limitations, or promises to pay debts discharged in Bankruptcy. The promise to pay can be implied by a mere acknowledgment of a debt or by part payment of the debt.
Moral Obligation Rule:
Legal Detriment: A Legal Detriment is a Promise to do something that one is NOT Legally obligated to do, or to refrain from doing something that is Legally Privileged to do.
Failure of Consideration: Failure of Consideration occurs when the Subject Matter of the Consideration Ceases to Exists or Becomes Worthless even though Valid Consideration was Present when the Parties First Contracted.
Failure of Consideration:
Want of Consideration: A Term applied to a Transaction where No Money, Property or Goods were Intended to pass from One Party to Another Party.
Want of Consideration:
Sufficiency of Consideration: Generally, courts do NOT require that the Consideration benefit the Promisee, Nor that of any Substantial Value, as long as there is some Legal Detriment to the Promisor so that the Consideration serves as an Inducement for the Return Promise of the Promisee.
Sufficiency of Consideration:
Executed Contract: An Executed Contract is a Contract that has been Fully Performed by ALL Parties to the Contract.
Executory Contract: An Executory Contract is a Contract that Remains to be Completed in the Future by at least One of the Contracting Parties.
Meeting of the Minds: The historical Rule holds that Mutual Assent exists if there was a "meeting of the Minds "between the Parties, meaning that the Parties Subjectively Intend to enter into a Legally Binding Contact AND Agreed to the Terms and Conditions of the Contact.
Meeting of the Minds:
Outward Manifestation Theory: An Outward Manifestation Theory is instead of the "meeting of the Mind," some Jurisdictions Apply the "Outward Manifestation Theory" whereby Contracts are Formed according to Outward Manifestations in Accordance with the Understanding of the Supposed "Reasonable Man."
Outward Manifestation Theory
Merit Music v. Sonneborn: In the case of Merit Music vs Sonneborn, the court held that in the Absence of Fraud, Duress, or Material Mistake, a Party to a Contract with the Capacity to Understand a Written Document will be Bound by his or her Signature whether or Not he READ the Document.
Merit Music v. Sonneborn: I
Express Contract: An Express Contract is one which is Manifested by Words either Written OR Oral.
Implied in Fact Contract: An Implied in Fact Contract is one that is Inferred by the Law because the Acts or Conduct of the Parties and the surrounding Circumstances make it Reasonable to Assume that a Contact Exists between them even though the Contact Never Manifested by Words.
Implied in Fact Contract:
Implied in Law Contract (Quasi Contract): An Implied-in-Law Contract is a remedy that is Imposed by Operation of Law to do Justice even though it is clear that No Promise was ever Manifested by Words or ever Intended. The creation of an Implied-in-Law Contract will be recognized by another Party who Expressed to be Paid and who was Not a Volunteer.
Implied in Law Contract (Quasi Contract):
Quantum Meruit: Quantium Meruit refers to the Reasonable Value deserved for one's Labor, and is awarded in a Quasi-Contract Claim. [Service/ Common Law]
Quantum Valebant: Quantium Valebant refers to Reasonable Value that is deserved as Payment of Goods, and is Awarded in a Quasi-Contract Claim. [Goods/ UCC]
Requirement Contract: A Requirement Contract is a Contract in which the Seller agrees to Supply all of the Goods or Services that the Buyer needs over a Specific Period of Time. As Consideration for the Seller's Promise, the Buyer agrees to obtain these Goods or Services exclusively from Seller.
Output Contracts: An Output Contract is a Contract in which the Buyer Agrees to Buy ALL of the Goods or Services that the Seller can Produce over a Specific Period of Time.
Option Contract: An Option Contract is a Contract which Includes an Option, that is, an Agreement between Parties which is supported by Consideration and which Involves a Promise to Hold an Offer Open for a Specific Period of Time.
Void Contract: A Void Contract is a Contract which Can-Not be Enforced by Either of the Parties.
Voidable Contract: A Voidable Contract is a Contract that Can be Disaffirmed by One or More of the Parties for Reasons related to Legal Immaturity or Mental Incapacity.
Power of Disaffirmance: A Legally Immature or Mentally Incapacitated Person has the Power to Disaffirm a Contract by Manifesting to the other Party an Unwillingness to Continue to be Bound by the Contract. But for ALL other purposes the Contract is Valid unless it is Disaffirmed.
Power of Disaffirmance:
Exculpatory Clause: An Exculpatory Clause (i.e., a Limitation of Liability Clause) that Eliminates a Party's Liability for Damages caused by a Breach of Contract is Valid and Enforceable. For example, in a Construction Contract, it may be provided that the Contractor will not be Liable for Damage caused by Delays of Third Parties (subcontractors, for example).
There is a trend in the law to Invalidate an Exculpatory Clause if: a) The parties have unequal bargaining power and the clause is unfair; b) The clause eliminates liability for negligence, particularly if a negligent party is a public utility or the contract involves a fundamental good or service; or; c) The Exculpatory Clause was Obtained by Fraud or other Wrongful Conduct.
Exculpatory Clauses are typically upheld if Agreed to by Businesses with Equal Bargaining Power.
Contract of Adhesion: An Adhesion Contract is a Contract Drafted by the Stronger of the Two Parties, with Terms Favoring the Stronger Party, and Offered to the Weaker Party with Little or No Negotiation as to the Already-Drafted Terms.
Contract of Adhesion:
Unconscionable Contract: An Unconscionable Contract is a Contract with a Provision that No Fair and Honest Person would Make and No Person in their Right Mind would accept. Such Contracts are usually agreed to through "Oppression" in that the Promisee Knows that he or she is Giving Up of his or her Rights but id Forced to if he or she wishes to Purchase the Subject Product. OR, he or she is Not Aware of the Rights that are being Given Up but through "Unfair Surprise" (such as Small Print or Vagueness in Terms) Signs the Contract Anyway.
Condition: A Condition is an Act or Event which affects a Duty to render a Performance. A Condition may be Express or Implied, and may be a =Condition Precedent, a Condition Concurrent, or a Condition Subsequent.
Condition Precedent: A Condition Precedent is related to an Event, other than a Lapse of Time, which must occur before a Duty on the part of the Defendant will arise. It may arise out of an Express or Implied Term of the Contract, or by Operation of Law under the Doctrine of Conditions.
Condition Concurrent: A Condition Concurrent is a type of Condition Precedent which exists when the parties to a Contract are Bound to Render Performance at the Same Time.
Condition Subsequent: A Condition Subsequent is related to an Event which, by Agreement of the Parties, operates to Terminate a duty of Performance After it has Arisen.
Express Conditions: An express Condition is Stated in the Contract and generally will be Strictly and Literally Enforced by courts.
Implied in Fact Conditions: Am Implied -in0Fact Condition is one which is necessary to the Performance of the Contract between the Parties and therefore is Deemed to have been Intended by the Parties, but is NOT Expressly Stated.
Implied in Fact Conditions:
Constructive Conditions: A Constructive Condition is an Implied-in-Law Condition, which the Law will Enforce even though the Parties did not agree to it. Such Conditions are Implied by the Law to Promote Justice.
Doctrine of Constructive Conditions: The Doctrine of Constructive Conditions holds that the Fulfillment of a Promise in a Bilateral Contract can be construed to be a Condition of the other Party's Performance even in the Absence of an Express Provision to that effect.
Doctrine of Constructive Conditions:
Substantial Performance: Under the Doctrine of Substantial Performance, a Plaintiff who has Failed to Perform A Constructive Condition in a Minor or Immaterial respect may nevertheless Recover on Contract. In order to Recover, the Plaintiff Must Prover: 1) the Def. got Substantially what he Bargained for, 2) the Def. can be Reimbursed for what he did not receive, 3) there will be a Great Hardship on the Plaintiff ig he is Denied Recovery under the Contract, and 4) the Deviation was Not Willful.
Implied Condition of Cooperation: An Implied Condition of Cooperation is Implied in a Contract whenever the Cooperation of the Promisee is Necessary for the Performance of the Promise.
Implied Condition of Cooperation:
Waiver of Condition: A Wavier of Conditions results when a Party to a Contract Voluntarily Relinquishes his or her known Right to Assert the Non-Performance of a Condition. A Wavier can be given by Express Agreement or by Conduct. A Wavier may be Retracted Except where the Other Party has detrimentally Relied on the Wavier.
Waiver of Condition:
Excuse of Conditions: An Excuse of Conditions occurs when the Plaintiff's Duty to Perform is Excused because the Defendant has Defaulted.
Excuse of Conditions:
Assignment: An Assignment is a Transfer of a Contractual Right. [ called "Chose in Action"] The Assignee "Steps into the Shoes" of the Assignor.
Divisible (or Severable) Contracts: A Divisible or Severable Contract is a Bilateral Contract in which Matter or Time, and Performance of each Party by One Party is the Agreed Exchange for a Corresponding part by the Other Party. Some typical examples are Construction Contracts, Contracts for the Sale of Goods and Employment Contracts.
Divisible (or Severable) Contracts:
Lawrence v. Fox: The Landmark case of Lawrence vs Fox Held that a Third-Party Beneficiary has the Right to Enforce the Contract which will Confer a Benefit Upon said Third-Party.
Lawrence v. Fox:
Delegation and Assumption of Duties: A Delegation and Assumption of Duties is a Transfer of a Contractual Obligation. It Involves a Situation in which the Assignor Transfers his or her Duty of Performance to Another. The Person Transferring the Duty of Performance is known as the Delegator and the Person who Assumes the Duty is known as the Delegatee.
Delegation and Assumption of Duties:
Creditor Beneficiary: A Creditor Beneficiary is a n Intended Third-Party Beneficiary who Receives the Benefit of a Contract in Satisfaction of an Actual or Supposed Debt or Obligation that Existed between the Third-Party Beneficiary and the Promisee to the Contract. [Modern Law] a Creditor Beneficiary is typically called simply an "Intended Beneficiary".
Third Party Beneficiary Contract: A Third-Party Beneficiary Contract is a Contract Wherein Performance by one Party, the Promisor, will Confer a Benefit upon a Third-Party Beneficiary, that is, a Person or Entity Other than the Promisee.
Third Party Beneficiary Contract:
Donee Beneficiary: A Donee Beneficiary is an Intended Third-Party Beneficiary who Receives the Benefit of a Contract as a Gift from the Promisee. [Modern Law], a Donee Beneficiary is typically called simply an "Intended Beneficiary".
Intended Beneficiary: An Intended Beneficiary is One in whose Favor the Original Parties to the Contract Purposely Created an Obligation. A Third-Party Must be Intended Beneficiary in Order to have Standing to Sue to Enforce the Provisions of the Contract.
Incidental Beneficiary: An Incidental Beneficiary is One who May Receive the Benefit of the Performance of the Contractual Provisions Only Incidentally and was NOT Intended to the Performance as a Gift NOR in Satisfaction of a Debt. An Incidental Beneficiary does NOT Have Standing to Sue.
Distinguishing between Donee and Creditor Beneficiary: The reason for distinguishing between Donee and Creditor Beneficiary is related to the Rules of Vesting.
Distinguishing between Donee and Creditor Beneficiary:
1)Under the First Restatement of Contracts, Donee's Rights Vest Upon Creation of the Contract.
2)Under the First Restatement of Contracts, Creditor's Rights Vest when the Creditor Brings Suit or otherwise Materially Change Position in Reliance Upon the Contract.
3)Majority Rule today: Donee and the Creditor Beneficiaries' Rights Vest Upon Learning of the Third-Party Beneficiary Contract.
4)Original Parties CAN Defeat or Alter Rights until the Beneficiary a) Manifests Assent (Majority Rule) or b) Detrimentally Relies on the Contract (Minority Rule).
Rights Against the Promisee: A Third-Party Donee Beneficiary Has NO Rights Against the Promisee by Reason of the Promisor's Failure to Perform the Contract. The "Creditor" Beneficiary, However, CAN Sue the Promisee on the Original Obligation since it Remains Unaffected by the Third-Party Beneficiary Contract.
Rights Against the Promisee:
Guaranty: A Guaranty is a Promise to Answer for the Debt, Default, or Miscarriage of Another. [ Collateral, Deposit.].
Statute of Frauds: The Statue of Frauds was Enacted in England centuries ago and remain in effect today. It was Established to Guard against Fraud and Perjury in Contract Actions to be in Writing and Signed by the Parties. 1)Cannot be Completed within One Year; 2) Involves the Payment of Another's Debt or Default; 3) Relates to Promise of Marriage; 4) Involves the Transfer Interest in Real Property, or 5) Involves the Sale of Goods of More-Than $500.
Statute of Frauds:
Parol Evidence Rule: The Parol Evidence Rule provides that where the Parties have entered into an Agreement that has been reduced to Writing with the Intent being to Make that Writing a Final and Complete Expression of their Contract, No Evidence of a Prior or Contemporaneous Agreement can be Introduced to Change the Terms of that Written Contract. [CL]
Parol Evidence Rule:
Modification: A modification is a Subsequent Agreement Entered into for Consideration for Purposes of Modifying the Prior Contract. Since the Parol Evidence Rule only as Evidence related to Agreements made prior to or Concurrently with the Written Contract, the Rule Does Not Apply to Modification. Under UCC, Consideration is NOT Required for a Modification to be Binding.
The Collateral Agreement Doctrine: The Calatral Agreement Docorine Holds that Additional Terms which were Intended by the Parties and Included in a Separate Agreement May be Enforced even though such Terms were NOT Included in the Original Contract if this Collateral Agreement is one which 1) does Not Contradict the Original Terms. 2) Might Naturally be Made as a Separate Agreement beween the Parties. Therfore, Evidence related to a Collateral Agreement will NOT be Excluded Under The Parol Evidence Rule.
The Collateral Agreement Doctrine:
Termination by Accord and Satisfaction: An accord and Satisfaction is an Agreement to Compromise an Existing Obligation which has become the Subject of a Good Faith Dispute. Acceptance of the Accord results in "Satisfaction", meaning that the Original Obligation has been Discharged with the Accepting Party No Longer being Able to charge the performing party with a Breach of Contract.
Termination by Accord and Satisfaction:
Termination by Novation: A Novation is a New Contract that is, in effect, an Immediate Discharge of a Pre-Existing Contractual Duty which creates a New Duty in its place. It requires the Replacement of One of the Previously Contracting Parties with a New Party who neither owed the previous Duty NOR was Entitled to its Performance.
Termination by Novation:
Termination by Release: A Release, at CL , was a Complete Discharge of Existing Contractual Obligations given by one Party to the Contract to the other in a Written Document under Seal. Modern Law, in those Jurisdictions that Do Not use the Formal Seal, a Release is generally considered Valid IF Supported by Consideration.
Termination by Release:
Merger: A Merger is Said to have occurred in a Contractual Situation when One Contract Supersedes or Incorporates another.
Termination by Mutual Rescission: A Mutual Rescission is an Agreement by the Parties to an Existing Executory Contract to Consider their Contract Null & Void. This Rescission is a Contract in itself and Requires Mutual Assent and Concideration. The Concideration for Rescission is usually found in the Fact ALL Parties Incur a Legal Detriment by giving up their Right to Sue each other.
Termination by Mutual Rescission:
Breach of Contract: A Breach of Contract occurs when One Party of a Contract Fails to Perform pursuant to the Terms of the Contract.
Breach of Contract:
Termination by Impossibility of Performance: A Party to a Contract will be Released from an obligation to Perform when, Neither from his Act nor from his Neglect , and Prior to bring in Default , it has become Impossible for said Party to Perform.
Termination by Impossibility of Performance:
Anticipatory Breach: An Anticipatory Breach occurs when One Party to a Contract makes it Clear Prior to the Performance is Due that he or she Will NOT Perform. A Anticipatory Breach may be Expressed in Words or by Action. The Promisee may elect to Sue Immediately for Damages or may wait after Performance has become Due to then File Suit.
Material vis-a-vis Minor Breach: A Material Breach is so Substantial that it Defeats the Purpose of the Parties in making the Contract, destroying the Value of the Contract. The Plaintiff is Justified in Treating the Entire Transaction has Ended and May thereafter Sue for Damages.
Material vis-a-vis Minor Breach:
In a Minor Breach, the Plaintiff has a Cause of Action caused by the Breach, BUT the Contract Remains in Effect.
Prospective Failure of Condition: Failure of Condition occurs when One Party Fails to Perform his Condition, resulting in a Breach of Contract. The Non-Breaching Party's Own Duty of Performance is Discharged. This means the Contract is still in Effect and the Breaching Party Still has a Duty to Perform. If he does not, Contract Remedies May be Imposed.
Prospective Failure of Condition:
Termination by Frustration of Purpose: Although Performance is still Possible, a Party to a Contract will be Discharged from an Obligation to Perform when an Unanticipated Event occurs After the Formation of the Contract, with a Result that the Parties' Main Purpose in making the Contract has become so Frustrated that the Benefit to be received by one Party from the other Party is Now Totally Destroyed or Materially Impaired.
Termination by Frustration of Purpose:
Liquidated damages: Liquidated Damages are an Amount of Damages Stated in a Contract in Advance of Any Breach. If there is a Valid Liquidated Damages Clause in a Contract, it will be the Sole Remedy Available upon Breach of the Contract. In order for such a Clause to be found Valid, it must be shown that it is based on Anticipated Damages as opposed to being a Mere Penalty. This is shown through establishing that Damages would have been Difficult to Ascertain at the Time the Contract was made, and the Amount Set as Liquidated Damages is a Reasonable forecast of what Damages Would Be.
Compensatory Damages: Compensatory Damages include Both General and Special Damages, AND are Awarded to the Non-Breaching Party to Place that Party in the Same Position that he or she Would Have Been in, had the Contract Been Performed as Agreed.
Consequential Damages: Consequential Damages are Special Damages. However, this Term Reflects the "Foreseeability" requirement that arose out of the case of Hadley vs Baxendale years ago in England. It was held in this case that Compensation in a Breach of Contract case should be given only for those Injuries that Defendant, at the Time the Contract was made, had Reason to Foresee as the Probable result of his or her Breach. Damages that are Foreseeable will be Held Too Remote and, therefore, Uncollectable.
Nominal Damages: Nominal Damages are Given by the Court to a Non-Breaching Party who has suffered no Damages or who has been Unable to Prove Damages at Trial, but who Nevertheless has Been Wronged and is Entitled to a Judgment for Technical Breach of Contract.
Mitigation of Damages: Mitigation of Damages refers to Efforts of the Non-Breaching Party to Use Ordinary Care to Mitigate, or Limit the Damages Caused by the other Party's Breach.
Mitigation of Damages:
Punitive or Exemplary Damages: Punitive Damages, which are also called Exemplary Damages, are Damages that are Granted to a Plaintiff to Punish the Defendant for Malicious, Wanton, or Willful Conduct and are Awarded to Make an "Example" of the Defendant's Conduct; so that such Conduct Will Not Be Repeated Again. Punitive or Exemplary Damages are NOT typically Allowed for Breach of Contract.
Punitive or Exemplary Damages:
THIS SET IS OFTEN IN FOLDERS WITH...
NWCU 1L - Contracts
NWCU 1L - Contracts
Contracts Law - 1L
NWCU 1L - Contracts (Clancey's et al)
YOU MIGHT ALSO LIKE...
NWCU 1L - Contracts
Law 1 Test #2
OTHER QUIZLET SETS
KTOF's ANS Midterm 1
Kahoot Quiz Review (Exam 1)
Business Studies - Finance
Psych 2301 Final