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Law 1 Test #2
Terms in this set (56)
Genuineness of Assent
A party who demonstrates that he or she did not genuinely assent to the terms of a contract may avoid the contract. Genuine assent may be lacking due to mistake, fraudulent misrepresentation, undue influence, or duress.
The parties entered into a contract with different understandings of one or more material fact(s) relating to the subject matter of the contract.
A mistake made by one of the contracting parties. Generally, a unilateral mistake will not excuse performance of the contract
A mistake on the part of both contracting parties. Either party may rescind the contract when both parties are mistaken about the same material fact. If instead, the mutual mistake concerns the market value or quality of the object of the contract, either party can enforce the contract.
When a party unknowingly consents to a contract with fraudulent terms, he or she may usually avoid the contract, because he or she did not genuinely assent to the fraudulent terms.
Elements of Fraudulent Misrepresentation:
1.A misrepresentation of material fact was made (through words, actions, or failure to disclose serious defects),
2.With the intent to deceive,
3.On which the innocent party justifiably relied,
4.Resulting in injury to the innocent party
arises from relationships in which one party can influence another party to the point of overcoming the influenced party's free will.
Forcing a party to enter into a contract because of the fear created by threats. While a party forced to enter into a contract under duress may choose to perform the contract, duress is grounds for cancellation, or rescission. Economic grounds are generally not sufficient to constitute duress.
Statute of Frauds:
A statute, which requires certain types of contracts to be in writing in order to be enforceable.
Exceptions to the Statute of Frauds:
A contract, which might otherwise be unenforceable because it is not in writing, may be enforced to some degree
Partial Performance: .
If a buyer has taken partial possession of real or personal property and paid that part of the contract price attributable to the property received, and if the parties cannot be returned to their pre-contractual positions, a court may order that the remainder of the contract be specifically performed - that is, performed according to the precise terms of the contract
If a promisee justifiably relies to the promisee's detriment, the promisor may be estoppel from denying the existence and validity of the contract.
Parol Evidence Rule:
A substantive rule of contract law under which a court will not admit evidence of the parties' prior negotiations, prior oral or written agreements, or contemporaneous oral agreements if that evidence contradicts or varies the terms of a written contract.
Privity of Contract:
As a general rule, only the parties to a contract - the promisor(s) and the promisee(s) owe any duties and enjoy any rights arising from the contract
Assignment (of Rights):
A transaction whereby a party to the contract (the assignor) transfers his or her rights to some third party (the assignee). As a consequence, the assignee may demand performance of the contract by the obligor, and the assignor's contract rights are extinguished.
Delegation (of Duties):
A transaction whereby a party to the contract (the delegator) frees himself or herself from his or her duties by having some third party (the delegatee) perform those duties. Unlike the assignor, whose contract rights are extinguished by the assignment, the delegator remains liable for his or her contract duties if the delegatee fails to perform.
A third party, X, who is intended, by the terms of the contract between Y and Z, to benefit from Y's and Z's performance of the contract.
As a general rule, all contract rights may be assigned, except where:
1. The assignment is prohibited by statute;
2. The contract to be assigned is for personal services, unless all that remains under the contract is a money payment for services previously rendered;
3. The assignment would materially increase the risk or alter the duties of the obligor; or
4. The contract specifically forbids assignment.
A third party for whose benefit a contract is formed.
A third party that benefits from the performance of a contract, but whose benefit was not the reason the contract was formed
A third party that benefits from a contract in which the promisor promises to pay a debt owed by the promisee to the third-party beneficiary.
A third party for whose benefit a contract was made whereby the promisor promised the promisee to make a gift to the third-party beneficiary.
The termination of a party's obligations arising under a contract.
Fulfilling one's contractual duties.
An unconditional offer to perform an obligation by a person who is ready, willing, and able to do so.
A contractual qualification, provision, or clause which creates, suspends, or terminates the obligations of one or both parties to the contract, depending on the occurrence or nonoccurrence of some event(s).
A condition that must be satisfied before a
party's contractual obligation to perform becomes absolute
a condition of which the occurrence or nonoccurrence will terminate a party's absolute obligation to perform
. Concurrent Conditions:
Mutually dependent conditions that must occur or be performed at the same time in order to give rise to any absolute obligation to perform
Discharge by Performance:
A contract terminates when both parties fulfill their respective duties by performing the acts they have promised.
Complete vs. Substantial Performance:
When a party fails to completely perform his or her contractual duties, the question arises whether the performance was nonetheless sufficiently substantial to discharge the contractual obligation. If so, then the party is said to have substantially performed.
Impossibility of Performance:
A doctrine which permits a party to be relieved of his or her contractual duties when performance becomes either impossible or totally impracticable through no fault of either party to the contract.
Objective vs. Subjective Impossibility:
Only objective impossibility excuses performance. The following will generally excuse performance as objectively impossible.
A change in circumstances that makes performance temporarily impossible will act to suspend,but not excuse performance.
An action by a party to a contract that indicates that he or she will not perform a contractual obligation due to be performed in the future.
Material Breach of Contract:
A party's failure, without legal excuse, to substantially perform the obligations he or she has promised to perform.
The process by which the parties cancel a contract and return one another to their pre-contract status.
Substituting, by agreement, a new contract for an old one, and thereby terminating the parties' rights and duties under the old contract.
Accord and Satisfaction:
An agreement between the parties to accept different performance than that promised in the contract.
The innocent party may elect to be discharged under a contract when the other party has unknowingly materially altered a written contract.
Statute of Limitations:
A statute which limits the time period for initiating a lawsuit to recover damages for a breach of contract.
A contractual debt or obligation that is discharged in a bankruptcy proceeding is barred from future enforcement.
Damages which compensate the non-breaching party for the injuries or losses actually sustained as a result of the breach.
Damages resulting indirectly from the breach which were reasonably foreseeable to the breaching party at the time the breach occurred.
Damages designed to punish a wrongdoer and to deter similar conduct in the future. Such damages are generally not recoverable in breach of contract actions, unless the breaching party's actions give rise to a separate tort claim.
Damages awarded to the non-breaching party when only a "technical" injury occurred resulting in no actual damages,
Mitigation of Damages:
In most situations, when a breach of contract occurs, the non-breaching party has a duty to take whatever action is reasonable to minimize the damages caused by the breach.
Many contracts contain provisions specifying a sum certain of money to be paid by the breaching party in the event that he or she fails to perform as required by the contract. Generally speaking, the liquidated damages are enforceable as long as the clause is based on a reasonable estimate of the value of the promised performance.
By contrast, a penalty provision specifies sum certain of money, bearing no reasonable relationship to the value of performance, to be paid by the breaching party in the event of default or breach. Penalty provisions are rarely enforceable.
Canceling a contract and returning the parties to their pre-contract position.
Returning good, property, or money previously transferred in order to restore the non-breaching party to his or her pre-contract position.
Requiring the breaching party to perform exactly as called for in the contract.
A remedy allowing the contract to be re-written to reflect the true intent of the parties
A remedy available to prevent one party from being unjustly enriched at the other party's expense.
Election of Remedies:
A non-breaching party must choose one remedy from those available to prevent double recovery or a windfall.
Provisions Limiting Remedies:
A contract may contain an "exculpatory" clause and/or a "limitation of liability" clause. Generally clauses excluding liability for fraud or intentional injuries will not be enforce.
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