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93 terms

Contracts

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Restatement Definition
a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty
Practical Definition
A set of legally enforceable promises
Agreement
Offer and Acceptance
Consideration
Bargained-For exchange
Contractual Capacity
Legally ability to enter a binding contract
Legal Object
Contract must have lawful purpose or subject
Lack of genuine assent
Offeror has secured acceptance of offeree thorugh improper means
Lack of proper form
Statute of frauds requires contract to be in writing
Sources of Contract Law
State common law- derived from english common law
Uniform Commercial Code
Bilateral Contract
a promise made by one party in exchange for the promise of another party; a promise for a promise
Unilateral Contract
Promise in exchange for a performance. (one-sided promise)
Express Contract
Based on written or spoken words
Implied Contract
Based on conduct/actions of parties
Quasi Contract
contract implied by law to prevent unjust enrichment and unjust detriment
Valid Contract
All elements of contract formation satisfied
Void Contract
Illegal purpose, illegal subject matter, improper form
Voidable Contract
One or both parties can withdraw from contract
Executed Contract
All terms of contract fully performed
Executory Contract
Some duties under contract not performed by one/ both parties
Formal Contract
Must meet special form requirements
Informal Contract
No formalities required in making a simple contract`
Element of valid offer 1
manifestation of offerors intent to be bound
Elements of valid offer 2
Definite and certain terms such as subject matter, price, quantity, quality, and parties
Elements of valid offer 3
Communication of offer to offeree, or offeree's agent
Auctions with reserve
seller merely expresses intent to recieve offers
Auction without reserve
Seller must accept highest bid
Five ways to terminate offer
1. Revocation by offeror before acceptance
2. Rejection by offeree
3. Death or incapacity of offeror
4. Destruction of subject matter or subsequent illegality of subject matter
5. Lapse of time/ failure of conditions specified in offer
Acceptance
Manifestation of offeree's intent to be bound by terms of offer and resulting contract
Mailbox Rule
acceptance becomes effective on dispatch (when sent by mail), revocation becomes effective only when received by offeree
Consideration
Something of value, given in exchange for something else of value, that is the product of a mutually bargained for exchange
Benefit to promisor
Ex. Employee promised to stay in job until project is complete
Detriment to promisee
Ex. Pro NFL player promised to not ride a motorcycle
Promise to do something
Ex. Promise to clean the house
Promise to refrain from doing something
Ex. Promise to not drink alcohol during finals
Consideration Rule # 1
For a promise to be legally enforced by the courts, there generally must be consideration
Promissory Estoppel
One party makes a promise knowing other will rely on it, other party relies on promise, only way to avoid injustice is to enforce the promise
Consideration Rule #2
Courts rarely consider the adequacy of consideration
Consideration Rule #3
Illusory promise does not constitute consideration
Illusory Promise
Party appears to commit to something, but does really has not committed at all
Consideration Rule #4
Past consideration does not constitute consideration for purposes of present contract
Consideration Rule #5
Promise to do something you are already legally obligated to do is not valid consideration
Pre-Existing Duty role
1. Performance of a duty you are obligated to do under the law is not good consideration
2. Performance of an existing contractual duty is not good consideration
Requirement Contract
Under which 1 party agree to purchase its entire requirement of specific goods or services exclusively from another party for a specific period of time. No consideration
Output Contract
a contract in which you promise to deliver your entire output to the other party who promises to accept it
Liquidated Debt
the parties agree that the debt exists and on the amount of the debt
Unliquidated Debt
the amount the debt is not certain and under debate by the parties
Contractual Capacity
Mental ability to understand rights and obligations established by contract, with the presumptive ability to understand how to comply with terms of agreement
Capacity General Rule
Natural persons over the age of 18 are presumed to have full legal capacity
Limited Capacity to Contracts
1. Minors
2. Mentally incapacitated persons
3. Intoxicated Persons
Contractual Power of Avoidance(Disaffirmance)
Minor's right, until a reasonable time after reaching age of majority, to disaffirm, or avoid, their contracts, Designed to discourage entering contracts with minors
Contract for necessaries
contracts that supply minors with basic necessities of life
Ratification
Acceptance of terms of contract after reaching age of majority
Express Ratification
Takes place when the individual, on reaching age of Majority, states orally or in writing that he or she intends to be bound by the contract.
Implied Ratification
Takes place when minor, reaching majority, evidences and intent to abide by the contract.
Parental Liability of Minors
Not liable for contracts or torts committed by their minor children
Legality of contracts
Contracts must have a legal exchange as its subject matter and must be able to be performed legally. Otherwise the bargain is illegal
Legal Assent
Voluntary, willing promise to transact. Acceptance
Unilateral Mistake
Mistake made by 1 party
Bilateral Mistake
Mistake made by both parties
Misrepresentation
Untruthful Assertion of material fact
Negligent Misrepresentation
Negligent, untruthful assertion of material fact by contracting party
Innocent Misrepresentation
Party making false assertion believes it to be true
Fraudulent Misrepresentation
Intentional, untruthful assertion of material fact by contracting party
Undue Influence
Persuasive efforts of dominant party, who uses special relationship to unduly persuade the other party
Duress
One party threatens other with wrongful act unless assent given
Unconscionability
One party has so much bargaining power that he effectively dictates terms of contract, resulting in other party lacks free will
Statute of Frauds
Rule of state law requiring certain types of contract to be in writing in order to be enforceable
Parole Evidence Rule
oral statements cannot be used to change or contradict the terms of a clearly written contract
Obligor
Contractual party who owes duty to other party in privity of contract
Obligee
Contractual party owed duty from other party in privity of contract
Privity of contract
Relationship between parties to a contract, allowing them to sue each other but preventing a third party to do so
Assignment
transfer of rights under a contract to a third party
Assignor
Party to contract who transfers his right to a third party
Assignee
Party who recieves transfer of rights to a contract
Delegation
Transfer of duty under a contract to a third party
Intended Beneficiary
A third party for whose benefit a contract is formed. An intended beneficiary can sue the promisor if such a contract is breached.
Promisor
Party who made to promise that benefits third party
Promisee
Party who owes something to promisor in exchange for promise
Creditor Beneficiary
Third party who benefits from contract in which promissor agrees to pay promisee's debt
Donee Beneficiary
Third party who benefits from contract in which promisor agrees to give a gift to third party
Vesting
Maturing of rights, such that a party can legally acts on the rights
Incidental Beneficiary
A third-party beneficiary who has not contractual rights but benefits from a contract even though that is not the intent of the parties to the contract. Cannot sue
Discharge by Material breach
Party unjustifiably fails to substantially perform his contractual obligations
Anticipatory Repudiation
Party decides, before actual time of performance, not to complete contract obligations. Anticipatory breach
Mutual Recission
Both parties agree to discharge each other from their mutual obligations
Substituted Contract
Parties agree to substitute new contract in place of original
Accord and satisfaction
Used when one party wishes to substitute a different performance to his original contractual duty
Compensatory Damages
Designed to put plantiff in position he would have been in had contract been performed
Consequential Damages
Forseeable damages outside the actual contract, result from the breach. Breaching party must have known of the special circumstances.
Punitive Damages
Designed to punish defendant and deter him and others from engaging in similar behavior in the future
Nominal Damages
Small award intended to signify that plantiff wronged by defendant
Liquidated Damages
Damages for breach of contract specified in contract itself
Duty to mitigate damages
Obligation on non-breaching party (plaintiff) to use reasonable efforts to minimize damage resulting from defendant's breach of contract.