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BLAW Exam #2 Chapter 10

Terms in this set (36)

Contract: Legal Definition
A promise of set of promises, bargained for (mutual assent), for which the law provides a remedy in the event of a breach thereof, and the performance of which the law regards as a duty. (An agreement b/t two of more parties that can be enforced in a court of law or a court of equity)
Requirements of a legally enforceable contract
Offer
Acceptance
Legal consideration
Capacity
Legality
Offer: Definition
A proposal intended to create a contract upon acceptance by the person to whom it is made
Required elements of a valid offer
1. Serious proposal - objective intent expressed
2. Reasonably definite and complete
3. Communicated to the offeree
Termination of an Offer
1. Revocation of the offer - by the offeror
a. Requires notice to the offeree prior to acceptance
b. Some offers cannot be revoked: Doctrine of "Promissory Estoppel."
2. Counter-offer by the offeree (terminated original offer)
Doctrine of "Promissory Estoppel."
Cannot be revoked - When an offeree materially changes his position in reliance to his detriment upon the offer
Acceptance of an offer
"Mutual Assent" to the terms of an offer - when a return promise is made
Required elements for acceptance
1. Terms must be an absolute, unequivocal acceptance (mirror image rule)
2. Meets all conditions of the offer
3. Must be communicated to the offeror
Mirror Image Rule
Voluntary assent by a return promise which matches the offer exactly - "mutual assent" - because it reflects a "meeting of the minds"
Legal Consideration
A promise, act of forbearance bargained for and given in exchange for a promise, act of for bearance
Required elements for legal consideration
1. Exchange of promises of sufficient legal value by parties
2. Bargained for
3. Separate consideration required for each contract (option)
Exchange of promises of sufficient legal value by parties
1. Legal benefit received
2. Legal detriment suffered
Capacity (Legal Capacity)
1. Adults who are mentally incompetent
2. Minors
Legality (Legal Purpose)
1. Contracts which violate statutes
2. Contracts which are against public policy - "unconscionability" of a bargain
Licensing laws
Those governing who can do certain types of business
Defects in the contract bargaining process: Defined
These defects mean the contract was not entered into freely and voluntarily. There was no "meeting of the minds." These contracts are either void of voidable.
Defects in the contract bargaining process
1. Misrepresentation
2. Fraud
3. Duress (Coercion)
4. Undue influence
5. Mutual Mistake
Misrepresentation
An innocent or negligent act; misrepresentation of a past or present material fact, justifiably relied upon, to the detriment of the other party
Fraud: Definition
An intentional act of omission; knowing, false misrepresentation of a past or present material fact, with the intent to deceive, causing the other party to justifiably rely to his or her detriment
Fraud: Remedies
1. Rescission - cancel the contract and go back to the status quo (make restitution of anything paid, such as deposit
2. Affirm the contract and sue for the damages
Mutual Mistake
Requires both parties to a contract being mistake as to a past or present material fact (both parties believed that a fact existed when it did not; or both parties believed that a fact did not exist when it did)
Mutual Mistake does not include
1. An error in judgement (bad deal)
2. Ignorance
3. A party's negligence (failure to investigate or inspect)
4. A party's mistaken belief that he will be able to fulfill contractual obligations
Unilateral Mistake of Fact
No rescission (still a valid contract)
- not a defense
Contract Defenses
The defenses mean than an otherwise valid contract is no longer enforceable
1. Statute of Frauds
2. Statute of Limitations
3. Parol of Evidence Rule
Statute of Frauds
Statutes that provide that certain types of contracts are not enforceable in Court unless they are in writing and signed by the party to be charged
1. Agreements for sale and purchase of real estate
2. Deeds for transfer of real estate interests
3. Leases for a term greater than one year
Statute of Limitations
Statutes that set limitations on the amount of time that can elapse during which a lawsuit must be filed
Parol of Evidence Rule "Best Evidence Rule"
A rule of evidence that allows Courts to prevent being placed into evidence any oral statements of the parties made prior to or at the signing of the contract. The Courts consider the best evidence of an agreement to be the written contract.
1. if a contract is not complete or has ambiguous terms, evidence in court is allowed to explain or clarify the terms of the contract
2. No evidence is allowed which would vary, modify alter or change the terms of the contract
Other contractual issues
Assignment - assignor transfers rights under a contract to a third party (assignee). Transfer of all rights and duties of the contract.
Assignment general rule
All rights are assignable unless prohibited by contract or law, or if the assignment materially altered/increased the duties of the original parties
Discharge of contracts
1. Discharge by performance
2. Discharge by substantial performance
3. Discharge by agreement
Discharge by performance
By full and complete performance by all parties of all contractual obligations
Discharge by substantial performance
Minor deviation from full performance is allowed when "complete" performance is not possible (assuming no intentional breach occurred)
Discharge by agreement
Accord and Satisfaction - a new bargain (performance) is substituted for the original, and this performance is completed
Remedies (for breach of contract)
1. Legal remedies - money damages
2. Equitable remedies - when no adequate remedy is available at law
Legal remedies
1. Compensatory damages
2. Consequential damages
3. Liquidated damages
Equitable remedies
1. Rescission and Restitution (status quo) - for fraud
2. Specific Performance
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