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legal ch 12 notes and vocab
Terms in this set (73)
a declaration by a person (the promisor) to do or not to do a certain act. The person to whom the promise is made (the promisee) has aright to expect or demand that something either will or will not happen in the future.
contract law must provide
the rules to determine which contract terms will be enforced and which promises must be kept
What does contract law reflect
our social values, interests , and expectations at a given point. It shows what kinds of promises our society thinks should be legally binding. It distinguishes between a promise that create only moral obligations such as a promise to take a friend to lunch and promises that are legally binding such as a promise to pay for merchandise purchased. Also indicates promise that are considered to be contrary to public policy-against the interest of society as a whole -and therefore legally invalid
a promise or a set of promises for the breach of which the law gives a remedy , or the performance of which the law in some way recognizes as a duty. An agreement that can be enforced in court. It is formed by two or more parties who agree to perform or to refrain from performing some act now or in the future.
Generally contract disputes arise when
there is a promise of future performance. If not fulfilled then the failing party may be subject to the sanctions of a court. This party may be required to pay damages for failing to perform the contract promise. Or in some instances the party may be required to carry out promise.
Common law governs all contracts except
when it has been modified or replaced by statutory law, such as UCC or by administrative agency regulations
examples that are governed by the common law of contracts
services, real estate, employment, and insurance
Contracts for the sale and lease of goods are governed by the
in contract law intent is determined by
objective theory of contracts
objective theory of contracts
A theory under which the intent to form a contract will be judged by outward, objective facts (what the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transaction) as interpreted by a reasonable person, rather than by the party's own secret, subjective intentions.
four requirements that must be met before a valid contract exists
1. agreement -this includes and offer and an acceptance
2.consideration- any promises made by the parties to contract must be supported legally sufficient and bargained for consideration (something of value or something promised such as money)
3.contractual capacity- both parties entering into the contract must have contractual capacity to do so
4. legality - contracts purpose much be to accomplish some goal that is legal and not against public policy
contracts can be classified according to and categorized by
how and when they are found , categorized by formation, performance, and enforceability
offeror and offeree
-Offeror makes the offer
-Offeree accepts the offer
Whether a contract is bilateral or unilateral depends upon
what the offeree must do to accept the offer and bind the offeror to a contract
A type of contract that arises when a promise is given in exchange for a return promise. "promise for a promise" no performance such as funds or delivery of goods need to take place for a bilateral contract to be performed. The contract comes into existence at the moment the promises are exchanged
A contract that results when an offer can be accepted only by the offeree's performance. "promise for an act"
bilateral contract example
Javier offers to buy annes smartphone for $200. Javier tells Anne that he will give her the $200 for the smartphone next Friday, when he gets paid. Ann accepts Javier's offer and promises to give him the smartphone when he pays her on Friday.
unilateral contract example
Reese says to Celia, If you drive my car from New York to LA , I'll give you $1000. Only on Celia's completion of the act-bringing the car to LA- does she fully accept Reese's offer to pay $1000. If she chooses not to accept the offer to drive to LA, there are no legal consequences. Contests, lotteries, and other competitions involving prizes are also examples. Once the performance is substantially undertaken, the offeror cannot revoke the offer
A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written. A signed lease for an apartment or a house is an express written contract. If one classmate calls another on the phone and agrees to buy her text books from last semester for $300 , an express oral contract has been made
A contract formed in whole or in part from the conduct of the parties rather than words. If these following conditions exist a court will hold that an implied contract was formed:
1. the plaintiff furnished some service or property
2. the plaintiff expected to be paid for that service or property , and the defendant knew or should have known that payment was expected 3. the defendant had a chance to reject the services of property and did not
a contract can be a mixture of both an express and an implied contract- example
during the construction of a home
A contract that has been completely performed by both parties. enforceable
A contract that may be legally avoided at the option of one or both of the parties.if the contract is avoided both parties are release but if it is ratified both parties must fully perform their respective obligations
A valid contract rendered unenforceable by some statute or law. certain contracts must be in writing, and if they are not, they will not be enforceable except in certain exceptional circumstances
A contract having no legal force or binding effect.
A mutual understanding or meeting of the minds between two or more individuals regarding the terms of a contract. an agreement is evidenced by two events: an offer and an acceptance .
A promise or commitment to perform or refrain from performing some specified act in the future. the parties to a contract are the offeror , the one who makes offer or proposal to another party and the offeree the one to whom the offer is made
requirements to an effective offer
intention, definiteness of terms, communication
an offer can be terminated by action of the parties in three ways
revocation, rejection, counteroffer
the offeror's act of withdrawing an offer
a contract that can be made irrevocable. This is created when an offeror promises to hold an offer open for a certain period of time in return for payment given by the offeree. An option contract takes away the offeror's power to revoke the offer for the period of time specified in the option.
rejection of the original offer and simultaneous making of a new offer .
mirror image rule
A common law rule that requires that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be formed.
Termination by operation law: the offer terminates ......
the offer terminates automatically by law when the period of time specified in the offer has passed. If the offer states that it will be left open until a particular date, then the offer will terminate at midnight on that day . The time period will begin when the offeree receives the offer
Termination by operation law: what if the the offer does not specify a time for acceptance?
if the offer does not specify a time for acceptance, the offer terminates at the end of a reasonable period of time. What constitutes a reasonable period of time depends on the subject matter of the contract. An offer to sell farm produce will expire before an offer to sell farm equipment bc farm produce is perishable
The act of voluntarily agreeing, through words or conduct, to the terms of an offer, thereby creating a contract.
" i accept the offer but only if i can pay on ninety days' credit" example of
a counteroffer and not an unequivocal acceptance
bilateral contract acceptance is in the form of a
promise because bilateral contracts are formed when a promise is made communication of acceptance is necessary. communication of acceptance may not be necessary if the offer dispenses with the requirement, however, or if the offer can be accepted by silence
A common law rule that acceptance takes effect, and thus completes formation of the contract, at the time the offeree sends or delivers the acceptance via the communication mode expressly or impliedly authorized by the offeror. the acceptance becomes valid when it is placed in the mailbox aka in control of the US postal service
a contract that is formed electronically
disputes concerning e contracts tend to center on
contract terms and whether the parties voluntarily agreed to those terms
forum selection clause
indicating the forum, or location (such as a court or jurisdiction), in which contract disputes will be resolved
choice of law clause
specifying that any contract disputes will be settled according to the law of a particular jurisdiction, such as a state or country. These are common in international contracts but may also appear in e contracts
Restatement of the Law of Contracts
compilation of contract law principles as agreed on by the drafters
An agreement that arises when an online buyer clicks on "I agree," or otherwise indicates her or his assent to be bound by the terms of an offer.
shrink wrap agreement
the terms are expressed inside the box in which the goods are packaged. (the term shrink wrap refers t other plastic that covers the box.) usually the party who opens the box is told she or he agrees to the terms by keeping whatever is in the box. similarly when a purchaser opens a software package, he or she agrees to abide by the terms of the limited license agreement
shrink wrap agreements and enforceable /not enforceable contract terms
in some cases the courts have enforced the terms of shrink wrap agreements in the same way as the terms of other contracts. However, the courts have refused to enforce certain terms included in shrink wrap agreements because the buyer did not expressly consent to them.
browse wrap terms
A term or condition of use that is presented when an online buyer downloads a product but that does not require the buyer's explicit agreement. unlike click on agreements, browse wrap terms do not require internet users to assent to the terms before 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. e signatures include encrypted digital signatures, name at the end of email messages, and clicks on a wen page if the click includes some means of ID.
law of e signatures
E-SIGN act law , an electronic signature on paper , and an e- document can be enforceable as a paper one
types of papers that do not apply to E-SIGN law
court papers, divorce decrees, evictions, foreclosures, health insurance terminations, prenuptial agreements, and wills
the uniform electronic transactions act is a
uniform law that has been adopted 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.
information that is either inscribed on a tangible medium or stored in an electronic or other medium and is retrievable
When is an electronic record considered sent?
when it is properly directed to the intended recipient in a form readable by the recipient's computer system. once the electronic record leaves the control of the sender or comes under the control of the recipient, the UETA deems it to have been sent. it is considered received when it enters the recipients processing system in a readable form- even if no individual is aware of its receipt
the value (such as cash) given in return for a promise (in a bilateral contract) or in return for a performance (in a unilateral contract) . As long as consideration is present, the courts generally do not interfere with contracts based on the amount of consideration paid. the fact that a promise has been make does not mean the promise can or will be enforced.
two elements of consideration
legally sufficient value(something of value in the eyes of the law) and bargained for exchange(must provide the basis for the bargain struck between the contracting parties. The item of value must be given or promised by the promisor in return for the promisees promise , performance, or promise of the performance.
the act of refraining from an action that one has a legal right to undertake
to be legally sufficient , consideration must be something of value in the eyes of the law The "something of legally sufficient value " may consist of the following:
1) a promise to do something that one ahs no prior legal duty to do
2) the performance of an action that one is otherwise not obligated to undertake
3) the refraining from an action that one has a legal right to undertake (called a forbearance)
consideration in a bilateral contract consist of a
promise in return for a promise
Under most circumstances, a promise to do what one already has a legal duty to do does not constitute legally sufficient consideration.
an act that has already taken place at the time a contract is made and that , by itself, cannot be consideration for a later promise to pay for the act
covenant not to compete
A contractual promise of one party to refrain from competing with another party for certain period of time and within a certain geographic area.
the legal ability to enter into contracts. The threshold mental capacity required by law for a party who enters into a contract to be bound by that contract. Someone young of mentally incompetent is unable to enter into contracts.
The legal avoidance, or setting aside, of a contractual obligation.
if the person was sufficiently intoxicated to lack mental capacity, then the agreement may be voidable even if the intoxication was purely voluntary. If a contract is voidable because one party was intoxicated, that person has the option of disaffirming it while intoxicated and for a reasonable time after becoming sober. Courts rarely permit contracts to be avoided due to intoxication. these contracts can either be voidable or valid
Contracts made by mentally incompetent persons can be void, voidable, or valid
Legality is the fourth requirement for a valid contract to exist. for a contract to be valid and enforceable , it must be formed for a legal purpose. A contract to do . something that is prohibited by federal or state law is illegal and such voided from the outset and thus unenforceable
gambling is the creation of risk for the purpose of assuming it. traditionally, the states have deemed gambling contracts illegal and thus void. It is sometimes difficult, to distinguish a gambling contract from the risk sharing inherent in almost all contracts
contrary to public policy
contract to commit an immoral act
sell a child
contract prohibiting marriage
contracts in restraint of trade
adversely affect the public policy that favors competition in the economy
A contract or clause that is void on the basis of public policy because one party, as a result of his or her disproportionate bargaining power, is forced to accept terms that are unfairly burdensome and that unfairly benefit the dominating party.
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.
statute of frauds
A state statute under which certain types of contracts must be in writing to be enforceable.
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