study guide

Question 1

is a contract a promise

Answer 1

yes, it’s essentially a promise or agreement between two or more parties, it outlines the obligations and rights of each party involved

Question 2

what is special about a contract being a promise

Answer 2

it is legally binding, so if someone cant keep their promise in the contract, the other party can take legal action to enforce it

Question 3

what is objective theory of contracts?

Answer 3

contracting parties shall only be bound by terms that can objectively be inferred from promises made

Question 4

how does the objective theory of contracts work?

Answer 4

it focuses on the external actions of the parties invovled, rather than internal thoughts. It interprets the contracts based on what a reasonable person would understand from the parties actions and words

Question 5

why does objective theory of contracts matter for contract disputes

Answer 5

it provides clear and consistent framework for interpreting and enforcing contracts

Question 6

what are the requirements for a valid contract

Answer 6

agreement, consideration, contractual capacity, legality

Question 7

what happens if the requirements of a valid contract are missing

Answer 7

Then if the contract is taken to court then it may not be enforceable

Question 8

what are defenses to enforceability of a contract

Answer 8

1. voidability
2. void contract
3. lack of capacity
   4.illegality
4. mistake

Question 9

how are contracts formed

Answer 9

1.the offeror must make a proposal to the offeree (offer)
2.the offeree agrees (acceptance)
3.both parties must exchange something of value(consideration)
4.parties entering in contract must have the legal capacity to do so (legal capacity)
5.the contract must have a lawful purpose and cannot involve illegal activities (legal purpose)
6. both parties must freely consent to the terms of the contract (mututal assent)

Question 10

what are the two types of contracts

Answer 10

-express and implied

Question 11

how are express and implied contracts formed

Answer 11

express is through explicit offer and acceptance, usually documented in writing. Implied are formed based on the conduct of parties without explicit agreement or written documentation

Question 12

what are the parties called in a contract

Answer 12

offeror and offeree

Question 13

what is acceptance

Answer 13

the agreement by the offeree to the terms of an offer, creating a binding contract between the parties

Question 14

when can unilateral contracts be revoked

Answer 14

unilateral contracts is where one party makes a promise in exchange for the other party doing something, can be revoked before the act is performed bc the act is not complete so the offeror has not yet inccurred any obligation

Question 15

what is the difference between formal and informal contracts

Answer 15

formal: typically in writing and have specific legal reqs. they involve complex transactions or agreements
informal: not necessarily in writing and may be based on verbal agreements or implied promises

Question 16

why does the difference between formal and informal contracts matter

Answer 16

because it affects the enforceability, legal certainty, risk management, complexity, and legal compliance of the contract

Question 17

what is e-signing

Answer 17

the process of signing documents digitally

Question 18

what is the federal on e-siging and how does it interact with state laws on the subject

Answer 18

ESIGN act established the legality and validity of electronic signatures and records for most transactions

Question 19

what is an express contract

Answer 19

the terms of the agreement are fully and explicitly stated in words, oral, or written

Question 20

what is an implied contract

Answer 20

formed in whole or in part from the conduct of the parties

Question 21

what is the difference between express and implied contracts

Answer 21

implied differs from express because in the conduct of the parties, rather than words, creates and defines at least some of the terms of the contract

Question 22

what is a executed contract

Answer 22

contract that has been fully performed by both parties

Question 23

what is executory contract

Answer 23

contract not yet been fully performed

Question 24

what is the plain meaning rule

Answer 24

words and their plain ordinary meaning- determine the intent of the parties at the time they entered into the contract

Question 25

when will court go outside a contract to understand its terms

Answer 25

when the language is ambiguous or unclear

Question 26

what is consideration

Answer 26

the value given in return for a promise or performance in a contractual agreementq

Question 27

what happens if consideration is lacking

Answer 27

the contract may lack enforceability, validity, and legal obligation

Question 28

what is promissory estoppel

Answer 28

doctrine to enforce a promise when the promisee has justifiably relied on it and when justice will be better by served by enforcing the promise

Question 29

5 elements of a promissory estoppel

Answer 29

1. must be clear and definite promise
2. promisor should have expected that the promisee would rely on the promise
3. promisee reasonably relied on the promise by acting or refraining from some act
4. the promisee’s reliance was definite and resulted in substantial detriment
   5.enforcement of the promise is necessary to avoid injustice

Question 30

what is the assumption about capacity for making a contract

Answer 30

the presumption that individuals have the legal capacity to enter into contracts unless proven otherwise

Question 31

what are the exceptions of having the capacity to enter a contract

Answer 31

1.minors
2.mental incapacity
3.intoxication
4.duress(threatened into agreement)

Question 32

what is usury

Answer 32

charging an illegal rate of interest

Question 33

can you have a contract for an illegal practice

Answer 33

no, any contract that involves illegal activities or purposes are considered void and unenforceable

Question 34

what can a non-breaching party do if there is a material breach

Answer 34

the nonbreaching party is excused from the performance of contractual duties and can sue for damages caused by the breach

Question 35

what are the damages you can get for breach

Answer 35

compensatory, consequential, punitive, liquidated, and nomial

Question 36

what is the difference between liquidated damages and penalties

Answer 36

the difference is their purpose and enforceability. Liquidated damages are meant to compensate the non breaching party, penalties are intended to punish the breaching party

Question 37

How do you tell the difference between liquidated damages and penalties

Answer 37

depends on whether the provision is primarily intended to compensate the non-breaching party for losses or to punish the breaching party

Question 38

how do restitution and reformation interact

Answer 38

they provide full relief to parties involved in a contract dispute. restitution aims to return parties to their pre-contractual positions, reformation seeks to correct errors or mistakes in the contracts terms

Question 39

what sort of contract provisions limit remedies

Answer 39

limitation of liability clauses, exculpatory clauses, and liquidated damages provisions