Contracts Flashcards
What is a bilateral contract?
Two promises are made. (I promise to pay you $50,000 if you promise to do my audit.) A contract is formed when the promises are exchanged.
What is a unilateral contract?
One promise for an act. (I will pay anyone $100 who will find my dog.) A contract is formed when performance is completed.
What are the criteria for a contract?
Offer, acceptance and consideration.
What would terminate an offer?
Expiration, revocation, rejection or counteroffer, operation of law (death or insanity by either party, destruction of subject matter, illegal)
What is the mirror-image rule for acceptance?
Must accept all terms and conditions of the offer without any alteration. An acceptance must be unequivocal and unqualified with respect to the precise terms specified by the offer.
What is the early acceptance rule?
Acceptance is effective when transmitted or dispatched. (mailbox rule)
What is the conditions precedent?
Acceptances of the offer that cite events outside of the contract which must take place before the acceptance is effective.
What is consideration?
Consideration is the legal term for exchange of benefits and sacrifices. Consideration must be legally sufficient.
What are the elements of consideration?
Of value and bargained for.
T/F: Modification of contract requires additional consideration.
True
What is a liquidated damages clause and how is it used?
A liquidated damages clause is used to enforce a contract, but unless the amount to be awarded in the event of breach is a reasonable estimate of the damages caused by the breach, the charges will be considered a penalty and will be unenforceable.
