A Deal's a Deal Flashcards
(145 cards)
1
Q
What is contract law about?
A
Contract law concerns the making, keeping, and breaking of promises and agreements.
2
Q
What are the two main functions of contract law in a market society?
A
- Dispute resolution – Resolves problems that arise in performance.
- Commitment to freedom and autonomy – Enforces voluntary agreements.
2
Q
How does contract law relate to other fields of law?
A
- Property law – Deals with what is.
- Tort law – Deals with what was.
- Contract law – Deals with what will be.
2
Q
How is a law firm agreement treated under contract law?
A
The agreement among partners is a contract, but partnership law controls it.
2
Q
How are promises and agreements different?
A
→ Promises = Assurances about future actions.
→ Agreements = Mutual understanding and commitment between parties.
2
Q
What does contract law cover?
A
It governs agreements unless they are subject to specialized areas of law like labor or partnership law.
2
Q
How do contracts function in society?
A
Contracts coordinate individual choices and fulfill personal and economic desires.
3
Q
What is freedom from contract?
A
The ability to refuse to enter into an agreement unless you choose to do so.
3
Q
What is freedom of contract?
A
The ability to enter or not enter into an agreement.
3
Q
Why is contract law considered a “remedy of last resort”?
A
It steps in only when things go wrong; most contracts function smoothly without legal intervention.
3
Q
What is freedom to contract?
A
The ability to enter into any kind of agreement you want.
4
Q
Example of freedom from contract – Hurley v. Eddingfield (1901)
A
Doctor refused to treat a patient. The court upheld that no one can be forced into a contract.
4
Q
Does consent determine the scope of freedom to contract?
A
No – The legal system determines the limits of contractual freedom.
5
Q
Why do businesses enter into contracts?
A
To get things done, not necessarily to create legal rights.
5
Q
What does “A deal’s a deal” mean?
A
When you make a contract, you have an obligation to fulfill it.
5
Q
How can practical circumstances limit freedom to contract?
A
Economic or social pressure can reduce genuine freedom to contract.
6
Q
How does contract law reinforce freedom and autonomy?
A
By enforcing agreements and only imposing obligations when both parties consent.
6
Q
Why does the author say “contract law provides the answers, or at least the vehicle through which we can argue about what the answers should be”?
A
Contract law gives a framework for resolving disputes but doesn’t always provide a single correct answer.
7
Q
Why is contract law essential in a market society?
A
It allows individuals and businesses to make reliable plans based on others’ promises.
7
Q
How is contract law different from property law and tort law?
A
- Contract law = Future commitments
- Property law = Present ownership
- Tort law = Past wrongs
8
Q
How does contract law ensure economic coordination?
A
By providing a mechanism to enforce promises and agreements.
8
Q
Why does contract law not resolve every dispute?
A
It intervenes only when agreements break down and parties can’t resolve the issue independently.
8
Q
What is the role of consent in contract law?
A
Contracts are only binding when both parties give valid consent.
9
Q
Can the law require someone to enter into a contract?
A
Yes – Federal law, like the duty of hospitals to treat patients, may override freedom from contract.
10
Why is contract law not purely about choice?
Background legal and policy rules shape the scope of freedom to contract.
11
What are the two key principles behind contract law’s role in society?
- Ensuring promises are enforceable.
- Protecting individual freedom and autonomy.
12
What does contract law demonstrate about society’s values?
Respect for personal autonomy and the enforcement of voluntary agreements.
13
Can a contract arise from a gift or past consideration?
No – There must be a present exchange or mutual obligation.
13
How does contract law balance freedom and obligation?
By allowing individuals to contract freely while holding them to their commitments.
14
How does contract law reinforce trust in the market?
By ensuring that promises made in business and personal transactions are legally binding.
14
Why do people enter into contracts?
To achieve personal and economic goals through voluntary agreements.
15
How does contract law support economic activity?
By providing a reliable framework for enforcing agreements and resolving disputes.
16
Why does contract law adapt to different fields like labor and partnership law?
To reflect the specialized nature of different types of agreements.
16
How does contract law protect against involuntary agreements?
By enforcing freedom from contract – no one can be forced into a contract.
17
How does contract law handle unequal bargaining power?
Legal and policy rules set limits on how contracts are formed to protect weaker parties.
17
Why is contract law seen as complex?
It involves balancing individual autonomy, economic efficiency, and social policy.
18
Can a person legally revoke a contract once it's made?
Not without mutual agreement or legal grounds like fraud or duress.
19
How does contract law handle incomplete or ambiguous terms?
Courts interpret terms based on parties’ intentions and legal standards.
20
What happens when a contract becomes impossible to perform?
The doctrine of frustration or impossibility may release parties from their obligations.
21
Why do courts uphold even unfavorable contracts?
To protect the principle of freedom and autonomy in contracting.
22
Can the law override a contract?
Yes – Public policy and statutory regulations can invalidate or modify contracts.
22
What is an “adhesion contract”?
A contract where one party has significantly more bargaining power (e.g., terms and conditions).
23
How does contract law address duress and undue influence?
Contracts formed under pressure or manipulation can be voided.
24
What is the “meeting of the minds” principle?
A contract requires mutual agreement and understanding between the parties.
25
How does contract law treat misrepresentation?
A contract can be voided if it was formed based on false information.
25
How does contract law protect minors?
Contracts with minors are often voidable to protect them from exploitation.
26
How does contract law handle unilateral mistakes?
A contract may not be voided unless the other party knew or should have known of the mistake.
27
Why is reliance important in contract law?
Promises that cause reasonable reliance may be enforceable even without formal consideration.
27
How does contract law treat illegal contracts?
Contracts based on illegal activities are unenforceable.
27
How does contract law address “unconscionable” terms?
Courts may refuse to enforce terms that are grossly unfair or oppressive.
27
How can a reasonable person determine that a promise has been made?
A reasonable person would be justified in believing that a person has made a commitment about future performance.
27
What is the basic principle of contract formation?
Almost total liberty in making a contract.
28
What is the best way to identify a promise?
Explicit words of commitment like "I promise."
28
Can a contract be formed without explicit words?
Yes – A contract can be formed by implication or conduct without spoken words.
28
How is a contract typically formed?
Through offer and acceptance.
28
What is the key focus in contract formation?
Whether the parties have demonstrated their consent to enter into a contract.
28
Are all contracts formed precisely and clearly?
No – Many contracts are not formed with clear or precise terms.
29
Where do we look to find evidence of consent?
Words and conduct of the parties.
30
What is a manifestation of assent?
When the words and conduct of the promisor, as reasonably understood by the promisee, imply a promise.
31
Who is the promisor?
The person who makes the promise.
31
Who is the promisee?
The person to whom the promise is made.
32
Why do courts focus on the words used rather than the promisor’s intention?
To protect the reasonable expectations of the promisee.
32
What is a common problem in indefinite contracts?
Lack of agreement on a reasonable time for performance.
33
Why is determining a reasonable price more difficult than a reasonable time?
Pricing is influenced by many external factors (e.g., market conditions, supply and demand).
33
Why is definiteness important in contract formation?
- Evidence of consent – Shows that both parties agreed to the terms.
- Judicial enforceability – Gives the court a clearer basis for resolving breaches.
33
What happens if no price term is included in a contract?
If no price term is stated, the court may conclude that no contract exists.
34
What happens if a contract is too indefinite?
It may be declared unenforceable due to lack of clear terms.
35
What is the role of "reasonable expectations" in contract law?
Courts protect the promisee's reasonable expectations based on the promisor’s words and conduct.
36
Why are courts more reluctant to impose a price term than a time term?
Price terms are more complex and variable, whereas performance timing can be reasonably inferred.
37
Can silence constitute acceptance of an offer?
Generally no – Unless there is a previous course of dealing or the parties have agreed that silence means acceptance.
37
What is the significance of a reasonable time in contract law?
If no time for performance is stated, courts will imply a reasonable time based on the circumstances.
38
How does contract law handle incomplete agreements?
Courts may fill in missing terms based on reasonableness and industry practices.
38
Can parties agree to leave certain terms open?
Yes – But if the terms left open are too significant, the contract may fail for indefiniteness.
38
How is a "reasonable price" determined if not stated in the contract?
Courts consider factors like:
- Market price
- Industry standards
- Previous dealings between the parties
38
Why does contract law focus on external conduct rather than subjective intention?
To provide certainty and protect the expectations of the parties involved.
39
What happens if one party acts in reliance on an incomplete contract?
What happens if one party acts in reliance on an incomplete contract?
40
What happens if one party acts in reliance on an incomplete contract?
What happens if one party acts in reliance on an incomplete contract?
41
What is an implied contract?
A contract formed through the conduct of the parties rather than explicit words.
41
What happens if an offer is unclear?
Courts interpret it based on how a reasonable person in the promisee’s position would understand it.
42
What role does consent play in contract formation?
Consent is a fundamental requirement for a valid contract – without it, no binding contract exists.
43
Can a contract be formed even if the parties never explicitly agreed on the price?
Yes – If performance has begun and a reasonable price can be determined based on market value.
43
How does a court determine if an implied contract exists?
By examining the parties' conduct and whether it shows a mutual agreement.
44
Why is the objective theory of contract formation important?
It ensures that contracts are interpreted based on how they would be understood by a reasonable person rather than subjective intention.
44
What is the “meeting of the minds” principle?
Both parties must understand and agree on the essential terms of the contract.
45
What happens if parties agree to “agree later” on a key term?
The contract may be unenforceable unless the court can supply the missing term based on reasonableness.
45
How can ambiguity in contract terms affect enforceability?
Ambiguous terms may make a contract unenforceable or open to judicial interpretation.
46
How does contract law treat performance under an indefinite contract?
Performance may imply a contract even if all terms were not initially agreed upon.
46
Can an offer be withdrawn before acceptance?
Yes – Unless the offer is irrevocable under an option contract or promissory estoppel applies.
47
What if the promisor claims they never intended to create a contract?
Courts will assess whether a reasonable person would have interpreted the promisor's conduct as a promise.
47
Can a contract be formed through performance rather than explicit acceptance?
Yes – Acceptance can occur through conduct or beginning of performance.
47
How does contract law protect the promisee’s expectations?
By enforcing terms that a reasonable person would understand as part of the agreement.
48
What is the “mirror image rule”?
Acceptance must match the terms of the offer exactly – otherwise, it is a counteroffer.
48
When does an offer lapse?
After a reasonable time or the time specified in the offer.
49
What happens if an offeree proposes new terms?
It is treated as a counteroffer and rejects the original offer.
49
What happens if one party accepts an offer but changes the terms slightly?
It becomes a counteroffer, not acceptance.
49
Can a contract be formed if the offeror is unaware of acceptance?
Acceptance is generally valid when communicated to the offeror, unless the contract specifies otherwise.
50
Can a party revoke an offer after acceptance?
No – Once accepted, a contract is formed and the offeror is bound by its terms.
51
What if performance begins before all terms are finalized?
The court may imply missing terms based on reasonableness and fairness.
51
What happens if an offeror dies before acceptance?
The offer typically terminates unless it was part of an option contract.
52
Why do courts hesitate to impose a price term on contracts?
Price is more complex and context-dependent than performance time.
52
Does a contract have to be in writing to be enforceable?
No – Oral contracts are generally enforceable if there is an intent to create a contract.
53
What types of contracts fall under the Statute of Frauds?
- Contract to pay someone else’s debt.
- Contract for the sale of an interest in land.
- Contract that is not to be performed within one year.
- Contract for the sale of goods for $500 or more.
53
What is the exception to the rule that contracts don’t need to be in writing?
Certain types of contracts are required to be in writing under the Statute of Frauds.
54
What is the Statute of Frauds?
A law from Britain (1677) designed to reduce fraud and perjury by requiring certain contracts to be in writing.
55
What is the purpose of formality (signing)?
- Reminds parties of the seriousness of their actions.
- Provides the court with solid evidence of intent and terms.
55
How do courts treat the Statute of Frauds for different types of contracts?
- More rigorous for important contracts (e.g., sale of land).
- More flexible for less significant contracts.
56
What problem can arise from strict application of formalities?
If formalities are too strictly applied, they can cause injustice instead of preventing it.
56
Is it necessary to state all terms in writing under the Statute of Frauds?
No – Only the crucial terms need to be stated.
56
Can anyone make a contract?
Almost anyone, but two groups are specially protected:
- Children under 18
- Mentally disabled persons
56
How do courts interpret the one-year rule under the Statute of Frauds?
Courts focus on whether a contract is not to be performed within one year, rather than whether it cannot be performed within one year.
57
Does a contract under the Statute of Frauds require a full signature?
No – A partial signature or electronic record may be enough.
58
What happens if a person appears mentally competent but is actually mentally disabled?
The contract can be voided if the other party knew or should have known of the disability.
58
What rights do minors have in contracts?
Minors can avoid a contract even if they appear mature.
59
What standard is used to judge minors who misrepresent their age?
A standard of maturity and truthfulness.
59
What are the exceptions to a minor’s right to avoid a contract?
- Minor can ratify the contract after turning 18.
- Minor must pay for necessaries (food, drink, medical care, car, education, etc.).
- If a minor misrepresents their age, they may have to fulfill the contract in some states.
59
What happens if a minor misrepresents their age?
In some states, they may have to pay for what they received under the contract.
59
Why are minors and mentally disabled persons protected under contract law?
They are said to lack the capacity to contract.
60
Example of an unenforceable promise due to lack of consideration
Uncle promises to give Nephew a car as a gift → Not enforceable because no consideration is given by Nephew.
60
Is every agreement enforceable once it’s made?
No – A contract must be supported by consideration.
60
Example of an enforceable contract based on consideration
Uncle agrees to sell Nephew a car for $5,000 → Enforceable because both parties gave consideration (car and money).
60
What is consideration?
An exchange or a manifested intention to enter into a bargain.
60
Why are gift promises generally unenforceable?
They are not economically productive and lack the element of bargain.
61
What happens if a contract is modified after formation?
A modification is unenforceable unless supported by new consideration.
62
What is the preexisting duty rule?
Performance of a preexisting duty cannot serve as consideration for a new promise.
62
What is an exception to the consideration requirement?
A promise to make a gift to a charity is enforceable without consideration.
63
When is a promise to modify a contract enforceable despite the preexisting duty rule?
If the modification is based on fairness or public policy.
64
What happens if a mentally disabled person enters into a contract?
The contract is voidable if the other party knew or should have known of the disability.
64
Why are charitable gift promises enforceable without consideration?
Based on principles of fairness and public policy.
64
Why does contract law focus on protecting reasonable expectations?
Enforcement of contracts ensures the reasonable expectations of the promisee are upheld.
65
When can a minor ratify a contract?
After turning 18 by:
- Expressly recognizing the contract in words.
- Accepting the other party’s performance.
65
Why are minors allowed to avoid contracts?
To protect them from exploitation due to their lack of judgment and experience.
66
Can minors be held responsible for necessaries?
Yes – They are required to pay for the reasonable value of necessaries.
67
What is the test for determining mental incapacity in contract law?
Whether the party understood the nature and consequences of the contract.
68
When is a contract for the sale of land enforceable despite not being in writing?
If there has been part performance or reliance by the buyer.
68
Why are oral contracts usually enforceable?
Contract law emphasizes intent and mutual assent over formality.
68
What are the two main functions of consideration?
- Evidence of intent to enter into a bargain.
- Provides a basis for enforcing the agreement.
69
What happens if an agreement lacks consideration?
The promise is generally unenforceable.
69
What is the effect of a contract made by a mentally incompetent person?
The contract is generally voidable at the discretion of the incompetent person or their guardian.
70
What happens if a minor buys something unnecessary (e.g., jewelry)?
The minor can disaffirm the contract and recover payment.
70
How does contract law treat charitable gift promises?
Courts enforce them based on principles of fairness and public policy.
71
What happens if a party breaches an oral contract under the Statute of Frauds?
The contract is unenforceable unless it meets an exception (e.g., partial performance).
71
Why does contract law focus on objective conduct rather than subjective intent?
To protect the reasonable expectations of the promisee.
72
Why is consideration important in contract law?
It ensures that contracts reflect a genuine exchange of value.
72
What happens if a promise to modify a contract lacks new consideration?
It is generally unenforceable unless supported by fairness or public policy.
73
Why does contract law protect minors more than adults?
Minors are seen as more vulnerable to exploitation.
