chap 11

Question 1

Mistake

Answer 1

Only a mistake of fact (and not a mistake of value or quality) makes a contract voidable

Question 2

Unilateral mistakes

Answer 2

mistake that occurs by one party and is normally enforceable against the mistaken party
Exceptions
1. Other party knew or should have known that a mistake of fact was made
2. Error was due to a substantial mathematical mistake and was made inadvertently and without extreme negligence

Question 3

Bilateral Mistakes

Answer 3

Both parties are mistaken about the same material fact (either party can rescind the contract)
Mutual misunderstanding my allow the contract to be rescinded or reformed

Question 4

Fraudulent Misrepresentation

Answer 4

1. A misrepresentation of a material fact must occur
2. There must be an intent to deceive
3. The innocent party must justifiably rely on the misrepresentation
4. To collect damages, a party must have been harmed as a result of the misrepresentation

Question 5

Misrepresentation by Words or Actions

Answer 5

Occurs when a part takes a specific action to conceal a fact that is material to the contract

Question 6

Injury to Innocent party

Answer 6

1. Most courts do not require a showing of injury in an action to rescind a contract
2. However proof of harm is required if the injured seeks damages

Question 7

Written Contracts

Answer 7

1.Real estate
2. Divorce
3. Debt Reassignment
4. Marriage

Question 8

Assignment

Answer 8

The transfer of a contractual right to a third party when rights are passed unconditionally the assignor’s rights are extinguished and given to the assignee

Question 9

Assignment Exceptions

Answer 9

1. Assignment is prohibited by statute
2. The contract is for personal services
3. Assignment significantly changes the risk or the duties of the obligor
4. the contract prohibits assignment

Question 10

Delegation

Answer 10

The transfer of a contractual duty to a third party, no special form is required as long as the delegator expresses that their intention it is valid. Delegations do not relieve delegator of their obligations under the contract. Obligee can sue both the delegatee and the delegator if the duties are not performed

Question 11

Delegation Exceptions

Answer 11

1. When special trust has been placed in the obligor
2. when the performance depends on the personal skills or talents of the obligor
3. When performance by a third party will vary materially from that expected by the obligee
4. When the contract expressly prohibits delegation

Question 12

Third party beneficiary

Answer 12

One for whose benefit a promise is made in a contract but who is not a party to the contract

Question 13

Incidental Beneficiary

Answer 13

A third party for whose benefit a contract is formed. An intended beneficiary can sue the promisor if the contract is breached

Question 14

Incidental beneficiary

Answer 14

third person who receives a benefit from the contract even though that persons benefit is not the reason for the contract being made. Cannot sue to enforce contract because the the benefit is unintentional

Question 15

Discharge

Answer 15

Termination of an obligation. In contract law, discharge occurs when the parties have fully performed their contractual obligations or when events, conduct of the parties, or operation of law releases the parties from performance

Question 16

Performance

Answer 16

In contract law, the fulfillment of one’s duties arising under a contract with another; the normal way of discharging one’s contractual obligations

Question 17

Performance Conditions

Answer 17

A qualification, provision, or clause in a contractual agreement, occurrence or nonoccurrence of which creates, suspends, or terminates the obligations of the contracting parties

Question 18

Condition Precedent

Answer 18

Condition that must occur before contract can be valid and promises can be absolute

Question 19

Performance tender

Answer 19

An unconditional offer to perform an obligation by a person who is ready, willing, and able to do so

Question 20

Complete performance

Answer 20

When a party performs exactly as agreed

Question 21

Substantial performance

Answer 21

Party did everything in its power to comply with contract. Other party is subject to compensation in the form of damages for other parts of the contract that were not fulfilled
1. Party must have performed in good faith. Intentional failure to comply with contract terms is a breach of contract
2. Performance must not vary greatly from what was promised
3. Performance must create substantially the same benefits as those promised in the contract

Question 22

Accord and Satisfaction

Answer 22

An agreement between two parties to accept performance that is different from what was promised in the original contract. After the performance has been completed, the obligation is discharged

Question 23

Breach of contract

Answer 23

The failure, without legal excuse, of a promisor to perform the obligations of a contract
1. Material - when performance is not at the least substantial (innocent party is discharged from the contract and can sue immediately)
2. minor - nonbreaching party’s duty to perform can sometimes be suspended until the breach has been remedied but duty to perform is not entirely excused

Question 24

Anticipatory repdudiation

Answer 24

Assertion or action that indicates a party will not perform a contractual obligation to perform at a future time. Is treated as a material breach and nonbreaching party can sue immediatly

Question 25

Mutual Rescission

Answer 25

An agreement between the parties to cancel their contract, releasing them from further contractual obligations. The object is to restore the parties to the positions they would have occupied before the contract had been formed

Question 26

Novation

Answer 26

The substitution, by agreement, of a new contract for an old one, with the rights under the old one being terminated. Typically, novation involves the substitution of a new party for one of the original parties to the contract

Question 27

Release

Answer 27

An agreement in which one party gives up the right to pursue a legal claim against another party

Question 28

Liquidated debt

Answer 28

Debt that is due in a certain amount

Question 29

Unliquidated debt

Answer 29

A debt that is due in an uncertain amount

Question 30

Commercial Impracticability

Answer 30

Doctrine that may excuse the duty to perform a contract when performance becomes much more difficult or costly due to unforeseen circumstances

Question 31

Frustration of Purpose

Answer 31

Doctrine under which a party to a contract will be relieved of the duty to perform when the objective purpose of the performance no longer exists due to reasons beyond that party's control

Question 32

Reformation

Answer 32

A court - ordered correction of a written contract so that is reflects the true intentions of the parties

Question 33

Specific performance

Answer 33

An equitable remedy requiring exactly the performance that was specified in a contract, usually granted only when monetary damages would be an inadequate remedy and the subject matter of the contract is unique

Question 34

Types of Damages

Answer 34

1. Compensatory (to cover direct losses and costs) 2. Consequential (to cover indirect and foreseeable losses) 3. Punitive (to punish and deter wrongdoing 4. Nominal (to recognize wrongdoing when no monetary loss is shown.

Question 35

Performance is Impossible

Answer 35

1. When party whose personal performance is essential to the completion of the contract dies or becomes incapacitated 2. When the specific subject matter of the contract is destroyed 3. When a change in the law renders the performance illegal