CHAP 7: The terms of a contract Flashcards Preview

LAW 4002 - Business and Family Law > CHAP 7: The terms of a contract > Flashcards

Flashcards in CHAP 7: The terms of a contract Deck (23):
1

#CH7 What is ideal contract?

1. anticipates everything which could go WRONG
2. provides for that possibility
=> NO need to go to COURT/ARBITRATION to RESOLVE a dispute

2

#CH7 What is RELATIONSHIP btw TERMs of contract n RISK management?

MOST of terms of contract: deal with risk management

3

#CH7 What are EXPRESS terms?

1. PARTIES have agreed to
2. are contained in the contract

4

#CH7 If express term is AMBIGUOUS, what will JUDGE do? (ambiguous: more 1 meaning)

interpret term

5

#CH7 What is PURPOSE of reasonable person test?

determine most reasonable interpretation (explain)

6

#CH7 If AMBIGUOUS term: part of a standard form contract, what happens? (Rule: contra preferentum)

benefit of DOUBT: given to person who did not write the contract

7

#CH7 What will happen to a term NOT included?

left out of the written contract although it was agreed to

8

#CH7 What is PAROL evidence rule (rule about VERBAL evidence)?

once a contract: put into WRITING
=> any terms NOT included do NOT exist

9

#CH7 How does ENTIRE agreement clause reinforce PAROL evidence rule?

1. only WRITTEN terms form part of the contract
2. NO other promises or representations

10

#CH7 If parties don't think of an important term, what will JUDGE do?

fix this omission by implying a term

11

#CH7 What are potential sources of implied terms?

1. legislation
2. PREVIOUS dealings btw parties
3. trade practice
4. or most economically efficient

12

#CH7 What is quantum meruit?

Where price: left out of agreement
=> a reasonable price: implied

13

#CH7 To deal with possibility that s.th: go WRONG => what happens?

a number of terms: included

14

#CH7 What is a condition SUBSEQUENT?

a specified event occurs => contract ends without liability (often)
not necessarily:
1. force majeure (unexpected event that prevent s.o from fulfilling a contract)
2. or WEATHER related clauses

15

#CH7 What is a condition PRECEDENT?

a specified condition: met => contract: only begin

16

#CH7 What are real estate deals conditional on?

purchaser: receive mortgage APPROVAL

17

#CH7 If an interest rate clause deals with risk => what happens?

Payment: be late

18

#CH7 What is LIMITATION of liability clauses?

max amt of money breaching party: be liable for (breach: an act of breaking a law)

19

#CH7 What are EXEMPTION clauses?

breaching party: not be liable for any LOSSES arising from a breach of contract
Ex: parking lots exempt themselves from liability for DAMAGE to cars

20

#CH7 In consumer contracts, what is important?

to draw the customer’s attention to 2 clauses (Limitation of liability clauses n Exemption clauses)

21

#CH7 What is a LIQUIDATED damages clause?

a PREDETERMINED amt of money which breaching party will pay.
Ex: $1000 for each day delivery is late.
1. amt: must be a GENUINE (authentic) estimate of expected loss
2. amt: NOT an attempt to PUNISH breaching party.
3. NO punitive damages in contract (punitive: intended as punishment)

22

#CH7 What is a DEPOSIT?

a type of LIQUIDATED damages
_ buyer breaches contract, a deposit: forfeit (lose)

23

#CH7 Other common terms

1. Governing law and venue: the law of which jurisdiction will be used and where a DISPUTE will be heard
2. TAXES payable
3. PAYMENT schedules
4. CANCELLATION charges
5. FINANCING arrangements