Chapter 6 Section 1: Contracts Flashcards Preview

REGULATION > Chapter 6 Section 1: Contracts > Flashcards

Flashcards in Chapter 6 Section 1: Contracts Deck (67):
1

Define contract

A promise the law will enforce

2

Define express contract

Formed by language (oral or written)

3

Define implied-in-fact contract

A contract formed by conduct (ex. like picking up an item in store off shelf, you are implying you want to buy it)

4

Define implied-in-law contract
What is it also known as?

Not a contract - a remedy to prevent unjust enrichment
Quasi-contract

5

Define unilateral contract
When is it formed?

One promise given in exchange for performance.
Not formed until performance is completed

6

Define bilateral contract
When is it formed?

Two promises exchanged for each other
Formed when promises are exchanged

7

Define executory contract

Duties remain to be performed

8

Define executed contract

All of the duties have been performed

9

Where is common law derived from?
What falls under it?

The courts

RISE

Real Estate
Insurance
Services
Employment

10

What does the UCC govern?

Contracts for sale of goods

11

What are the three requirements of a legally enforceable contract?

Offer and acceptance
Exchange of consideration
Lack of defenses

12

Does a contract need to be in writing?

Usually not

13

Define agreement

Mutual assent - a meeting of the minds

14

What is required for an offer to exist?

The communication must create a reasonable expectation in the offeree that the offeror intends to make a contract

15

What questions should be asked to determine if an offer exists?

Intent?
Definiteness and certainty?
Communication of the above?

16

Are advertisements offers?
What's the exception?

Usually not - they're invitations seeking offers
If the offeree is specified (rewards) it's an offer

17

What needs to be specified in the offer for RISE?
UCC?

All terms for RISE
- ID of offeree and the subject matter
- price to be paid
- time of performance
- quantity involved
- the nature of the work to be performed

Only quantity for UCC

18

What are the three ways to terminate an offer?

Revoke
Reject
Automatic

19

Can you revoke an offer after you promise to keep it open?

Yes.

20

What are the three limits on the offeror's power to revoke?

Option contract
Unilateral contract (if work is begun)
Merchant firm offer

21

What is an option contract?

The offeree buying time for the offeror to keep the offer open

22

Can an offer be accepted after it is rejected?

Not really

23

When is a rejection, counteroffer, offer, or revocation effective?

When received

24

Under what three circumstances is an offer automatically terminated?

Death or incompetency
Destruction of subject matter
Illegality

25

What is the mirror image rule?
Under what law is it required?

An acceptance must be the mirror image of the offer
RISE

26

What is the mailbox rule?
What is the exception?

Acceptances are effective when dispatched, even if it is lost in the mail
If the offeror says they need to receive to offer for it to be valid

27

What needs to be exchanged in order to be called consideration?

Something of legal value - something you're not otherwise obligated to do

28

Does the consideration need to go to the third party?

Not necessarily

29

Does the consideration need to be fair?

No, but it can't be unconscionable and it must be arms-length

30

Is a gift protected by law?

No

31

Is a contract enforced if it is created for something that was already done?

No

32

What is the detrimental Reliance/Promissory Estoppel rule?

A promise made by one party and detrimentally relied upon by another can be enforced without consideration (gift to charity if they spent the money already)

33

What makes a contract void?

Fraud in the execution,
nonexistence of subject matter,
illegality,
physical force duress,
failure to have a license to protect the public

34

What is required to establish fraud?

MAIDS

Material misrepresentation
Actual and justifiable reliance
Intent to induce
Damages
Scienter

35

Do opinions of value qualify as misrepresentation or fraud?

No

36

What is the difference between fraud in the execution and inducement?

Execution is when a party tricks another into signing. It makes it void.
Inducement is when the terms of the contract are misrepresented. It makes it voidable.

37

Does economic or social duress make it void or voidable?

Voidable

38

Is a unilateral mistake a defense to a contract?

Is a mutual one?

Usually not, unless the other party knew or should have known (ex. bid is 3,000,000 and by error offer by 300,000--> obvious mistake)

It's voidable then

39

If the seller doesn't have a license, what does that do to the contract?

If the license is to protect the public, it makes it void (CPA or doctor)
If the license is to raise revenue it's enforceable

40

Are promises not to compete enforceable?

If reasonable.

41

Explain how contracts work with minorites

Minors can disaffirm a contract, even for a while after they turn 18. They cannot disaffirm contracts for necessities. They can be bound to the contract if they ratify, but they must be an adult to ratify

42

What is the statute of limitations under RISE?
UCC?

4-6
4

43

What six contracts require writing under the Statute of Frauds?

MY LEGS

Marriage
Year (can't be done in a year)
Land (for over a year)
Executors to pay estates or debts
Goods (over $500) - not services
Surety

44

For the Statute of Frauds regarding the over a year requirement, when does the year start?

From the date of a contract, it has to be IMPOSSIBLE to do in a year.

45

What is an accord and satisfaction?

Same parties, new agreement. Until substitute is satisfied, you can sue under new or old. It does not discharge the original duty

46

What is novation?

Same agreement, substituted party

47

What is a substituted contract?

Like accord and satisfaction, but the duties under the original contract are discharged immediately.

48

What is the parol evidence rule?

It prohibits a party in a lawsuit involving a fully integrated written contract from introducing evidence of oral or written statements from before or at the same time as the main one, or that seek to vary the terms of the contract.
Subsequent modifications are admissable, and it's always admissable if it shows fraud, duress, or a mistake.

49

What if there is a material breach of contract?
Immaterial?

Material - nonbreaching can be discharged from contract
Immaterial - nonbreaching is entitled to damages

50

What is anticipatory repudiation, and what happens if it's there?

It occurs when one person unequivocally indicates in advance of performance that they will not perform their duties when the time comes.
You can sue now, sue later, or cancel the contract.

51

What is the purpose of damages?

They intend to put the nonbreaching party in as good a position as he would have been had there been no breach

52

What is the standard measure of damages for personal service contracts?

Enough money to obtain subtsitute performance

53

What are consequential damages?

Damages that are reasonably foreseeable as a result of the breach

54

What is specific performance and when is it used?

Court order that the breaching party performs.
Land or unique items

55

Can you get compensatory damages and specific performance?

No

56

What is a liquidated damage?

It's a clause in a contract that specifies what will be paid if there is a breach.

57

Are punitive damages available in a breach?

Not usually

58

When are punitive damages available?

Fraud

59

What is rescission or cancellation?

Cancels the contract and restores the parties to their former position

60

What is the doctrine of substantial performance?

A party cannot rescind or cancel if a contract has been substantially performed - the only remedy is monetary damages for the minor breach

61

What third parties are generally given rights?

Only parties to the contract (have privity). They must be specifically named

62

Are donee beneficiaries and creditor beneficiaries intended or incidental?

Intended

63

What is an assignment of all rights under a contract interpreted as?

An assignment of a contract, which assigns rights and delegates duties

64

What contracts can be assigned or delegated?
What are the exceptions?

Any
If it will change the obligor's risk, or involves specialized personal service (surgeon)

65

Can you assign offers?
What's the exception?

No
You can assign option contracts

66

Who is liable under a delegation of duties?

Both parties, unless there is novation

67

Can you assign accounts receivable if the contract forbids it?

Yes, as long as you give the debtor notice

Decks in REGULATION Class (35):