Contracts Flashcards
(28 cards)
The formation of a valid common law contract must contain what?
Offer - the offeror expresses willingness to enter into contract (intent to make offer and communicated to offerree)
Acceptance - creates a contract
Consideration - both parties must provide
What are the rules regarding acceptance of an offer?
Mirror-Image Rule - must accept all terms and cond. w/o alteration, or it will be a counter-offer
Early Acceptance Rule (mail-box rule) - effective when transmitted or dispatched
Who can accept an offer?
Must be accepted by intended party (offeree)
Acceptance can only be made by a party who knows an offer has been made and has all of the facts - AKA a meeting of the minds
They must intend to accept
What happens if an offeree accepts a contract but puts added stipulations?
It is not acceptance; but instead becomes a counter-offer and the original offeror is now the offeree
When is an offeror bound by a contract?
When they RECEIVE the acceptance.
If the offeree rejects; then accepts - whatever gets to the offeror first is what is binding.
What will void an offer?
If offeror dies or becomes insane before acceptance; offer is void.
Contract is binding if acceptance occurs before death/insanity.
What actions or circumstances will revoke a contract?
Offeror revokes and offeree receives revocation
Offeree finds out prior to acceptance that offeror has sold the item
In the case of an Option; offeror cannot revoke until the time of the option has elapsed
Initial rejection by offeree doesn’t void the option.
What is an Option?
Some amount of consideration (like money) is put forth by offeror to keep the offer open for a stated period of time
What is a Requirements Contract? How are they limited?
These are contracts where someone becomes the exclusive provider of something in exchange for consideration
Companies can’t get locked in to one and then have market conditions force them to sell something at
what has become an unreasonable price
What can make a contract VOID?
Fraud in the execution
Formed under extreme duress - extreme
Illegal
What can make a contract VOIDABLE?
Fraud in the inducement
Party not competent to contract/intoxication
Formed under SIMPLE duress (improper threat)
Undue influence (trusted the other party)
Misrepresentation of a material fact
Capacity - ex: a minor can withdraw if they choose
What is the result of a clerical error in a contract?
The contract is unenforceable.
Example: Person signs a contract to pay $500.00 to have
their lawn re-seeded but due to clerical error; it actually reads $5000.00
Contracts under the Statute of Frauds must be in what form to be valid?
They must be in writing.
(Unless the contract has already been performed by both parties; or the contract meets certain exceptions regarding the sale of goods- SPAM)
What makes a contract subject to the Statute of Frauds?
“GROSS”
- Sale of “G”oods worth $500+
- Real estate sales
- Over one yr required to perform contract
- Suretyship (guarantee debt of another)
- Statements in consideration of marriage
What is the parol evidence rule?
Prohibits the use of oral or written evidence to contradict the terms of the written contract
If there is a written contract, the parol rule applies
It bars from court, any prior agreements made before the written contract, but does not bar any agreements or modifications made after the written agreement.
What are the requirements for the assignment of a contract?
Contracts are assignable to a third party beneficiary; but must be done so in good faith
Obligations may be assignable- Assignor is still liable
Assignor may be released from liability if other party grants a novation
When can contracts be discharged by law?
Party under contract is bankrupt
Party under contract dies or is incapacitated
Party cannot physically complete the contract (i.e. They are in prison so can’t finish building your house)
What would terminate an offer?
Expiration
Revocation (must be received to be effective)
Rejection (refusal by offeree)
Counteroffer
Operation of Law (death, insanity, illegal matter)
Bilateral contract
A contract that can be accepted by a promise
Unilateral contract
A contract that can only be accepted by actual performance
Common law prohibits the offeror from revoking an offer if the offerree is in the process of performing such actions
What would a victim of a contract breach entitiled?
Actual damages (damages directly caused by the breach) The courts do not award punitive damages that are designed to specifically punish the defendant
Anticipatory breach
When a party indicates in advance that they will not perform a term required in the future
What are the two main sources of contract law?
Common Law derived from courts
Uniform Commercial Code (UCC)- derived from Statutory Law (Sales of Goods)
What is an express contract?
The terms of an offer must be definite to permit the formation of a contract, including clear agreement to subject matter, price, and time of performance.
Terms can be implied-in-fact and not explicitly stated
