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REG - Business Law > Contracts > Flashcards

Flashcards in Contracts Deck (33):
2

What must a contract contain?

Offer
Acceptance
Consideration (something of value)
Proper form (oral or written)
Legal subject matter
Two or more competent parties

3

What forms may acceptance of a contract take?

Can be written or oral

Must be in the form/method required by offeror

Must be mirror image - i.e. no changes in terms

4

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

5

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

6

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.

7

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.

8

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.

9

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

10

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

11

What is promissory estoppel?

Promises to donate are legally enforceable

Basically; you can’t tell a charity; “Hey; if you buy this
$100;000 piece of land; I’ll pay for the building that
will go on it;” and then renege on your promise

12

What can make a contract VOID?

Fraud in the execution

Formed under extreme duress - extreme

Illegal

13

What can make a contract VOIDABLE?

Fraud in the inducement

Party not competent to contract

Formed under SIMPLE duress

Undue influence

14

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

15

Contracts under the Statute of Frauds must be in what form to be valid?

They must be in writing.

16

What makes a contract subject to the Statute of Frauds?

o Cannot be completed within one year
o Involves the purchase of real estate
o $500+ Sale of Goods
o Co-signing and guaranteeing the debt of another

17

What is the parol evidence rule?

Prevents one party to a written contract from coming in after the fact and claiming that a certain
conversation took place that conflicts with what is agreed upon in the written contract

It also prevents using an oral argument to read into the meaning of what is written on paper

If it's on paper; it trumps what was agreed-upon orally prior to the written contract

Note: does not negate oral agreements made AFTER the contract or disallow oral words from clarifying ambiguous contract language.

18

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

19

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)

20

When does Common Law apply?

RISE
RE
Insurance
Services
Employment

21

When does UCC apply?

Sale of goods

22

What creates a legally enforceable agreement?

1. Offer & acceptance
RISE acceptance - mirror image rule
UCC acceptance - no mirror image
2. Exchange of consideration (no gift)
3. Lack of defenses

23

What constitutes an offer?

1. Intent
2. Definiteness and certainty
UCC - specify qty
Common law - specify ALL terms
3. Communication

24

Generally, offeror can revoke offer before acceptance, except:

1. Option contract ("buy" time)
2. Unilateral contract
3. Merchant written firm offer under UCC

25

Mailbox rule

Acceptances are generally effective when dispatched (sent), even if lost
or delayed

Can avoid rule by saying "acceptance valid when RECEIVED"

Applies to offers, rejections, revocation, & counter offers

26

Elements of consideration

- legal value
- bargained for exchange

27

Defense to contract - fraud

MAIDS

Misrepresentation of material fact
Actual & justifiable reasonable reliance
Induce
Damages
Scienter (intent)

28

Void vs. voidable

Void = unenforecable by either party
Voidable = avoided at option of party adversely affected

"Void because of defense" is usually wrong answer!

29

Fraud in the execution

VOID

Party deceived into signing something that they didn't know was a contract

30

Fraud in the inducement

VOIDABLE

Aware that you are signing a contract, but terms are materially represented

31

Defenses that are void

Fraud in the execution
Duress
Nonexistence of subject matter
Illegal

32

Defenses that are VOIDABLE

Fraud in the inducement
Duress
Mental incompetence
Undue influence

33

6 contracts that require a writing

MY LEGS

1. Consideration is Marriage
2. Cannot be performed w/i 1 Yr
3. Sale of interest in property
4. By Executors
5. Sale of Goods $500+
6. To act as Surety (pay the debt of another)

34

Accord and satisfaction vs. nova room

A&C = same parties, new agreement
Notation= same agreement, sub party