Exam 3 - Contracts Flashcards
(83 cards)
1
Q
offeror
A
-One who gives the offer, offeror is master of the offer
2
Q
Offeree
A
- one to whom offer is given, can choose to accept or not
- Power to bind offeror to contract simply by accepting
3
Q
Unilateral contract
A
-Only one party makes a promise
4
Q
Bilateral contract
A
- Both parties make promises
- Contract is formed as soon as promises are made
5
Q
Express
A
Parties have directly stated the terms of the contract orally or in writing at the time that the contract was formed
6
Q
Implied
A
Surrounding facts and circumstances imply that an agreement has indeed been made
-Example: when you go to the doctor, implied that they will use reasonable care to treat you
7
Q
Void
A
- Create no legal obligation, no remedy is given
- Example: contract to commit a crime
8
Q
Voidable
A
- One or more of the parties has the legal right to cancel their obligation of the contract
- Example: contract induced by fraud or duress
9
Q
Executory
A
The parties have not yet fully performed their duties
10
Q
Executed
A
When all parties have fully performed their duties
11
Q
Present intent to contract
A
- Intent to enter the contract upon acceptance
- Look as outward manifestation of intent (words, acts, and circumstances to signify intent)
12
Q
UCC Article 2 applies to…
A
- Only contracts for sale of goods
- Does NOT apply to sale of real estate, intangibles, or service contracts (for this, use common law)
13
Q
Hybrid contracts
A
- Contracts involving both goods and services
- Whichever predominates the contract is what applies (major purpose of the contract)
- Services that involve significant skill or judgement in addition to goods is probably common law (not UCC)
14
Q
Trend in modern common law?
A
- Courts have a tendency to apply Code contract concepts by analogy to contracts that are not covered by the UCC
- Also, if no Code rule applies, sometimes use relevant common law rule
15
Q
Merchant
A
- Held to a higher standard under the UCC
- person who regularly deals in the kinds of goodsbeing sold, pretends to have some special knowledge about the goods, or employed an agent in the sale who fits either of these 2 descriptions
16
Q
Definiteness under Common Law
A
- Traditionally, required a high standard of definiteness for offers (all essential terms of contract be stated in the offer)
- Trend in modern courts is to tolerate a lower degree of specificity in agreements than classical contract law
- Still, if important aspects are left out, not likely to be enforceable
17
Q
Definiteness under UCC
A
- Often creates contractual liability where no contract would have been created under UCC
- Because parties left out important parts does not mean that they their agreement is too indefinite to enforce
18
Q
Gap-filling rules
A
Under UCC, courts can fill contract terms left open on matters such as price, quantity, etc.
19
Q
Communicated to offeree
A
Must be communicated directly to offeree to be enforceable
20
Q
Advertisements
A
-NOT considered offers, but rather an invitation (or offer) to negotiate
21
Q
Rewards
A
-Generally treated as offers for unilateral contracts
22
Q
Auctions
A
- Sellers at an auction generally treated as making an invitation to offer
- Those who bid, making offers that the owner of the good can then accept or reject
23
Q
Unconscionable contract (UCC)
A
- Grossly unfair or one-sided
- Gives courts broad discretionary powers to deal fairly with such contracts
24
Q
Goods
A
Goods are tangible, movable, personal property
25
Revocation rule:
General rule: offers are revocable. UNLESS:
1) Option Contract
2) Unilateral contract
3) Promissory estoppel
4) Firm offer
26
Option contract
- Option is a separate contract where offeror agrees to not revoke for a certain amount of time in exchange for something (money, often)
- Selling away right to revoke
27
Unilateral contract
Since offeree must fully perform requested act in order to accept the offer, this would be unfair so offeror cannot revoke
28
Promissory estoppel
If offeree RELIES of the offer being kept open, offeror can be kept from revoking
29
Firm offer
```
-Offer for sale of goods ONLY
MUST be
-Made by offeror who is a merchant
-Contained in signed writing
-Give assurance that the offer will remain open
```
30
Rejection
- Offeree can expressly reject (say no)
- Can also impliedly reject by making counteroffer
- Either form terminates the power to accept the offer
- Only effective when actually received by the offeror
31
Automatic termination occurs when:
- Death or insanity of either party
- Destruction of subject matter
- Intervening illegality (becomes illegal before accepted)
32
Common law: mirror image rule
- Acceptance must be mirror image of the offer
- Attempts to change terms or add anything to the offer are seen as counteroffers (impliedly reject)
- More recently, more liberal application of mirror image rule, only material differences in offer and acceptance result in implied rejection
33
Grumbling acceptance
-STILL an acceptance, even if grumbling but agrees to terms still accepts
34
Battle of forms
- Has changed mirror image rule for contracts involving sale of goods (UCC)
- Everything that is the same on both forms becomes the contract
- Additional items are treated as proposals for addition to the contract
35
Mailbox rule
- Properly addressed and dispatched acceptances can become effective when they are dispatched even if they are lost and never received by offeror
- Offerors can stipulate in offer that must actually receive acceptance to be effective
36
Mailbox rule under common law
- Traditionally, acceptances effective upon dispatch when impliedly or expressly authorized means
- Nonauthorized would be accepted when received
- Restatement holds that any reasonable method is effective on dispatch
37
Mailbox rule under UCC
- Any reasonable means unless specified
- Effective on dispatch
- Unreasonable means still effective on dispatch if received within time that an acceptance by reasonable means would normally arrive
38
Acceptance
1) offeree intended to enter the contract
2) Offeree accepted by terms proposed by offeror
3) communicated acceptance of the offer
39
UCC nonconforming goods
- Offer may be accepted by prompt or current shipment of goods
- Shipment of either conforming or nonconforming goods is an acceptance of the offer
40
UCC accomodation
-
41
Acceptance in unilateral contracts
Fully performing requested act
42
Acceptance in bilateral contracts
-Can accept expressly or impliedly by taking action that indicates agreement
43
Silence as acceptance
- Silence is generally NOT an acceptance
| - In the case of a quasi-contract, can create a duty
44
Consideration
Legal value bargained for and given in exchange for an act or promise
- Not enforcceable unless promisee has given up something of legal value in exchange for promise
- Can be act (uni) or promise (bi)
45
Legal value
-Does something had no prior legal duty to do or does not do something has a legal right to do
46
Adequacy
-Inadequacy alone cannot set aside contract unless gross inadequacies
47
Illusory promises
- If promise does not bind promisee to do or refrain from doing anything
- Lack mutuality of obligation to be enforceable
48
Quasi contract
If you knowingly receive benefit, you then have a duty to pay (someone painting your house and you know, you have to pay them then)
49
Preexisting duty
Agreeing to perform a preexisting duty does not give consideration
-Preexisting contractual duty: requires new consideration to be enforceable
50
Preexisting public duty
Public officials have preexisting legal duties to perform their public responsibilities (unenforceable)
51
Unforseen circumstances
-Generally, courts will enforce an agreement to modify an existing contract if the modification resulted form unforseen circumstances
52
Forbearance to sue
An agreement by a promisee to refrain from filing suit can be valid consideration to enforce a return promise
53
Liquidated debt
- Debt that is due and certain, no good faith dispute about existence or amount
- Promise to discharge a liquidated debt for part payment is not enforceable
54
Unliquidated debt
- Good faith disagreement about existence or amount
- Settlement of unliquidated debt is called an accord and satisfaction
- When A&S has occurred, creditor cannot request remaining amount
55
Ratification
- Of a voidable contract
- Person who has a right to rescind has decided not to
- Ratification ends right to rescind
56
Misrepresentation
- AN assertion that is not in accord with the truth
- When enter into contract relying on misrepresentation, contract is voidable
- Can be innocent or fraudulent - both give right to rescind
57
Scienter
- Distinguishes fraud from innocent misrepresentation
- Committed knowingly and with the intent to deceive
- May be liable for damages (possibly punitive damages) for tort of deceit -> would have to also prove that suffered actual economic injury
58
Concealment
-Active conduct to keep other party from discovering some fact is equivalent to of an assertion
59
Materiality
-If misrepresentation was innocent, person seeking to rescind contract must establish that the fact asserted was material
(Fraudulent does not have to be material)
60
Mistake
- Belief about a fact that is not in accord with the truth
- Mistake alone is not sufficient for avoidance of the contract
- For mutual mistakes, reformation rather than avoidance
- For unilateral mistake, must show either of the following
1) Non-mistakenn party caused or had reason to know of the mistake
2) It would be unconsionable to enforce contract
61
Duress
-Wrongful coercion that enduces a person to enter or modify a contract
-Contract considered voidable at the option of the victimized person
1) induced by improper threat
2) No reasonable alternative but to enter contract
Example: gun to head
62
Undue influence
- Undue persuasion, wrongful pressure but through persuasion rather than coercion
1) Relationship of parties is one of trust or confidence or dominates power
2) Persuasion is unfair
63
Capacity
```
Ability to incur legal obligations and acquire legal rights
Those who lack capacity:
-Minors
-Mental Illness
-Intoxicated persons
```
64
Adjudicated impairment
-Contract considered void if the court had already adjudicated one of the parties mentally imcompetent or so impaired that he could not manifest assent (coma)
65
Minors - right to disaffirm
- Exercise a right to disaffirm a contract
- Any words or acts from minor that communicate desire to cancel contract can constitute disaffirmance
- If affirm, adult must perform. Puts adult at a disadvantage
66
Emancipation
- Termination of parent's right to control a child and receive services and wages from him
- No formal requirements for emancipation
67
Necessaries - minors
-Disaffirming minors are required to pay reasonable value of necessaries she has received
68
Intoxication
- Only affects capacity when it is so extreme that the person lacks the ability to understand the nature of the business at hand
- Similar to mental impairment but courts generally much less sympathetic
- Rare for a person to actually escape contractual obligations due to intoxication
69
Illegality
- Illegal becasue either legislature declared type of contract unenforceable because it violates public policy or other sources of law
- If the enforcement of an agreement would create a threat to public policy, court may determine it is illegal
70
Illegal agreements - 3 main categories
1) violates statutes
2) violates public policy
3) unconscionable agreements and contracts of adhesion
71
Contract of adhesion
- Offered by someone with significant bargaining power
| - No opportunity to negotiate
72
Condition
-Future uncertain event that affects the party's duty to perform
73
Condition precedent
Future, uncertain event that creates a duty to perform
- If condition does not occur, performance does not become due
- If does occur, duty to perform arises
74
Concurrent condition
-When contract calls for parties to perform at the same time, each person's performance is conditioned on the performance of the other
75
Condition subsequent
- Future uncertain event that discharges duty to perform
| - Duty arises, then is discharged if event happpens
76
Express condition
Specified in the language of the contract
77
Satisfaction of 3rd party
Often for construction, common to provide that builder or engineer has to approve
-If approval of 3rd party not received, builder cannot receive payment
78
Personal satisfaction
-SOmetimes provide that duty is contingent upon satisfaction with the performance
79
Waiver
- Grounds for excusing a condition
| - Person whose duty is conditional gives up his right to the occurance of the condition, then condition excused
80
Estoppel
-Person whose duty is conditional leads the other party to rely on his non-insistence on the condition, condition excused
81
Strict performance standard
Standard of performance that requires virtually perfect compliance with the contract terms
82
Good faith
Imposed duty by UCC
Imposed by law, neither party will do anything to keeep the other party fom receiving benefits of the contract
Breach can give rise to contract remedies
83
Materiality of the breach
- Material breach occurs when performance fails to reach level of performance that promisee is justified
- Right to withold and right to damagest4
