Module 2: Contracts II

Question 1

voidable contract

Answer 1

a contract that, in certain circumstances, an aggrieved party can choose to keep in force or bring to an end

Question 2

void contract

Answer 2

a contract involving a defect so substantial that it is of no force or effect

Question 3

legal capacity

Answer 3

the ability to make binding contracts (must not be a minor, must have mental capacity)

Question 4

economic duress

Answer 4

the threat of economic harm that coerces the will of the other party and results in a contract - voidable at the option of the party who was victim to duress

Question 5

undue influence

Answer 5

unfair manipulation that compromises someone’s free will or choice: includes actual pressure and presumed pressure (based on relationship)

Question 6

unconscionable contract

Answer 6

an unfair contract formed when one party takes advantage of the weakness of another; 2 elements: there must be substantially unequal bargaining power, and terms of contract must be grossly unfair . almost like fraud / exploitation

Question 7

misrepresentation

Answer 7

a false statement of fact that causes someone to enter a contract

Question 8

rescission

Answer 8

the remedy that results in the parties being returned to their pre-contractual positions

Question 9

fraudulent misrepresentation

Answer 9

speaker has a deliberate intent to mislead or make the statement recklessly without knowing or believing that it is true

Question 10

negligent misrepresentation

Answer 10

speaker makes the statement carelessly or negligently

Question 11

innocent misrepresentation

Answer 11

speaker has not been fraudulent or negligent, but has misrepresented a fact. by process of elimination, the misrepresentation is merely innocent

Question 12

mistake

Answer 12

an error made by one or both parties that seriously undermines a contract; most common type is a mutual mistake

Question 13

common mistake (aka mutual mistake)

Answer 13

both parties, without fault, are mistaken about an ESSENTIAL TERM of the contract (fundamental assumption)

Question 14

rectification

Answer 14

a remedy available where parties have made a mistake in recording their agreement and based on establishing the specific terms actually agreed to; typographic or clerical mistake

Question 15

non-solicitation clause

Answer 15

a clause forbidding contact with the business’s customers

Question 16

non-competition clause

Answer 16

a clause forbidding competition (no-compete)

Question 17

vicarious performance

Answer 17

performance of contractual obligations through others

Question 18

novation

Answer 18

the substitution of parties in a contract or the replacement of one contract with another

Question 19

termination by frustration

Answer 19

contract is terminated on the basis that work that was to be performed is simply impossible

Question 20

privity of contract

Answer 20

there is a contract between the parties as intended (can only be a breach of contract if concerning the parties in the contract)

Question 21

condition

Answer 21

if breached, innocent party has right to terminate the contract and claim damages

Question 22

warranty

Answer 22

minor term that if breached, gives innocent party right to claim damages only (not terminate)

Question 23

innominate term

Answer 23

a term that cannot easily be classified as either a condition or a warranty

Question 24

anticipatory breach

Answer 24

a breach that occurs before the date for performance

Question 25

damages

Answer 25

monetary compensation for breach of contract or other actionable wrong

Question 26

expectation damages

Answer 26

damages that provide the plaintiff with the monetary equivalent of contractual performance

Question 27

punitive damages

Answer 27

an award to the plaintiff to punish the defendant for malicious, oppressive, and high-handed conduct

Question 28

test for remoteness

Answer 28

damages must have been anticipated or having "Arisen naturally" from the breach, or if difficult to anticipate, are reasonably foreseeable because those unusual circumstances were communicated upfront (i.e. the $50mil raptors bid)

Question 29

interlocutory injunction (or just injunction)

Answer 29

an order to refrain from doing something for a limited period of time (an order for someone to not do something) ; opposite of specific performance

Question 30

unjust enrichment

Answer 30

occurs when on party has undeservedly or unjustly secured a beneft at the other party's expense

Question 31

restitutionary quantum meruit

Answer 31

an amount that is reasonable given the benefit the plaintiff has conferred

Question 32

valid but unenforceable contracts

Answer 32

exist, but cannot be enforced i.e. Statute of Frauds (some contracts must be in writing in order to be enforceable)

Question 33

looking forwards

Answer 33

contract law - we put the innocent person in the position they WOULDVE BEEN IN if contract was properly performed. EXPECTATION of where she expected to be

Question 34

looking backwards

Answer 34

tort law - put innocent person in position they were in BEFORE the incident occurred

Question 35

remoteness

Answer 35

damages that are not reasonably foreseeable (i.e. 50mil example, forest guy in stretcher)

Question 36

mitigation

Answer 36

legal duty of innocent person to keep damages relatively low (i cant use your breach of contract as an excuse to live in a lavish hotel and sue you for those costs because u didnt build my floor properly)

Question 37

negotiable instruments

Answer 37

based on ability to assign rights under the contract; i.e. cheque, asset-backed commercial paper

Question 38

Statute of Frauds

Answer 38

written proof to prevent fraud and perjury