Test 2 Flashcards
(47 cards)
Contract Elements
- Agreement/ “Mutual Assent”
- Consideration
- Capacity
- Legality of Object
Contract Defenses
- Assent is Genuine (No uress, undue influence, misrep, or mistake)
- Statute of Frauds - (mus be written)
If contract involves products and other?
Governing law depends on the predominate factor (goods or other)
Classify Contracts
Bi vs Uni
Bilateral - Mutual promises
Unilateral - One party promises, other actions by action or refraining from action
Classify Contracts
Express v Implied
Express – both parties manifest assent by word
• Implied (“Implied in Fact”) – Conduct indicates a
contract.
• Elements:
• The P provided property or services to the D
• The P expected to be paid by the D for the property or services
and did not not provide the property or services gratuitously.
• The D was given an opportunity to reject the property or
services provided by the P but failed to do so.
Classify K
Valid….
Valid – All elements met.
• Void – Essential elements missing – Not a K.
• Voidable – Defective Contract – Still a K, but “may” be
voided by one or both parties.
• Examples: Fraudulent Misrepresentation, Duress
• Unenforceable - It is not void or voidable, but there is a
legal defense to the enforcement.
• Statute of Frauds, Statute of Limitations
Mutual Assent
An agreement between the parties.
Classic: Offer and Accept (Words or Conduct)
Objective Standard!
• Assent, agreement, or intention of a party as it reasonably
appears from words or conduct.
Not Valid if - Duress, Undue, Influence, Fraud, Nonfraud Misrep
Offer Elements
Intent (Joke Excited, or Frustration - RP Obj Std)
Communication - OR to EE (Advertised reward for lost watch - Offeree must know of offer to accept)
Definitiveness
Lucy V Zehmer
Farm case - specific performance because to an RP, this constituted a contract - included revision so that wife could sign it, etc.
Offers, Invitation for Offers, Ads
Valid Offer: •“I will buy your car for $25,000.”
•Invitation for an Offer/Preliminary Negotiations:
•“Would you be interested in selling me your car for $25,000?”
•Frodo tells Sam that he is thinking of selling his textbook and asks if Sam would pay $100 for the book.
Ads - Generally solicitation for offer, unless ULTRA specific. Unilat Offer if includes a reward in the advertisement (fuzzy socks to first 20 in line)
Termination of Offers
Operation of Law (Destroyed, Death, Later Illegal, Lapse of Time)
Parties’ Actions: - Revocation
-Rejection (expressed or implied word, conduct, silence)
-Counteroffer
-Accept (K)
Revocation
Free to revoke anytime b/f accept
even if told by 3rd party
Exceptions:
Option Contract ($$ to OR to keep offer open)
UCC: Firm Merchant Rule (UCC - if merchant says in writing that offer will be held open, must honor offer for RP time)
Irrevocable Offers of Unilateral K - Unilat, can revoke before thy start, but once they start, must give them RP time to complete
Acceptance
Dispatch. - Show willingness to enter K
Unilat - Performance with intent of accept
Bilat - Communication (grumbling accept counts)
Generally silence is not accept, unless you agree (Netflix)
Acceptance Alters Offer
Common Law - Services
Mirror Image Rule - If diff at all, it’s reject and counter
UCC: If essential terms are agreed upon (Price, Quant, Deliv) K is formed unless Acceptance Form must be agreed upon in Entirety
Mailbox Rule
Offer, Rej, Rev: Effective upon receipt
Acceptance: Effective upon dispatch
Three Exceptions where Accept is effective on Receipt:
-OR states such in offer
-EE sends Rej, then Accept. First to arrive wins.
-Sent by unreasonable means
Means of Acceptance
-EE must use means required; if EE uses a diff means it =rejection and counteroffer
If no means stated: Reasonable means - effective on dispatch. Unreasonable - Effective upon receipt.
Consideration and Elements
something of legal value exch for a promise.
- Legal Sufficiency- Value (Money, Promise not to smoke, Promise to put a scholarship in someone’s name)
- Bargained-for Exch - intentionally entering a BFE of promise. (No include Gift promise until transferred, No past consideration)
Legal Sufficiency
-Preexisting legal duty - NO
-Modification - Common Law says mod must have new consid. UNLESS unforeseeable.
UCC says new consid not need, but both in GOOD FAITH
Settlement of Dispute
Undisputed - must have mutual new consideration if discount given (paid a week earlier) to be binding
Disputed - pay less than agreed to (PIF) - If A accepts, it’s binding, both waive right to sue - accord and satisfaction
Legal Sufficiency: Illusory Promise vs. Conditional
Illusory - Not a K, except Satisfaction Clause = Personalized - taste. Other - RP
Conditional - K - based on outside factors, effective K when entered, not when condition is met
Promissory Estoppel / Detrimental Reliance
Promissory Estoppel NEVER MAKES A K.
Exception to Consideration - based on injustice, equitable request to enforce the promise.
Elements:
-OR makes promise to EE
-OR should reasonably expect EE to rely on promise
-EE actually relies on it to their detriment
-Injustice would be caused if promise not enforced
Conduct Invalidating Assent:
Fraud
- Fraud in Inception - don’t know you’re signing a contract, you’re told it’s a petition
- Fraud in induce or Fraud Misrep - VOIDABLE by innocent party if Fraud or Material
Elements of Fraud Misrep
False rep Of Fact Material (Big Deal) Intention to deceive (knew it was a lie) Rep is justifiably relied upon - don't have to investigate Innocent party injured
-Includes denial of knowledge
Doesn’t count as Fraud misrep if the truth is in the K. Watch out for TOO GOOD TO BE TRUE deals - check K
Nonfraud Misrep
-Material, false factual stmt that induces another to justifiably rely - made without scienter ( lacks intent to deceive)
-Voidable because it has to be material
Includes Negligent Misrep (careless in ascertaining truth) and Innocent Misrep (no knowledge of falsity, no carelessness)
K is reversible if FRAUDULENT or MATERIAL. Damages if both.
