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| a contract that one party can set aside; aka choose to be bound to the contract |
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| if an agreement is void, it is unenforceable |
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| neither party has started to perform their duties, also, any contract that is not fully executed |
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| both sides have performed all duties of the contract |
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| Promise for an act. Contract becomes a contract when the act is performed |
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| promise for a promise; becomes a contract when promises are exchanged |
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| a contract is formed by the words |
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| a contract is formed based upon the conduct of the parties |
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| is not a contract, but the court will treat it as a contract to avoid unjust enrichment. Is NOT an implied contract. |
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| each state has its own contract law known as common law. |
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| Uniform Commercial Code Article 2 |
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| Federal law, used for the sale of goods only. |
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| If minerals are sold and the seller extracts you use |
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| If minerals are sold and the buyer extracts you use |
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| T/F Every state except Louisiana and Michigan have adopted the UCC article 2 |
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| False, only Louisiana has not accepted it |
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| T/F Crop yields are not covered by the UCC |
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| False, they are considered goods |
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| Services are/aren't covered by UCC |
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| Intellectual property is/isn't covered by UCC |
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| goods and services bundled together. Which is used depends on which is dominant, not dollar value. |
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| Convention on the International Sale of Goods (CISG) |
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| the article 2 for international trade |
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| Requirements for a Valid Contract |
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| 1)Offer and Acceptance known as AGREEMENT 2)CONSIDERATION:both sides must give consideration which is the m oney property an act a service or not doing something of legal value. 3)CAPACITY 4)LEGALITY 5)REALITY OF CONSENT:both parties have to give their knowing and intelligent consent 7)STATUTE OF FRAUD: valid but unenforceable if it is not in writing. |
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| Requirements for an Offer |
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| 1)Intent to make the offer 2)Definite terms within the offer 3)Communicated to the offeree |
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| Article 2 section 204 ** Check |
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| requires more lienient definteness than the UCC |
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| T/F Only the offeree can accept |
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| True, cannot pass to someone else |
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| T/F Only the offeror can choose to communicate to the offeree |
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| T/F Prices are invitations to make an offer to buy |
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| True, because they have limited quantities |
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| must communicate to the offeree before they accept that the offer is revoked. Effective when recieved |
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| 7 ways to terminate an offer |
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| 1)Lapse of time: offer is specified to last certain # of days 2)revoke the offer 3)Rejection 4)Destruction of the subject matter 5)Death 6)Insanity 7)Superviewing Legality (new law is passed that makes offer illegal before acceptance |
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| Common Law Revoking Offer Rule |
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Definition
| anytime prior to acceptance. exception: if you give the offeror consideration for holding the offer open |
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| UCC 2-205 Revoking Offer Rule |
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| Called a firm offer, offer is irrevokable with all four following items with no need for consideration: 1)Contract for sale of good 2)offeror must be a merchant 3)Must be written and signed (by offeror) 4)Offer must indicate it is irrevokable END RESULT: offer is irrevokable for the time stated or for a reasonable period of time (never more than 3 months) |
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| T/F 2-206 deals with the acceptance of an offer |
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| T/F An acceptance is valid when sent unless otherwise stated by the offeror |
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| Exception to valid acceptance |
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| If a rejection is mailed first, followed by an acceptance, the rule is: first to be recieved |
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| Allows a common law unilateral contract to become a bilateral contract |
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| terms in an offer must be identical to terms in acceptance, additional terms constitute a counter offer under common law |
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| Exception to mirror image law, additional terms make a contract depending on certain situations |
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| 1) If neither or one of the parties is a merchant: offerors terms control, offeree's terms are proposals to be accepted by the offeror 2)If both are merchants offeree's terms control |
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| 2-207 exception to the "if both are merchants, offeree controls" rule |
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| 1)Unless offeree's terms materially alter the contract 2)Unless offeror's offer states their terms control 3)Unless the offeror objects to new terms within a reasonable period of time |
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| T/F Both sides must give consideration |
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| T/F Equity of consideration is necessary on the part of both parties |
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| False, if both sides knowingly and willingly enter into a contract, equity is irrelevant |
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| Both sides must each recieve a benefit and must suffer a detriment |
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| T/F Doing something that you are legally obligated to is NOT consideration |
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| True, police officer example |
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| T/F Satisfaction is consideration |
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| T/F Under common law, modification of a contract requires both parties additional consideration |
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| True, satisfaction cannot be used to meet the additional consideration and both sides must agree to the modification |
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| Deals with modification of contracts, a modification under the code is ok with no additional consideration, but both parties must agree |
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| T/F Love and affection is valid consideration |
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| T/F Past consideration is valid consideration |
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| T/F Moral obligations are valid consideration |
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| Debt that is not in dispute, partial payment tendered as 'full payment' will NOT discharge the debt |
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| amount is in good faith dispute, partial payment will discharge all debt if accepted |
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| if a person makes a promise, and another party relies on that promise and makes a change in condition, that promisor must fulfill the promise. Mainly applies to charitable donations |
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| Common Law Rule of Capacity |
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| agreement is voidable only by the minor |
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| if the minor wants to be bound by the contract after they are 18 they have to ratify |
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| T/F A minor can disaffirm a contract any time before turning 18 or a reasonable time after |
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| T/F A minor can ratify a contract at any time |
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| T/F Marriage and Military contracts are not voidable |
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| If a minor disaffirms they get: |
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| Everything back, only ahve to give back what they have left |
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| Contract is still voidable but minor must make other party whole |
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| basic food, shelter, clothes |
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| 2 ways courts decide what is a necessary |
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Definition
| 1)Using your status as a guide 2)If your parents would NOT provide it for you |
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| If a minor enters into a contract for a ncessity: |
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| Contract is still voidable, minor is not liable under contract law, but is liable under quasi-contract theory for fair market value of the goods |
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| The point of the necessary rule is to |
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| avoid unreasonable enrichment |
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| 2 groups of insane people |
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Definition
| 1)Walking Insane or unadjudicated 2)Judicated insane: have been judged to be incompetent |
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| Rules of capacity for walking insane |
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| voidable by insane party, ratification rule same as for minor, disaffirm same as minor, must make other party whole, necessities are treated same as the minor |
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| Rules of capacity for judicated insane |
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| all contracts are void, guardians usually appointed, only guardian can enter into contract for them |
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| Rules of capacity for drunks |
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| if you understand your actions, contract is void, if you can prove you couldn't understand the contract is voidable, must make other party whole, ratify and disaffirm rules same as minor, habitual drunkards are the same as judicated insane = void |
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| 2 ways for an agreement to be illegal |
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| 1)Violates a statute 2)Contrary to public policy |
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| T/F Illegal agreements are void |
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| 3 exceptions to illegal agreements |
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| 1)If the parties are notin pari delicto (not equally guilty)2) if the statute is there to project a group of people are you are in that group 3)If part of the agreement is legal and part is illegal |
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| charging a higher rate of interest than is allowed by law |
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| T/F Usuary is also applicable to corporations |
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| lender can recover only allowable interest |
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| part of a sale of a business or in a contract for employment, prevents owner/employee from opening or working for a competitor to the main business. |
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| required to do business, contracts entered into by unlicenced people are void. If it is a non-regulatory (aka a fee based one) then the contract is valid and the state will sue the non-licneced person |
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| tries to eliminate liability, illegal and unenforcable |
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| T/F anything agreed upon that is against public policy is not valid |
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| Certain contracts have to be in writing; most contracts do not |
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| If a contract is within the Statute of Frauds it is: void, voidable, valid |
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| Valid, but is not enforceable |
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| If a contract is within the Statute of Frauds, not in writing but executed it is: void, voidable, valid |
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| T/F The SOF protects against excutory contracts |
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| T/F A written contract has a specific format and must be signed by the person being sued |
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| F, no format, must be signed by person being sued |
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| 1)Promise in consideration of marriage 2)If the contract cannot be performed within one year 3)Sale of Land or interest therein 4)Promise to pay for the debt of another 5)Executor or Admin promise to pay the debt of decendent out of their own pocket |
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| T/F A contract is valid without writing if it is possible within one year |
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Definition
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| T/F Timing on a contract starts when you start executing it |
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| Part Performance Doctrine |
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| If the buyer takes posession of land and tenders payment and/or improves the land, an oral contract is valid. |
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| T/F To pay the debt of another it must be a primary promise |
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| False, it must be a secondary promise (collateral promise) |
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| If the party making the secondary promise has an interest in the payment of debt, it does not have to be in writing. |
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| 1)Sale of Goods $500 or more 2)Parole Evidence Rule |
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| 3 Exceptions to 2-201 rule 1 |
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| 1)Custom Goods that can't be sold 2)Admiting in court will enforce the quantity so admitted 3)Court will enforce the contract for the quantity of goods received and paid for |
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| Oral or Written statements occuring prior to or during hte signing of the contract are excluded and not allowed to alter the written contract. Subsequent Statements are ok to modify the contract. |
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| T/F The UCC Firm offer uses consideration to keep an offer open |
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Definition
| False, if there is no consideration, even if it is a good, it defaults to common law. |
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| T/F The offeree can form a unilateral contract by promising and therefore creating a bilateral contract |
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| T/F In bringing a party back to status quo with necessities, the status quo is the original price paid |
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| False, necessities require fair value, it could or couldn't be the same as the original price |
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| T/F Borrowing money is considered a necessity |
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| T/F Borrowing money is considered a necessity |
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| valid contract because it is mutually binding |
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| not a binding obligation, not a contract |
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