Term
| What is the difference between a promise that is contractual and one that is not contractual? |
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Definition
| A promise is an assertion that something either will or will not happen in the future. A promise that is contractual is one that a court will enforce |
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Term
| What is objective judgement of contract formation? |
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Definition
| Contract formation is judged by its outward, objective fact as interpreted by a reasonable person, rather than by the party’s own secret, subjective intentions |
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Term
| Four elements of a contract |
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Definition
| (1) Agreement, including offer and acceptance (2) Consideration - something of value received or promised; incentive to enter into the deal. (3) Contractual capacity - parties must be recognized by law as competent and qualified (4) Legality - Contract's purpose must be legal |
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Term
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Definition
| In a bilateral contract the offeree must only promise to perform (“a promise for a promise”), and the contract comes into existence at the moment the promises are exchanged |
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Term
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Definition
| In a unilateral contract, the offer is phrased so that the offeree can accept the offer only by completing the contract performance |
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Term
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Definition
| The terms of the agreement are fully and explicitly stated in words, oral or written |
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Term
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Definition
| A contract that is implied from the conduct of the parties is an implied-in-fact contract (1) plaintiff furnished some service or property (2) plaintiff expected payment for said service or property; defendent knew or should have known payment was expected (3) defendant had a chance to reject the services or property, and did not |
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Term
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Definition
| Has not been fully performed by the parties. If one party has fully performed but the other has not, the contract is executed on one side and executory on the other, but executory overall. |
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Term
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Definition
| A contract that has been fully performed on both sides |
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Term
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Definition
| A valid contract that can be voided at the option of one or both parties |
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Term
| What situations make a contract voidable? |
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Definition
| 1) Entered into by minors or by someone with a mental incapacity 2) Entered into by someone under undue influence 3) Not formed correctly (legal rules are breached) 4) The statute of limitations has expired |
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Term
| What is an unenforceable contract? |
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Definition
| One that cannot be enforced because of certain legal defenses against it; it is a valid contract rendered unenforceable by some statute or law |
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Term
| What is a void agreement? |
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Definition
| A void contract is no contract at all; has no legal force or binding effect |
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Term
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Definition
| A promise or commitment to do or refrain from doing some specified thing in the future |
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Term
| What does an offer create in the offeree? |
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Definition
| The offeree has the power of acceptance; once an offer is accepted it becomes a contract |
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Term
| What are the requirements for an offer? |
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Definition
| 1) The offeror must have a serious intention to become bound by the offer. 2) The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract. 3) The offer must be communicated by the offeror to the offeree, resulting in the offeree’s knowledge of the offer. |
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Term
| When is an offer effective? |
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Definition
| Once it is communicated to the offeree |
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Term
| Is an advertisement an offer? |
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Definition
| No. Advertisements are an "expression of intent to sell" or an invitation to bargain |
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Term
| What is acceptance, and when is it effective? |
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Definition
| Acceptance is a voluntary act (either words of conduct) by the offeree that shows assent (agreement) to the terms of an offer. It is effective when it is unequivocally communicated to the offeror in a timely manner |
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Term
| What is revocation, and when is it effective? |
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Definition
| Revocation is the offeror’s act of withdrawing an offer. The offeror can usually revoke the offer as long as the revocation is communicated to the offeree before the offeree accepts |
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Term
| What is rejection, and when is it effective? |
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Definition
| Rejection is the offeree’s refusal of the offer, and is effective when it is actually received by the offeror or the offeror’s agent |
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Term
| What is a counteroffer, and what two effects does it have? |
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Definition
| A counteroffer occurs when the offeree rejects the original offer and simultaneously makes a new offer. A counteroffer cancels the original offer and the offeree becomes the offeror of the new agreement |
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Term
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Definition
| Consideration is the value (such as cash) given in return for a promise or in return for a performance. Something of legally sufficient value must be given in exchange for the promise, and usually, there must be a bargained-for exchange. |
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Term
| What are the requirements for consideration? |
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Definition
| (1) Legally sufficient (2) Bargained-for exchange (3) Adequacy of consideration |
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Term
| Examples of agreements without consideration? |
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Definition
| (1) Preexisting duty (2) Unforeseen Difficulties (except in business contracts) (3) Past Consideration |
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Term
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Definition
| A doctrine under which a person has reasonably and substantially relied on the promise of another may be able to obtain some measure of recovery. Requirements: 1) There must be a clear and definite promise. 2) The promise must justifiably rely on the promise. 3) The reliance normally must be of a substantial and definite character.4) Justice will be better served by enforcement of the promise. |
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Term
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Definition
| The legal ability to enter into a contractual relationship.Denied to (1) Minors (2) Intoxication (3) Mental Incompetence |
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Term
| What does the legality requirement of contract law mean? |
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Definition
| For a contract to be valid and enforceable, it must be formed for a legal purpose. Contracts in violation of statutes or contrary to public policy do not meet the legality requirements |
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Term
| What kinds of illegal agreements are not enforced by the courts? |
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Definition
| Illegal agreements such as contract killings or contracts related to illegal gambling, for example, are not enforceable in the courts |
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Term
| What is a covenant not to compete, and when are they enforceable? |
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Definition
| covenant not to compete is usually part of employment contracts or sales of businesses. It must be reasonable as to time and geography. Someone buying a business is also paying for the goodwill of the former owner not to enter into direct competition with the former business |
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Term
| What kinds of agreements are deemed against public policy? |
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Definition
| Contracts in restraint of trade or competition generally are contrary to public policy |
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Term
| What kinds of mistakes are grounds for avoiding a contract? |
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Definition
| (1) Mutual Mistakes of Fact (2) Unilateral Mistakes of Fact (exceptions: when one party knew or should have known a mistake was made, and in cases of mistakes in addition/subtraction made inadvertently and without extreme negligence) |
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Term
| Elements of fraudulent misrepresentation? |
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Definition
| 1) A misrepresentation of a material fact must occur. 2) There must be intent to deceive. 3) The innocent party must justifiably rely on the misrepresentation. |
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Term
| Remedies for fraudulent misrepresentation? |
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Definition
| Recission and Restitution |
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Term
| What kind of relationship gives rise to the claim of undue influence? |
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Definition
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Term
| What is the effect of the court's presumption of undue influence? |
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Definition
| A contract entered into under excessive or undue influence lacks genuine assent and is therefore voidable. |
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Term
| What must one prove to avoid having a contract avoided on grounds of undue influence? |
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Definition
| One must prove to a standard of “clear and convincing” evidence that the person knew what they were doing when entering into the contract |
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Term
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Definition
| (1) Threats of physical harm (2) Other threats which are wrongful or illegal |
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Term
| What is an adhesion contract? |
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Definition
| Written exclusively by one party (the dominant party) and presented to the other party (the adhering party) on a take-it-or-leave-it basis. They are also known as Standard-Form Contracts |
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Term
| When is an adhesion contract held to be unenforceable? |
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Definition
| When the aggrieved party can show that the parties had substantially unequal bargaining positions and that enforcement would be manifestly unfair or oppressive |
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Term
| What is unconscionability? |
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Definition
| 1) Procedural – the contract is written to be overcomplicated so as not to be understandable by the party agreeing to it. 2) Substantive – the deal is really, really unfair. |
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Term
| What does the Statute of Frauds require? |
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Definition
| Certain types of contracts to be put into writing; it denies enforceability to certain contracts that do not comply with its requirement |
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Term
| What kinds of contracts fall within the Statute of Frauds? |
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Definition
| 1) Contracts involving interests in land. 2) Contracts that by their terms be performed within one year from the day after the date of formation. 3) Collateral, or secondary, contracts, such as promises to answer for the debt or duty of another and promises by the administrator or executor of an estate to pay a debt of the estate personally – that is, out of his or her own pocket. 4) Promises made in consideration of marriage (including prenuptial agreements) 5) Contracts for the sale of goods priced at $500 or more. |
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Term
| What is a suretyship promise? |
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Definition
| When someone promises to answer for the debt or duty of another, such as to pay someone else’s debt |
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Term
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Definition
| A contract is a private agreement between the parties who have entered into it, and traditionally these parties alone have rights and liabilities under the contract |
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Term
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Definition
| The transfer of contractual rights to a third party. When rights under a contract are assigned unconditionally, the rights of the assignor are extinguished |
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Term
| When is an assignment of contract rights not allowed? |
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Definition
| 1) When a statute expressly prohibits assignment of a particular right. 2) When a contract is personal in nature, the rights under the contract cannot be assigned if assignment will materially increase or alter the risk or duties of the obligor. 3) If a contract stipulates that a right cannot be assigned, then ordinarily the right cannot be assigned. |
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Term
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Definition
| The transfer of contractual duties to a third party. Normally, a delegation of duties does not relieve the party making the delegation of the obligation to perform in the event that the party to whom the duty has been delegated fails to perform |
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Term
| When is delegation not allowed? |
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Definition
| 1) When special trust has been placed in the obligor. 2) When performance depends on the personal skill or talents of the obligor. 3) When performance by a third party will vary materially from that expected by the obligee. 4) When the contract expressly prohibits delegation. |
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Term
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Definition
| Prevents a party to a written contract from contradicting (or sometimes adding to) the terms of the contract by seeking the admission of evidence "extrinsic" (outside) to the contract. You can avoid being harmed by it by making sure that you can meet your obligations under the written contract; if you can’t, you must have the written contract changed so that you can meet the obligations |
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