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| One may lack capacity for a number of reasons including Infancy, insanity or intoxication |
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under common law the age of majority was 21
general rule: infants are not liable of their contracts for either necessaries or non-necessaries, however minors (infants) are liable to quasi contract for reasonable value |
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are what is required to maintain one's life i.e. clothing food shelter medical care
case by case basis |
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| Infants (Minors) may disaffirm their contract at any time prior to reaching the age of majority, or with in reasonable time thereafter |
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A minor (infant) cannot ratify a contract prior to majority
may be oral, written, expressed, or implied
does not disaffirm by majority reach, may be deemed |
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Most states hold that a minor still is protected by law even when he/she misrepresents his/her age
however, minor may be liable for Tort of Fraud |
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a contract entered into by a person lacking the mental capacity to form a contractual intent is either void or voidable and adjudication of insanity, contract is void or voidable
may be liable under quasi contract |
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| Intoxication (drug or alcohol) |
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Definition
if person is so intoxicated that they do not understand act, they are treated as Insanity and its voidable
Liable under Quasi Contract
it is enforceable if if they made contract and judgement was bad |
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| One of the elements of a contact is "must have legal purpose or object" if illegal agreement is executory, court will not enforce it |
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| Contracts to commit crimes and civil wrongs |
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| wager agreements and other forms of gambling are void. state run lotteries are legal by legislation |
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| not same as gambling because it involves transferring the risk of occurrence of an event from one party to another |
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| These contracts are legal provided that a sale is intended when contract is formed |
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| Contracts to Interfere with Justice or Influence Gov. Action |
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Definition
| agreement to use corrupt influence to interfere with the performance of duties by a member of executive, legislative, or judicial branch of gov. is void |
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| if they involve the use of threats or intimidation they are unenforceable. if they do not have threats or other illegal acts they are not illegal |
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| There are contracts that are void because they violate public policy even though it does not run of any statue or the common law -shack, vs. Food Mackery case |
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| Contracts Violating Licensing Statues |
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Definition
| situation where one party to a contract fails to comply with terms of licensing statues |
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Definition
Charging a greater interest rate than allowed by law
court tends to make sure agreements doe not call interest rate something else; "Truth in Lending" |
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Definition
1. forfeiture of the entire amount of interest charge
2. both interest and principle are forfeited
3. only that amount that exceeds the usury is forfeited |
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| Sunday Agreements -"Blue Laws" |
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Definition
Law Prohibiting the making of certain contracts or sales on Sunday.Legal if protection of health life or property
unconstitutional if discriminates |
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Term
| Contracts of in Restraint of Trade |
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Definition
Under "Old common law" of agreement that placed a restraint on a man's right to pursue his trade or profession was void against public policy
>recently courts have permitted the enforcement of certain restrictive covenants not to compete |
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| OK to restrict if (3 reasons) |
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Definition
1. for reasonable length of time
2. Reasonable in geographic area of restriction
3. have the element of consideration |
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Term
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Definition
Both oral and written contracts are valid, although it is important to have important agreements in writing
Staue of Frauds-requires certain types of contracts in writing |
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-first enacted by english Parliament in 1677
-today, adopted by almost every state
-if contract contract needs to be in writing to be enforceable, it is aid to "fall within the statue" vice versa! |
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| Promise by Executor or Administrator |
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Definition
| a. In order for a creditor to bind a personal representative to a contract requiring him or her to pay a decedent’s debt out of his own assets, the contract must be written, or there be a written memorandum signed by the personal representative. *not required to be writing if made contract on behalf of estate |
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| Promise to Answer for the debt of another |
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Definition
| a. promise to pay debt incurred by another, contracts must comply with the statue to be enforceable, limited collateral promises |
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Definition
| "Sell goods to jones, and if jones doesnt pay, I will pay" (writing required) |
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| "(no writing required)Let jones have the goods and I will pay" |
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Term
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| Changes what appears to be a collateral promise to a primary promise which falls outside the statues(no writing required) when purpose for promising to pay another's obligation is for their own benefit |
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| Indemnity Contracts and Novations |
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Definition
| "fall outside statue" (no writing requirement both are considered primary promises |
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Term
| Agreement made upon Consideration of Marriage |
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Definition
a. does not apply to mutual promises to marry or engagement agreement
b. only occurs when marriage is part of the consideration given in return for some other performance ex. prenuptial Agreement (must be in writing) |
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| Contracts for the sale of an interest in Land |
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Definition
a. Not only sale of land, but also any interest in land (real estate sales contract, easement, mortgage, rights-of-way) falls within the statues.
b. Does a license to hunt on real estate full the statues? No! permission rather than sale |
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| Agreements not to be performed within one year from the time of their making |
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Definition
a. Courts hold that only contracts on which performance within a year from date of making is impossible fall within the statue (required in writing)
b. Statue of Frauds Section of UCC: any contract for sale of goods are UCC at a price of $500 or more must be in writing, or there be in writing on indication of the terms of agreement signal by party against whom enforcement is sought.
c. No particular form necessary – may be a letter, or series of letter, containing the terms of agreement |
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Term
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Definition
| Rule: one may not introduce oral evidence at a trial to contradict the clear, unambiguous terms of a written agreement. |
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Term
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Definition
| (intended to be a complete and final statement of the terms of the agreement) for the rule to apply |
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Term
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Definition
Evidence of any subsequent modification
Evidence that the contract is void or voidable
Evidence to explain ambiguity
Evidence to “fill in the gaps” if the written agreement is lacks one or more essential terms. |
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Term
| 3rd Party Creditor Beneficiary |
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Definition
| a. Occurs when the promisor obligates himself to satisfy a duty owed by the promisee to his creditor |
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Term
| 3rd Party Donee Beneficiary |
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Definition
| a. No-Debtor-Creditor Relationship; where the intent of promisee is to confer a gift upon a 3rd person. |
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Term
| 3rd Party Incidental Beneficiary |
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Definition
a. Where the 3rd party is only an incidental beneficiary
b. May not sue to enforce any of the contractual provision |
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Term
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Definition
| Generally, when 3rd party beneficiary has accepted, adopted, or acted upon the agreement, the parties may not change it without his/her consent The right of the third party is said to have “vested” |
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Term
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Definition
| An assignment under a contract occurs when one party transfers his rights under the agreement to a 3rd person |
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Term
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Definition
| person who transfers his contractual right (original party) |
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Term
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Definition
| the person whom the right is transferred to |
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Term
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Definition
| Party to the contract against whom the right may be exercise (original party) |
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Term
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Definition
| one may assign contrautal rights, but may not assign contractual duties. May ‘delegate’ contractual duties if they don’t involve personal service or personal attention of obligor. |
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Term
| Assignment of Claim of Money |
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Definition
| because the right to receive money isn’t personal in nature, it’s generally assignable. However, a contract may contain an “Anti-assignment Clause” which may prevent an assignment that would otherwise be possible |
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| Personal-Service Contract and Delegation of Duties: |
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Definition
| personal service contract, that involve the exercise of personal skill, judgment, taste, on knowledge are not assignable and may not be delegated. However, if the service or labor does not involve personal skill or trust and confidence that peculiar to the obligor, the duties may be delegated. |
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| Contracted Rights that may not be Assigned |
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Definition
| uture accounts or earning that are not founded on an existing contract are generally not assignable because the accountant or debt is merely speculative and has no potential existence. If the assignment increase the corresponding duty of the obligor, it is ineffective. |
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Term
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Definition
| when assignor transfers a contractual right to the assignee, he/she gives up ability to exercise that right against the obligor. |
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Term
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Definition
a. the assignee takes the assignment of contractual right subject to all defenses that obligor could raise against assignor.
i. i.e. the “assignee stand in the shoes of assignor” |
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Term
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Definition
1. there is no legal requirement that the assignee notify the obligor of an assignment, but it’s generally wise to do so, because notice protects the him/her 2 potential problems:
a. Obligor will pay assignor after assignment is made & discharge his obligation
b. Assignor may assign the claim to more than one assignee |
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Term
Multiple Assignments
English Rule: |
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Definition
| the first bona fide assignee for value to notify the debtor of assignment prevails, regardless of whether he/she is the 1st person to receive the assignment in point of time. Followed by majority of jurisdictions. |
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Term
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Definition
| 1st assignee in point of time prevails, regardless of which assignee gives notice first. |
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Term
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Definition
| There are a number of legal concepts that may result in the termination or discharge of the parties’ obligations under a contract |
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Term
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Definition
A condition is a clause in a contract that will shift, suspend, modify, or rescind on obligation based upon some operative fact or event.
May be express, implied infact, or implied in law.
Express conditions may be either conditions precedent conditions subsequent, or conditions concurrent. |
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Term
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Definition
1. A specified condition that must occur before the agreement between the parties can become binding or before a party is required to perform a duty or obligation under the contract.
a. Frequently used to shift the risk that a certain event will or will not occur from one party to another.
i. Ex. Manufacture enters a contract with clothier, terms of which provides manufacture, is to ship 100 pair of slacks at $10 per pair, “90 days after manufacture receives necessary cloth from supplier.”
ii. What’s condition precedent?
1. Often an event that must occur prior to or preceding a contractual obligation |
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Term
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Definition
1. an event that occurs after or subsequent to the point in time when one is obligated under a contract
a. Operates to cut off contractual liability
b. Ex. Goods sold under a “sale or return” policy. Retailer purchases watches on “sales or return” policy – watches haven’t sold gets return for credit. |
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Term
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Definition
1. when the parties under a contract are required to perform simultaneously.
a. Ex. Farmer agrees to sell 100 bushels of corn retailer for $10 per bushel, payment on delivery. The delivery of the corn and the payment take place simultaneously. |
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Term
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Definition
| once the required performance is completed, the party is discharge |
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Term
| Doctrine of Substantial Performance |
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Definition
| Applicable where full and exact performance of every detail of the contract has not been rendered but where there has been a Good-Faith attempt to perform the agreement, resulting in substantial compliance. When applicable, the party substantially performing under the contract is entitled o recover but subject to the right of the innocent party to be compensated for damages occasioned by defects in performance, but isn’t excused from performance. |
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| Doctrine of Partial Performance |
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Definition
a. When a portion of required performance is not completed, generally intentionally.
i. When innocent party has done nothing to prevent full performance and has not waived his or her right to full performance. There can be no recovery under the contract. However, if the innocent party accepts the benefits of a partially performed contract he or she waives right to full performance and must pay reasonable or fair value of performance accept. |
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| Performance to Satisfaction of Promisee |
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Definition
| Without a specific contractual provision, one may not refuse to pay for contractual performance on the sole ground that he or she isn’t satisfied with results, except contracts involving one’s personal taste, or, in some cases involving mechanical utility |
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Term
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Definition
a. Usually, failure to perform on time will not discharge the other party from performing, unless the parties consider “time to be of the essence,” in which case failure to perform on time will create a discharge.
i. Whether “time is of the essence” is a matter for court (intentions of the parties), on a case-by-case basis. Best to put it in the contract!!
ii. If no time for performance is stated in the contract, time for performance is “within a reasonable time.” |
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Term
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Definition
| Simply offering to render the performance due under the contract. |
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