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Definition
| Both parties exchange promises and the contract is formed as soon as the promises are exchanged |
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| Only one party makes a promise |
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Term
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Definition
| A contract that meets all of the legal requirements for a binding, enforcable in court |
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Term
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| Contracts in which one or more of the parties have the legal right to cancel their obligations under the contract, induced by fraud or duress is voidable at the election of the injured party |
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| Agreements that create no legal obligations and for which no remedy will be given, contracts to commit crimes |
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Term
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Definition
| Parties have directly stated the terms of their contract orally or in a writing at the time the contract was formed. However the mutual agreement necessary to create a contract may also be demonstracted by the conduct of the parties |
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Term
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Definition
| When the surrounding facts and circumstances indicate that an agreement has in fact been reached |
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Term
| Two bodies of law that govern contracts today: |
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Definition
| 1. Article 2 of the UCC 2.Common law |
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Term
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Definition
| Statutory law in every state except Louisiana, purpose was to establish a uniform set of rules to govern commerical transactions (often conducted across state lines.) Also create a body of rules that would realistically and fairly solve the common problems occuring in everyday commercial transactions, and to promote fair dealing and higher standings in the market place, expressly applies only to the contracts for the sale of goods (tangible, movable personal property) |
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Term
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Definition
| Court made law that, like all court made law, is in a constant state of evolution, govern contracts for the sale of real estate, services and intangibles |
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Term
| Basic Differences between two bodies of law that govern contracts? |
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Definition
| Article 2 concerned with rewarding people's legitimate expectations than with the technical rules. A court that applies Article 2 is more likely to find that the parties had a contract than is a court that applies to the common law. Article 2 sometimes gives less weight to technical requirements such as consideration. Article 2 expressly recognizes the concept of unconscionable contracts-one that is grossly unfair or one-sided and it gives the court broad discretionary powers to deal fairly with such contracts |
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Term
| Define merchant (in regards to Article 2 contracts) |
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Definition
| If a person regularly deals in the kind of goods being sold, or pretends to have some special knowledge about the goods, or employed an agent in the sale who fits either of these two descriptions, that person is a merchant for the purposes of the contract in question |
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Term
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Definition
| An offer is the critically important first step in forming a contract, "this is it-if you agree to these terms, we have a contract" |
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Term
| Who is the person who makes an offer? |
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Definition
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| Person to whom the offer is made |
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Definition
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| Requirements for an offer |
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Definition
| Courts look for some objective indication of a present intent to contract on the part of the offeror, courts look for specificity or definiteness in the terms of the alleged offer, courts look to see whether the alleged offer has been communicated to the offeree |
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Definition
| Offeror must indicate present intent to contract for a proposal to be considered an offer |
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Term
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Definition
| the intent to enter the contract upon acceptance, offeror is not joking |
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Term
| What is a problem with forming contracts? |
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Definition
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| Reason for requirement of definiteness? |
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Definition
| Definiteness and specificity in an offer indicate intent to contract, indefiniteness indicates parties are still negotiating and havent reached an agreement |
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Term
| In the common law: what if the price is not mentioned? |
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Definition
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| In the UCC: what if there is no mention of price |
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Definition
| Still an offer, reasonable price |
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Term
| Special offer problem areas: advertisements |
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Definition
| For sale of goods at specific prices generally not considered offers but invitations to offer or negotiate |
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Term
| Exceptions to advertisements being offers |
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Definition
| Ads offering rewards for lost property, info, or animals treated as unilateral contracts. To receive award offeree must perform request |
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Term
| Special offer problem areas: Auctions and bid |
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Definition
| Sellers at auctions and ads for bids are invite to offer, if individual bids seller may accept or reject |
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Term
| How can an offer be terminated? |
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Definition
| By revocation if revoked and communicated to offeree before the offer is accepted |
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Term
| Unambiguous statement (in revocation) |
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Definition
| Offeror to offeree of unwillingness or inability to contact |
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Term
| Unambiguous conduct (in revocation) |
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Definition
| by offeror indicating an unwillingness or inability to contrac that oferee is aware of |
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Term
| Exceptions to revocation: option contract |
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Definition
| offeror agrees not to revoke the offer for a stated time in exchange for some valuable consideration |
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Term
| Exceptions to revocation: offers for unilateral contracts |
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Definition
| the start of performance persuant to an offer to enter into a unilateral contract makes that offer irrevocable for a resasonable time to complete |
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Term
| Exception to revocation: promissory estoppel circumstances |
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Definition
| an offer cannot be revoked if there has been detrimental reliance by the offerree that is reasonably foreseeable |
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Term
| Exceptions to revocation: firm offers for the sale of goods |
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Definition
| An offer cannot be revoked for up to three months If: 1. contract for sale of goods 2. Signed, written promise to keep the offer open 3. The party is a merchant |
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Term
| Exceptions to revocation: rejection by offeree |
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Definition
| Offeree expressly rejets offer or impliedly rejects the offer by making a counteroffer |
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Term
| What happens if death or disability happens to either party of an offer? |
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Definition
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Term
| What happens if destruction of subject matter occurs in an offer? |
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Definition
| without the knowledge or fault of either party, offer terminated |
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Term
| What happens if performance becomes illegal in an offer? |
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Definition
| Offer will be terminated if performance becomes illegal before the offer is accepted |
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Term
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Definition
| A manifestation of assent to the terms of the offer made by the offeree in the manner invited or required by the offer |
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Term
| In determining if an offeree accepted an offer and created a contract a court will look at: |
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Definition
| 1. The offeree intended to enter into the contract 2. The offeree accepted on the terms proposed by the offeror 3. The offeree communicated his/her acceptance to the offeror |
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Term
| Common Law: Mirror Image Rule |
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Definition
| Acceptance must be in the mirror image of the offer on all material terms, offerree can not cahnge the terms |
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Term
| Common Law, Accepting: No rejection implied if… |
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Definition
| Inquiry regarding the terms: the oferee merely asks about the terms of an offer without indicating his rejection, or offeree accepts offer while complaining about it |
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Term
| UCC, Accepting: Mirror image? |
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Definition
| Changed mirror image rule for contracs involving sale of goods, allows formation of a contract even when there is some variance in the offer and the acceptance |
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Term
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Definition
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Term
| If the parties are both merchant, the additional terms become part of the contract unless: |
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Definition
| 1. the offer expressly limited acceptance to its own terms 2. the new terms would materially alter the offer 3. the offeror gives notice of objection to the new terms within a reasonable time after receiving the acceptance |
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Term
| When does acceptance occur with an offer for Bilateral contract |
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Definition
| Offer is open as to method of acceptance so start of the performance can be acceptance |
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Term
| When does acceptance occur with an offer for a Unilateral contract: |
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Definition
| Offers require performance for acceptance so that start of performance is not acceptance, completion of performance is required |
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Term
| Can an offer be accepted if the oferee promises to perform? |
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Definition
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Term
| If an oferee sends its acceptance in the mail is this valid? |
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Definition
| If invited to accept by mail, generally accpetance is effective when acceptance is sent |
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Term
| If the seller of the goods sends the wrong goods |
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Definition
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Term
| If the offeree is silent is this acceptance? |
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Definition
| General rule: no, if oferee agrees that silence is acceptance than yes |
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Term
| Forms of consideration (4) |
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Definition
| Performance (doing something not legally obligated to) Forbearance (not doing something legally entitled to) Promise to Perform, Promise to forbear |
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Term
| Consideration: Common Law: General Rule:: Pre-existing contractual or statutory duty rule |
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Definition
| Performance of preexisting contractual or legal duty not consideration |
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Term
| Consideration UCC, Sale of Goods: Pre-existing contractual or statutory duty rule |
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Definition
| Does not have a pre-existing legal duty rule; good fait his the test for changes in the existing sale of goods contract |
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Term
| Part payment of a debt as consideration for promise to forgive the balance of the debt- when is this valid? |
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Definition
| Key is whether the debt is due and undisputed. If due and undisputed part payment is not consideration for release |
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Term
| Defenses to contracts: Mutual mistake |
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Definition
| When both parties are mistaken about facts relating to agreement, contract may be voidable if mistake concerns basica assumption contract made, mistake has a material effect on the agreed upon exchange, and the party seeking avoidance didn’t assume the risk of the mistake |
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Term
| Defenses to contracts: unilateral mistake |
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Definition
| Where only one of the parties is mistaken about the facts of the agreement, mistake wont prevent formation of a contract |
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Term
| Defenses to contracts: capacity |
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Definition
| A person must have the ability to give consent befor he can be legally bound to an agreement- capacity is the ability to incur legal obligations and acquire legal rights |
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Term
| People who lack capacity? |
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Definition
| Minors, mentally diabled, intoxicated |
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Term
| What if an adult makes a contract with a minor? |
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Definition
| Adult's contractual promises are binding, child is voidable |
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Term
| What are agreements that may violate public policy (illegal)? |
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Definition
| Commit a crime, promote violations of statutes, perform an act for which the person is not properly licenses |
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Term
| What is non-compete clause? |
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Definition
| Contract where you can't work for a competitor |
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Term
| When is a non-compete clause enforced? |
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Definition
| serves legit business purpose, restriction is in reasonable time and georaphic area, doesn't impose an undue hardship |
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Term
| What situations to statue of frauds control? |
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Definition
| situations in which a promise that is not in writing can be denied enforcement |
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Term
| What is the purpose of statute of fraud? |
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Definition
| prevent fraud by requiring written evidence before enforcing certain types of contracts |
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Term
| Contracts covered by the statute of frauds: |
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Definition
| Collateral contracts in which a person promises to perform obligation to another person, contracts for sale of interest in real estate, bilateral contracts that can't be performed within a year of formation, contracts for sale of goods for a price of $500 or more, Admin promises to be personally liable for debt of an estate, contract where marriage is the consideration |
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Term
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Definition
| Transfer of a right under a contract |
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Term
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Definition
| Person who owes duty to perform under a contract |
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Term
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Definition
| Person who the duty of performance is owed to |
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Term
| When does an assignment occur? |
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Definition
| When the obligee transfers his right to receive obligor's performance to a third party |
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Term
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Definition
| Original obligee when an assignment occurs |
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Term
| What is delegation of duties? |
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Definition
| When an obligor indicates his intent to appoint another person to perorm for him |
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Term
| Does delegation of duty extinguish duty owed by obligor? |
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Definition
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Term
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Definition
| person who is making the promise that benefits the third party |
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Term
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Definition
| Person who obtains the promise that benefits the third party |
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Term
| When can a third party cancel or modify? |
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Definition
| If third party knows assets to the contract- if already assented, rights have vested and the contract can't be canceled or modified w/out their consent |
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Term
| Three parts of product liability |
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Definition
| 1. Negligence, breach of warranty, strict liability |
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Term
| What is anticipatory repudiation? |
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Definition
| Breach of contract when promisor indicates before the time for his performanc ethat he is unwilling or unable to carry out contract, dishcarges the promisee from all futher obligation under the contract |
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Term
| Excuse for non-performance? |
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Definition
| Situations in which nonperformance is excused bc of factors that arise after the fomation of the contract-person whose performance is made impossible is discharged from further obligation under the contract |
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Term
| Excuses for non-performance? (4) |
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Definition
| Impossibility, supervening illegality, destruction of subject matter of the contract, impracticability |
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Term
| Other reasons for discharge? (3) |
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Definition
| Discharge by mutual agreement, accord and satisfaction, discharge by statute of limitations |
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Term
| Discharge: Accord and satisfaction |
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Definition
| Agreement where promisor acccepts some performance different than originally agreed upon and promisor performs the accord, parties discharged |
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Term
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Definition
| Contract remedies focus on the economic loss caused by breach of contract, not on moral obligation |
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Term
| Types of contract remedies (3) |
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Definition
| Legal remedies (money damages), Equitable remedies, Restitution |
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Term
| What is injunction? (Equitable remedy) |
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Definition
| Court order requiring a person to do something or odering a person to refrain from doing something |
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Term
| What are equitable remedies? |
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Definition
| Cases when money damages alone are not adequate to fully compensate party's injuries. |
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