BLAW 255- Test 3 (Moegle)

-parties can "assign" their rights to a 3rd party therefore known as assignees -parties enter a contract can draft a provision stating their performance will benefit a 3rd party EX life insurance beneficiary "INTENDED BENEFICIARY" -a K can have an INCIDENTAL BENEFICIARY who has no right to enforce the K or sue under the K

3rd parties in a contract...

parties to a K agree to settle a contract dispute through _____ -the agreement wherein the parties agree to accept a different "satisfaction" om place pf the original K is the accord. This does not of itself discharge the OG K, but it does suspend it until the accord and new K is performed. Satisfaction of the accord will discharge the accord and og K.

Accord and Satisfaction

One party tells the other party in advance he will not perform his duty under the K -can expressly stated or implied -non-breacher is discharged from K, can sue breacher

Anticipatory breach

Promise for a promise, parties exchange promises NOT acts. ex. if you promise to paint my store I promise to pay you $500

Bilateral K

Age of majority Infancy doctrine- (minors can disaffirm most k's entered into with adults, voidable by the minor. can disaffirm K anytime before 18 plus reasonable time) Mentally Incompetent (either adjudicated insane (void) or de facto insane (voidable)) Intoxicated persons- voidable, not by other person assuming they have capacity, are they capable of understanding/comprehending the transaction. If K is disaffirmed, consideration must be affirmed, restitution made. K can be ratified once person is sober.

Capacity to a K

offer could be revoked at any time prior to acceptance. nowadays its "reasonable time"

Common Law Contracts

performance 100% exactly as required under a K

Complete performance

occurance of an event before a party is obligated to perform

Condition precedent

non-occurance of a specified event that excuses existing duty to perform

Condition subsequent

1) sell or transfer property 2) purchase goods 3) hire employees 4) lease apartments, homes, etc. Without enforceable _________, commerce would collapse

Contracts

voluntarily entered into by two or more persons, terms of a K become "Private law" between the parties and thus enforceable in a court of law. The court is obligated to give it a "legal effect"

Contracts are....

1) made by offeree 2) simultaneously terminates the original offer 3) creates new offer, new terms and conditions

Counter offers are...

unconditional promise to perform

Covenant promise

1) death or incapacity of the promise 2) destruction of the subject matter prior to performance 3) supervening illegality makes K illegal 4) Force majeure clause- "Act of God" clause, certain events will excuse performance under a clause. ex, extreme weather, covid, labor strike, gas shortage, etc.

Discharge by impossibility, performance may be excused if...

1- Mutual agreement or impossibility of performance 2- Mutual recision- if a K is wholly or partially executory, then the parties can agree to cancel the K. Probably a good idea to have parties enter a 2nd K to cancel the first. One party cannot rescind in a mutual recision. 3) Novation- contracting parties agree to substitute a 3rd party in place of one of the original K's parties. C is obligated to perform, A is relieved of duties under the K

Discharge of Performance

one party threatens to physically harm another unless they enter a K, Assent is not voluntary -bring a criminal suit if you don't enter a K is _______ -bring a civil suit is not ______ unless frivolous/bad faith

Duress

A buys a guitar from B, rumored to be Kurt Cobains, for $5K. A sends to expert after deal and the guitar is the real deal. B wants to rescind but cannot.

Example of a Mutual Mistake of Value

fully performed on both sides

Executed K's

not fully performed on both sides, meaning at least one party has not performed

Executory K's

verbal or written K, exact terms

Express K

one party takes action to conceal a material fact from the other party EX. ABC - ww, sell used commercial washing machine, says they are just upgrading, they refuse to disclose maintenance or repair records. After purchase machines breaks down, discovers history. Can sue once discovered for fraud. VOIDABLE

Fraud in Concealment

Person is decieved as to the nature of his act and doesn't know what he is signing ex. Student brings and add/drop slip and moegle signs but underneath what he really signed was a "power of attorney" giving student access to to banking and credit info etc. VOID

Fraud in Inception

Person knows what he is signing but has been "frantically induced" to sign and enter a K ex. A tells B he's from an oil venture, B puts up $10K, B signs, invests, A absconds for non-extradition country (CONMAN) B can sue, rescind K, will have to find A

Fraud in Inducement

1) sue to enforce the accord 2) sue to enforce the original K

If the accord is not satisfied the aggrieved party can....

conduct of the parties where a) plaintiff provides services to the defendant b) plaintiff expected payment for services c) defendant could have rejected services but did not

Implied in Fact K

1) party made a false misrepresentation of fact 2) intent to deceive another party 3) innocent party relied on misrepresentation 4) the innocent party was injured by their alliance on the misrep.

Intentional Misrepresentation (leads to FRAUD)

1) illegal- in restraint of trade (ex. price gouging) 2) non compete clause- might be considered unreasonable if the geographic area is too large or too long in duration 3) Exculpatory clause- provision that relieves one party to a K from tort liability from ordinary negligence for actions/ duties performed under K 4) Immoral K if deemed immoral by society standards

K's against public policy

lawyers, accountants, doctors, architects- license, dues, continuing ed

Licensing statutes

the party failed to perform an express obligation under the K; "inferior" performance of the K. Nonbreaching party may 1) rescind, seek to be discharged or 2) treat the K as being in effect "executory" can sue under the K and get monetary damages

Material breach

1)K's involving interests in land and real estate (mortgage, leases, life estates, easements) 2) 1-year rule- an executory K that cannot be performed within one year of its formation (prevents disputes at or near the end of the year 3) Collateral Promise (Guaranty)- one person agrees to answer for the debts of another 4) K for sale of goods $500 or more a)sale was less than 500 originally but then modified to be more than 500 then it must be in writing 5) An agent to a K to sell property must be in writing

More on Statutes of Frauds

both parties were mistaken as to the subject matter of a K. Either or both can rescind K because of ambiguity.

Mutual Mistake of Fact

both parties know the object they are contracting for but are mistaken of its value 1) here the K is enforceable by either party bc the identification of the object is not a question; if we held differently, then the party who got the worst monetary end of the deal would always be able to rescind and every L would be undone, therefore it is not valid

Mutual Mistake of Value

Court has to go from conduct of parties to determine whether a K exists (unwritten). Did the parties intend to enter a K? "Reasonable Person Standard." NEVER SUBJECTIVE

Objective Theory

the building up in the mind of the offeree that the offeror wants to do business on those terms

Offer (MOEGLES SPECIAL DEF)

1) by action of the parties (revoke, reject) 2) operations of the law

Offers do not go indefinitely, ended by

Mailbox Rule

On acceptance upon dispatch rule offeree's acceptance is effective once dispatched (sent) even if lost in transmission (PROTECTS THE OFFEREE) IF the offeree first dispatches a rejection that this rule does not apply

1) Lapse of time- stated time period expires or if no time period goes to reasonable time. 2) Destruction of Subject Matter- no offer, no acceptance because subject matter now non-existent 3) Death or Incapacity of the offeror or offeree, will terminate the offer, no notice is required to either side 4) Supervening Illegality- if prior to acceptance of the offer, the object of the contract becomes illegal, offer terminates

Operations of Law in which an Offer will terminate

Equitable exception to sof- parties entered into an oral K that should have been in writing under the statute of frauds. then the promise/k is going to be enforceable against the promisor if: 1) promise made induced action/forbearance by the promisee 2) reliance on the promise was forseeable 3) injustice can only be avoided by enforcement of the promise When raised, promissor is "estopped" from raising SOF as a defense

Promissory Estoppel

Court may award monetary$ damages to the plaintiff for work or services rendered to a defendant, even though no actual K even exists. Intent is to prevent "unjust enrichment" to the defendant where one person confers a benefit upon another, or where it is unjust for the other person not to pay for that benefit. Does not work with an enforceable K between parties

Quasi K (Implied in Law)

Court rewriting a K to reflect the parties true intentions usually to clear up grammatical errors, etc.

Reformation

1) was the assent genuine? (even if all reqs are met, k may not be enforceable) 2) the requirements for a K's performance 3) Consequences/penalties for breach or failure to perform a duty under K

Remedies for breach of K

1) agreement between the parties (offer and acceptance) 2) consideration- promises supported by and bargained for, legal benefits exchanged Parties have the capacity to a K

Requirements for a K

-Every state has an Sof -requires certain K's to be in writing -public policy that these types of K's are are too important not to be in writing ex. Some executory K's required to be in writing by SOF, it will not be enforceable, but if already executed, neither party can rescind the K using SOF defense.

Statute of Frauds

there was a "minor breach" of the K, performance only "slightly deviated" from being complete. Like 85%

Substantial performance

One party takes advantage of another party's mental, emotional state, or physical weakness to persuade to enter a K 1) Wills are challenged 2) Fiduciary Relationship (ex doc, patient, attorney and accountant to client) VOIDABLE

Undue Influence

Legal defense to that contract enforcement- "there is a defect" ex. K is required to be in writing -Real estate under K under statute of frauds

Unenforceable

Promise for an act, Offeree can only "accept" by performance ex. if you paint my store by July 1st, I will pay you $500 -can be revoked anytime prior to performance, once performance has begun offer cannot be revoked

Unilateral K wrinkle?

only 1 party to a K are mistaken as to the subject matter of the K unless the other party also knew or should have known of the mistake the K will be enforced

Unilateral Mistake

set appropriate limits on APR's interest rate, that can be changed on credit cards (K's)

Usury Laws

meets all the essential elements of a K 1- Agreement between the parties 2- Supported by legal consideration 3) the parties must have legal capacity to K 4) accomplish a lawful object -are enforceable by at least one party of the K

Valid

no legal effect "ab initio" from the beginning ex. K to commit a crime is void neither party could enforce such a K, neither party is obligated to perform

Void

at least one party has the option to void/ terminate her K'l obligation -if voided, both parties are released from K -if ratified, both parties must perform under K

Voidable

Gift promises of gratutitus k's Illegal act K's Illusory Promise (both parties can choose not to perform) Pre-existing duty (already have promise to perform already)

What K.s are no enforceable?

Consideration

all K must have and require consideration to be valid, a thing of value must be given in exchange for a promise, bargained for consideration. ex. money, property, services, or and agreement to do or not do an act

Required signature- sof that the K must be signed against whom enforcement is sought, if no signature that person can place an x by typed name

any writing will due or suffice for a K, as long as it contains the essential terms of a K and requirements

promise or a set of promises for the breach of which the law provides a remedy

contract defined...

cannot be enforced by and party if void or by statute

legality of a K

Acceptance

manifestation of assent by the oferee to the terms of a K

Mirror Image Doctrine

offeree accepts the terms as stated percisely in the offer

1) Offeror- the party who makes the initial offer (REVOKES), promises to do something (an act) 2) Offeree- party to whom the offer is made (REJECTS), has the power to create a K by acceptance of offer

who are the parties to a contract?