BLAW Contract Law Study Guide
Types of Changes
- Additional Terms - Changes to Previous Terms
contract statute of limitations
4 years
Mirror Image Rule
A common law rule that requires that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be formed.
Void Contract
A contract having no legal force or binding effect.
exculpatory clause
A contract provision that attempts to release one party from liability in the event the other is injured
Executed Contract
A contract that has been completely performed by both parties.
Valid Contract
A contract that satisfies all the law's requirements and is enforceable.
Bailments
Contract between 2 parties where one party gives temporary possession of personal property to another Agreements usually contain exculpatory clauses
Ucc Rule
Contract for sale of goods must include important terms, including the QUANTITY of the goods sold
Yes
Is quantity a requirement for UCC?
Illusory promises exceptions
Outputs and Requirements Contracts
Exceptions Considerations
- Additional Work (CL and UCC - Rescission and modifications used in UCC (Sale of Goods) - unless mutually prohibited in the original contract - Unforeseen circumstances
Restriction on Employment (Non-Compete)
- Agreements not to compete at competing companies - must uphold reasonable restrictions (geography, duration, and scope) - otherwise, competing companies gain an advantage
Types of Exchange
- Doing an action not legally required to do - promise of future action you're not legally required to do - Forbearance; Refraining from doing something you're legally allowed to do
Additional Terms Exceptions
- If the original offer insists on its own terms in the offer - The additional term material alters the original offer (substantial change; delivery change, quantity, price, etc.) - If the offeror receives the additional terms and promptly rejects them
Changes Terms in Contract (Ucc)
- Majority of courts that neither terms is used will used gap filler provisions
Termination of offers
- Once offer is terminated it can never be accepted - Revocation (unless Irrevocable) - Counteroffer - Expirations - Operations of Law
UCC applies to
- Open Terms - Permits Flexibility when it comes to price and quanitiy - Commodity of price fluctuations
Irrevocable Offers
- Options Contracts (In CL and UCC; purchaser buys right to keep offer open for a Specific time period) - Firm Offers (Only UCC; must be written, signed by merchant, and open for a certain time period; no longer than 3 months)
Provisions when it comes to Quantity for UCC
- Outputs (seller sells everything to 1 Buyer) - Requirements (Buyer buys everything from 1 Seller) - Both parties must work in good faith
What aren't offers?
- Price Quotes - Advertisement - Auctions - Invitation to Bargain
Accpetance
- Some Action is required that indicates acceptance (words, deeds, writing) - Action must show manifestation of intent to be bound to a contract by offeree - objective standard is used
Consideration
- Something of value is exchanged - Bargain for exchange (Mutality; occurs after negotiating)
Gap filler provision
- Used for missing terms - Uses standard ruled by court found in UCC book
Sale of Business (Non-compete)
- agreements not to compete are standard in purchase & sale agreements - all states uphold reasonable restrictions (geography, duration, and scope) - otherwise buyer would be deprived of value of the purchase
Offer (element of a contract)
-Intention to make a bargain -Terms are reasonable definitive (UCC is more lacked)
Types of Licensing Statutes
-To protect public -unforeseeable/void -To raise revenue for government - enforceable
UCC
-helps with interstate commerce -not federal, but adapted by all 50 states -only used if its a sale of a good
Contract
A MUTAL promise that courts can enforce
Voidable Contract
A contract that may be legally avoided (canceled, or annulled) at the option of the party that lacks legal capacity to form a contract.
A Good
A moveable thing that isn't money, securities, and civil rights (patents, copyrights, intellectual property)
Bilateral Contract
A promise made in exchange for another promise (e.g. salary worker)
Additional Terms (UCC)
A response to an offer that adds new terms but does not make the new terms a condition of acceptance is treated as an acceptance.
Primary Purpose Test
A test used by judges to determine the primary purpose of the lawsuit (Rosenfeld Case)
Mailbox Rule
Acceptance is effective upon dispatch, while termination is effective when received
Irrelevant to courts
Adequacy/Amount of consideration - freedom of contract
Cannot waive liability b/c if on party has unequal bargaining power
Amelia buys an Airplane Tix
Executory Contract
An agreement in which one or more parties has not fulfilled its obligations
Contractual Employment
An express or implied contract exists between the employer and employee (permits employee to sue for wrongful termination)
Counteroffer
An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer.
Communication of Acceptance
Any reasonable method or manner is considered a valid acceptance
Expressed Contracts
Are stated in distinct and clear language, either orally or in writing (easy to create)
UCC Examples
Automobile, Cattle, Dental Implant
Types of contracts
Bilateral, Unilateral, Formal, Informal, Express, Implied
Illusory Promises
Clause or wording that allows party to escape from legal obligation (not consideration)
Intentional Tort Exception
Cody pushes Toby off cliff
Sources of Contract Law
Common Law and Uniform Commercial Code (UCC)
non-compete agreement
Contract law in which employee agrees not to leave employer for a # of years (1-3) to work at a similar/competing company
No, they can be verbal
Do contracts always have to be written?
Cannot waive liability for essential services (med care, public Transportation)
Doctor Negligently performs knee surgery
Meeting of the Minds (mutual promise)
Everyone in contract must agree on every term embedded in contract
Cannot waive liability if terms; unclear/buried
Exculpatory Clause is in small font and buried in contract w/o heading, single-spaced, small font
Revocation
Happens when offeror revokes offer BEFORE accepted by offeree
Fraud Exception
If minor lies or commits fraud in forming the contract (e.g. lies about age), he cannot disaffirm; contract is no longer voidable, considered valid
Mental Impairment Exception
If the mentally impaired party is adjudicated insane by court gives authority appointed to someone contract is void (mere low intelligence isn't void)
Communication of Acceptance Exceptions
If the offer specifies a type of method or manner of acceptance; offeree must respond by method or manner to accept (Both CL and UCC)
Disaffirment Timing
Minor can disaffirm at any time while under the age of 18 and within a reasonable time after turning 18
majority rule, minority rights
Minor doesn't have to return it, but the minor still get their consideration back
Restitution for a minor
Minor must return the consideration to the best of ability and receives consideration back
Minority Status Quo Rule
Minor only receives the profit margin on the purchased item back and not full purchase price
Groups that lack capacity
Minors and Mentally Disabled
Examples of parties that lack legal capacity to form a valid contract.
Minors, mentally incapacitated (intoxicated, injured, diseased, or disabled)
Ucc Rule
More than $500 must be written to be valid and enforceable
Freedom from Contract
Not required when there is no contract applied not intended to make a contract
Unilateral Contract
One party makes a promise that the other party can accept by actually doing something (e.g. hourly worker)
Intoxication (BLACKED OUT)
Party is so intoxicated that he/she cannot understand the nature and consequences of the transaction made; Remedy full restitution to the nonvoidable party
Mental impairment
Party is unable to understand the nature of contract; the contract is voidable at the mentally impaired party's opinion
Ratification
Party's words or actions show an intent to be bound by contract
Merchant
Person/s who deals in goods of the kind regularly
Gardner
Porsche repair shop held onto his car, then was stolen from their lot overnight sued repair shop won because claimed it was on great public importance (have to use public transportation b/c of no car)
Terms That Must Be Covered for Contract to be Formed Under CL
Price/ Salary and duration if applicable
Only way to sue for wrongful termination as an at will employee
Protected class statutes (Title 7, race, religion, color, national origin, sex, ethnicity, gender, sexual orientation, gender identity)
Common Law Examples
Real Estate, Employment, Licensing IP, Contracts for services
Types of Legitimate bargains/noncompetes
Sale of Business Restriction on Employment
Weiss
Self-storage unit got mold damaged property sued storage unit company lost because it wasn't essential service and was on of the liabilities she signed off on
Yes
Should you make all your contracts expressed (written even if not required)?
Gross Negligence Exception
Snowmobile left at end of run, Amelia is injured
Operation of law (Contracts)
Termination of an offer by the occurrence of certain happenings or events, which generally include lapse of time, death or incapacity of the offeror or offeree, destruction of the subject matter of the contract prior to acceptance, and supervening illegality.
Disaffirmance
The legal avoidance, or setting aside, of a contractual obligation; Requires Restitution
Acceptance Rule
The offeror cannot unilaterally bind the offeree via the inaction (silence of offeree)
Employment protected w/o non-compete
Trade secrets, customer/client lists, proprietary info, and other confidential info
Battle of the Forms
Ucc rule where the acceptance has new or altered terms form the offeror; it can still create a contract
Assih Case
Usury (Excessive interest) against New Yorker under Utah Law Amex used Utah Interest Rates, although a NY company IR increased from. 12% -> 21% -> 27.99% after missed payments Amex sues for Interest and principal NY law applied to case b/c Utah law was inappropriate Used Substantial relationship test in court
Sadri Case
Wagering in Nevada by Californian Lost Credit Line at Casino Casino Sued in California (Credit Lines illegal to gamble in CA) Choice of Law Clause only that State Law in the Dispute, could only file suit in Nevada Court
Violations of Statutes
Wagers and Usury; Legality and conflicts of Laws
Expiration Termination
When offeree doesn't accept the offeror's contract in the stated time frame
Freedom of Contract
When parties can form a contract for anything besides illegal activity
Implied Contracts
Words/conduct of parties indicate an intent to be bound by a contract (difficult)
contract for necessaries
a contract that supplies the minor with the basic necessities of life ex- food, clothing, shelter, and essential medical services Cannot be disaffirmed; minor must pay market value of items consumed
Substantial Relationship Test
a test courts use to determine if a law discriminates on an individual or a group of individuals and if there is a close connection between the law and its purpose
Grounds for nonenforceability
exceptions to exculpatory clauses
Open Price Term
if the parties have not agreed on a price, the court will determine a "reasonable price at the time for delivery"
capacity
legal ability to enter into a contract; if a party lacks capacity contract is voidable
Not Consideration
preexisting obligation, past consideration, promise to make a gift
Employment-at-will-doctrine
says an employee may quit and an employer may fire an employee at any time and for any reason. There are many exceptions to the at-will doctrine, but it is the most basic U.S. employment law
Auctions
w/ Reserves - Only bids over reserved price w/o reserves - every bid is an offer