Business Law Chapter 11 part 2 Test 3

Ambiguity (PMR)

1) when the intent of the parties cannot be determined from the contract's language 2) when the contract lacks a provision on a disputed term 3) when a term is susceptible to more than one interpretation 4) when there is uncertainty about a provision

Extrinsic Evidence (PMR)

If a contract term is ambiguous a court can consider extrinsic evidence (outside the contract) or it may interpret the ambiguity against the party who drafted the term. Includes testimonies, additional agreements or communications. CANNOT BE USED WHEN CONTRACT MEANING IS CLEAR.

Plain meaning rule

If a court determines that the terms of the contract are clear and unequivocal then it will enforce it according to the terms. Meaning of terms must come the face of the instrument (written document alone). The words and ordinary meaning determine the INTENT of the parties at the time they entered the contract.

Void Contracts (NO CONTRACT)

NO PARTY HAS LEGAL OBLIGATIONS IN THIS CASE. May be considered void if one was considered mentally incompetent or purpose of contract was illegal.

Quantum Meruit "as much as her or she deserves"

Quasi contracts imposed to avoid UNJUST ENRICHMENT of one party at the expense of another (based on the principle that individuals should not be able to profit at the expense of others). A plaintiff may recover in QUANTUM MERUIT, which describes the extent of compensation owed under a contract implied in law.

Limitations on Quasi-Contractual Recovery

The party obtaining the enrichment is not held liable in some situations. Generally, a party who has obtained a benefit on someone else unnecessarily or as a result of misconduct or negligence cannot invoke on this principle, as it will not be considered "unjust."

Other Rules of Interpretation

a court will interpret the language to give the effect of the parties' intent as expressed in their contract. Rules used to determine this intent. RULES USED: 1) a reasonable, lawful, and effective meaning will be given to all the contract terms 2) contract interpreted as a whole. Specific clauses considered subordinate to contract's general intent. All writings that are a part of the same transaction will be interpreted together. 3) terms that were subject of separate negotiation will be given greater consideration than standardized terms and terms that were not negotiated separately. 4) a word will be given its ordinary, commonly accepted meaning, and a technical word will be given its technical meaning, unless parties clearly intended something else. 5) specific and exact wording will be given greater consideration than general language. 6) written or typewritten terms will prevail over pre-printed ones. 7) because a contract should be drafted in clear and unambiguous language, a party who uses ambiguous expressions is held to be responsible for the ambiguities. Thus, when the language has more than one meaning, it will be interpreted against the party who drafted the contract. 8) evidence of usage of trade, course of dealing, and course of performance may be admitted to clarify the meaning of an ambiguously worded contract.

Contract Performance

classified according to the degree to which they have been performed. 1) executed contract-fully performed on both sides 2) executory contract- not been fully performed by the parties. *if one party has fully performed the contract but the other hasn't, then one side is executed and the other is executory.

Unenforceable Contracts (Valid Contract)

contract cannot be enforced because of certain legal defenses (statutes or law) against it, NOT if a party failed to satisfy a legal requirement of the contract.

Voidable Contracts (Valid Contract)

contract that can be avoided at the option of one or both parties. If this happens, both parties must be released from it. (contracts with minors, intoxicated persons, and mentally incompetent persons are generally voidable)

Quasi ("as if", "analogous to") Contracts

contracts implied by law, are not actual contracts. They are NOT true contracts as because they do not arise from any expressed or implied agreement. Courts impose these types of contracts on parties "as if" they had entered into the agreement by themselves. THEY ARE EQUITABLE RATHER THAN LEGAL CONTRACTS.

Actual Contract and Quasi Contract

doctrine of quasi contract generally can't be used when there is an actual contract that covers the matter in controversy. *remedy already exists when an actual contract is breached and a party is unjustly enriched.

Plain language laws

enacted by fed government and several states have helped to avoid the difficulty of interpreting the legal meaning of a contract.

Weight of interpretation

express terms given the most weight (expressly stated in the contract), then course of performance, course of dealing, and custom and usage of trade--in THAT ORDER!!!

Contract Enforceability

valid contract- has the elements necessary to entitle at least one of the parties to enforce it in: 1) agreement (offer and acceptance) 2) supported by legally sufficient consideration 3) made by parties who have the legal capacity to enter into the contract 4) a legal purpose