CH. 9
e-contracts
A contract that is entered into in cyberspace and is evidenced only by electronic impulses (such as those that make up a computer's memory), rather than, for example, a typewritten form.
voidable contract
A contract that may be legally avoided (canceled, or annulled) at the option of one of the parties.
unilateral contract
A contract that results when an offer can only be accepted by the offeree's performance
valid contract
A contract that results when elements necessary for contract formation (agreement, consideration, legal purpose, and contractual capacity) are present.
option contract
A contract under which the offeror cannot revoke his or her offer for a stipulated time period and the offeree can accept or reject the offer during this period without fear that the offer will be made to another person. The offeree must give consideration for the option (the irrevocable offer) to be enforceable.
reformation
A court-ordered correction of a written contract so that it reflects the true intentions of the parties.
agreement
A meeting of two or more minds in regard to the terms of a contract. Agreement is usually broken down into two events—an offer by one party to form a contract, and an acceptance of the offer by the person to whom the offer is made.
objective theory of contracts
A theory under which the intent to form a contract will be judged by outward, objective facts (what the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transaction) as interpreted by a reasonable person, rather than by the party's own secret, subjective intentions.
intended beneficiary
A third party for whose benefit a contract is formed. An intended beneficiary can sue the promisor if such a contract is breached.
bilateral contract
A type of contract that arises when a promise is given in exchange for a return promise.
unenforceable contract
A valid contract rendered unenforceable by some statute or law.
record
According to the Uniform Electronic Transactions Act, information that is either inscribed on a tangible medium or stored in an electronic or other medium and that is retrievable. The Uniform Computer Information Transactions Act uses the term record instead of writing.
click-on agreement
An agreement that arises when a buyer, engaging in a transaction on a computer, indicates his or her assent to be bound by the terms of an offer by clicking on a button that says, for example, "I agree"; sometimes referred to as a click-on license or a click-wrap agreement.
contract
An agreement that can be enforced in court; formed by two or more parties, each of whom agrees to perform or to refrain from performing some act now or in the future.
shrink-wrap agreement
An agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packaged; sometimes called a shrink-wrap license.
browse-wrap terms
Terms and conditions of use that are presented to an Internet user at the time certain products, such as software, are being downloaded but that need not be agreed to (by clicking "I agree," for example) before being able to install or use the product.
forbearance
The act of refraining from exercising a legal right. An agreement between the lender and the borrower in which the lender agrees to temporarily cease requiring mortgage payments, to delay foreclosure, or to accept smaller payments than previously scheduled.
assignment
The act of transferring to another all or part of one's rights arising under a contract.
contractual capacity
The legal ability to enter into contracts. The threshold mental capacity required by law for a party who enters into a contract to be bound by that contract.
disaffirmance
The legal avoidance, or setting aside, of a contractual obligation.
privity of contract
The relationship that exists between the promisor and the promisee of a contract.
delegation
The transfer of a contractual duty to a third party. The party delegating the duty (the delegator) to the third party (the delegatee) is still obliged to perform on the contract should the delegatee fail to perform.
executed contract
A contract that has been completely performed by both parties.
executory contract
A contract that has not as yet been fully performed.
Formal contracts
A contract that by law requires a specific form, such as being executed under seal, to be valid.
Provisions to Include
1) Acceptance of terms - A clause that clearly indicates what constitutes the buyer's agreement to the terms of the offer, such as a box containing the words "I accept" that the buyer can click. 2) Payment - A provision specifying how payment for the goods (including any applicable taxes) must be made. 3) Return policy - A statement of the seller's refund and return policies. 4) Disclaimer - Disclaimers of liability for certain uses of the goods. For instance, an online seller of business forms may add a disclaimer that the seller does not accept responsibility for the buyer's reliance on the forms rather than on an attorney's advice. 5) Limitation on remedies - A provision specifying the remedies available to the buyer if the goods are found to be defective or if the contract is otherwise breached. Any limitation of remedies should be clearly spelled out. 6) Privacy policy - A statement indicating how the seller will use the information gathered about the buyer. 7) Dispute resolution - Provisions relating to dispute settlement, such as an arbitration clause or a forum-selection clause
Requirement for a Valid Contact
1) Agreement - to form a contract include an offer and an acceptance 2) Consideration - any promises made by the parties to the contract must be supported by legally sufficient and bargained 3) Contractual capacity - Both parties entering into the contract must have contractual capacity to do so 4)Legality - the contracts purpose must be to accomplish some goal that is legal and not against public policy
Contracts Contrary to Statute
1) Contract to commit a crime 2) Usury 3) Gambling
Contracts that must be in writing
1) Contracts involving interests in land. 2) Contracts that cannot by their terms be performed within one year from the day after the date of formation. 3) Collateral, or secondary, contracts, such as promises to answer for the debt or duty of another and promises by the administrator or executor of an estate to pay a debt of the estate personally—that is, out of her or his own pocket. 4) Promises made in consideration of marriage. 5) Under the Uniform Commercial Code, contracts for the sale of goods priced at $500 or more
Informal contracts
A contract that does not require a specified form or formality in order to be valid.
Termination by Operation of Law
1) Lapse of time. 2) Destruction of the specific subject matter of the offer (such as a smartphone or a house). 3) Death or incompetence of the offeror or the offeree 4) Supervening illegality of the proposed contract. (A statute or court decision that makes an offer illegal automatically terminates the offer.)
people who do not have contractual capacity
1) Minors 2) Intoxicated people 3) The Mentally Ill
Definiteness of Terms
1) The identification of the parties. 2) The identification of the object or subject matter of the contract (also the quantity, when appropriate), including the work to be performed, with specific identification of such items as goods, services, and land. 3) The consideration to be paid 4) The time of payment, delivery, or performance.
Effective Offer
1) The offeror must have a serious intention to become bound by the offer. 2) The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract. 3) The offer must be communicated to the offeree.
Unenforceable Contract
1) Voluntary Consent - the consent of both parties must be voluntary 2)Form - the contract must be in whatever form the law requires
Requirements for an Implied Contract
1) plantiff furnished some service or property 2) The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected. 3) The defendant had a chance to reject the services or property and did not.
Considerations (pt. 2)
1) something of legally sufficient value must be given in exchange for the promise, and 2) there must be a bargained-for exchange.
exculpatory clauses
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.
mirror image rule
A common law rule that requires, for a valid contractual agreement, that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer.
implied contract
A contract formed in whole or in part from the conduct of the parties (as opposed to an express contract). Also known as implied-in-fact contract.
void contract
A contract having no legal force or binding effect.
express contract
A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written.
unconscionable
A contract or clause that is void on the basis of public policy because one party, as a result of his or her disproportionate bargaining power, is forced to accept terms that are unfairly burdensome and that unfairly benefit the dominating party. See also Procedural unconscionability; Substantive unconscionability
offer
A promise or commitment to perform or refrain from performing some specified act in the future.
forum-selection clause
A provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract.
Rescission
A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made; may be effected through the mutual consent of the parties, by their conduct, or by court decree.
mailbox rule
A rule providing that an acceptance of an offer becomes effective on dispatch. Acceptance takes effect, thus completing formation of the contract, at the time the offeree sends or delivers the communication via the mode expressly or impliedly authorized by the offeror.
Statute of Frauds
A state statute under which certain types of contracts must be in writing to be enforceable.
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.
e-signature
As defined by the Uniform Electronic Transactions Act, "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record."
usury
Charging an illegal rate of interest.
Consideration
Generally, the value given in return for a promise or a performance. The consideration, which must be present to make the contract legally binding, must be something of legally sufficient value and bargained for.
past consideration
Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain.
Acceptance
In contract law, the offeree's notification to the offeror that the offeree agrees to be bound by the terms of the offeror's proposal. Although historically the terms of acceptance had to be the mirror image of the terms of the offer, the Uniform Commercial Code provides that even modified terms of the offer in a definite expression of acceptance constitute a contract.
revocation
In contract law, the withdrawal of an offer by an offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability.
third party beneficiary
One for whose benefit a promise is made in a contract but who is not a party to the contract.
choice-of-law clause
specifying that any contract dispute will be settled according to the law of a particular jurisdiction, such as a state or country.