Contract Law
Implied-in-law Contract
(also known as quasicontract): situations that look like a contract but are not because one of the requisite elements is missing.
What is not consideration?
1) past consideration 2) moral obligations 3) gifts 4) illusory promises 5) Promises to do that which one is already bound to do
Guarantees
1. A guarantee is a promise to answer for the debts of another. 2. A guarantee is also a type of formal contract. 3. The concept of a guarantee comes from the Statute of Frauds. 4. Because there is, in fact, no consideration for this promise, it must be in writing to be enforceable.
Valid Accord and Satisfaction
1. A valid contract 2. A dispute between the parties with respect to that contract and 3. An agreement to compromise the dispute rather than sue
Requirements for a Guarantee to be Valid
1. A valid contract is entered into between two or more parties 2. The guarantor creates the guarantee at the time the contract is executed 3. The guarantee is in writing
Four Major Areas of Contractual Capacity
1. Age 2. Mental capacity 3. Alcohol 4. Drugs
Four Types of Damages
1. Compensatory damages 2. Punitive damages 3. Consequential damages 4. Liquidated damages
Conditions categorized by when they create, or extinguish, the duty to perform the covenant
1. Conditions precedent 2. Conditions subsequent 3. Conditions concurrent
The Statute of Frauds
1. Contracts for an interest in real estate 2. Contracts in consideration of marriage 3. Contracts that are not to be performed within one year 4. Guarantees 5. Contracts for the sale of goods valued over a specified amount • Executor's promises to pay a decedent's debts
Contracts That Violate the Statute of Frauds
1. Contracts for an interest in realty 2. Contracts that are not to be performed within one year 3. Contracts in consideration of marriage • Guarantees 4. Sale of goods valued at over $500 5. Executors' promises to pay the decedent's debts
Methods of Discharge
1. Excuse of conditions 2. Performance 3. Breach of contract 4. Agreement of the parties 5. Impossibility of performance 6. Supervening illegality 7. Death or destruction of the subject matter or parties 8. Frustration of purpose
Conditions categorized by how the parties have arrived at them
1. Express conditions 2. Implied-in-fact conditions 3. Implied-in-law conditions
Circumstances Under Which a Preexisting Duty May Be Consideration
1. If new or different consideration is given 2. The purpose is to ratify a voidable obligation 3. The duty is owed to a third person, not the promisee 4. Unforeseen circumstances make the duty more difficult to fulfill
Categories of Equitable Remedies
1. Injunctions 2. Specific performance 3. Rescission and restitution 4. Reformation 5. Quasi-contractual
Guidelines that the courts use to interpret all contractual provisions.
1. Lengthy communications are viewed as a whole, and any inconsistent words are discarded. 2. Contracts are to be interpreted according to business custom and usage. 3. Words are to be construed according to their ordinary meaning. 4. If there is an inconsistency with words that are printed, typed, or handwritten, handwriting prevails over typing, and typing prevails over mechanical printing.
Six Types of New Agreements
1. Mutual Rescission 2. Release 3. Accord and satisfaction 4. Substituted agreement 5. Novation 6. Modification
Situations in which the condition itself discharges the contractual obligation
1. Performance prevented 2. Voluntary disablement 3. Insolvency 4. Anticipatory breach
Contracts in Consideration of Marriage
1. The concept that any promise given in consideration of marriage must be in writing still exists. 2. This usually takes the form of an antenuptial, or prenuptial, agreement. 3. An antenuptial agreement is a contract between the intended bride and groom specifying each one's property rights in case of death or divorce.
Fraud
1. The misrepresentation 2. of a material fact 3. made with the intent to deceive and 4. relied on by the other party 5. to his or her detriment
Three Conditions for a Proposal to Qualify as a Contractual Offer
1. The offeror must manifest a present contractual intent. 2. The offer must be communicated to the offeree. 3. The offer must be certain and definite with respect to its terms
Four essential elements for definite and certain terms:
1. The price of the contract 2. The subject matter of the contract 3. The parties to the contract 4. The time of performance for fulfilling the contract
Contracts for an Interest in Real Estate
1. To be enforceable, every contract for an interest in real estate must be in writing. 2. Contracts for the sale of land are also permanently recorded in governmental offices in the county where the property is located. 3. This insures that the title to the property can be traced and determined.
There are five situations in which a gratuitous assignment may become irrevocable
1. delivery of a token chose; 2. writing; 3. estoppel; 4. performance 5. novation.
Detriment to qualify as consideration, the person incurring the detriment must
1. give up a legal right 2. at the request of the other party 3. in exchange for something of legal value
Termination by Operation of Law
1. lapse of time 2. destruction of the specific subject matter of the offer 3. death or incompetence of the offeror or the offeree 4. supervening illegality of the proposed contract
The Uniform Commercial Code is
A State law governing commerce
Element of intent
A basic requirement of all contractual relationships.
Consideration
A benefit conferred or a detriment incurred; a basic requirement of every valid contract.
A promise for a promise is an example of?
A bilateral contract
Bilateral
A bilateral contract is a promise for a promise.
Executory contract Timing
A contract in which one or both of the parties still have obligations to perform.
Contract of Adhesion (falls under duress)
A contract in which one side has an unfair bargaining position, a position that is so unequal that the other party's assent is suspect. Even though no actual duress exists, because of the inequality of the parties the contract is called into question. These types of contracts are voidable by the innocent party because of the unconscionable aspect of the other side's bargaining position.
Implied-in-fact contract
A contract in which the promises of the parties are inferred from their actions as opposed to specific words.
Executed contract Timing
A contract that is complete and final with respect to all of its terms and conditions.
Voidable Contract
A contract that one party may void at his or her option without being in breach of contract.
Voidable Enforceability
A contract where a party to the agreement has the option of avoiding his legal obligation without any negative consequences, but who could, if he wished, affirm his obligation and thereby be contractually bound.
Limitation of demands
A contractual provision placing a ceiling on the amount of potential liability for breach of contract
Promissory Estoppel
A doctrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies; such a promise is binding if justice will be better served by the enforcement of the promise.
If one side is providing the price, the other side is usually providing?
A good or service
Express warranty
A guarantee created by words or conduct of the seller.
Operation of Law
A manner in which rights and obligations devolve on a person without the act or cooperation of the party himself or herself.
An example of lack of contractual capacity is?
A minor, A person on drugs, .A drunk
Fraud
A misrepresentation of a material fact made with the intent to deceive, relied upon by the other party to his or her detriment.
A gratuitous assignment does not become irrevocable by
A promise
Bilateral Contract
A promise for a promise
Unilateral
A promise for an act.
Unilateral Contract
A promise for an act.
Under the UCC a merchant is
A retailer
Void Enforceability
A situation where there is no contract and the law therefore does not entitle the parties to any legal remedy.
Accord and satisfaction
A special agreement in which the parties to disputed contract agree to new terms in exchange for forebearing to sue under the original agreement
An example of a good or service?
A textbook or paralegal services, which is that party's consideration for the contract
Selling your textbook to pay off a student loan is
A third party creditor beneficiary contract
A method of avoiding litigation for a breach of contract is
A waiver Accord and satisfaction Arbitration
The manifestation of assent in the manner requested or authorized by the offeror
Acceptance
What can occur only if the offeree is aware of the offer?
Acceptance
Terminate an Offer
Act of the parties, either the offeree must reject the proposal or the offeror must revoke the offer
Exemplary damages
Additional monetary award designed to punish the breaching party
Stipulation
Agreement of the parties
Shipment contract
Agreement whereby risk passes from seller to buyer when goods are transported by a third person under Article II of the UCC.
Third Party Beneficiary Contracts
Agreements in which the original intent of one of the contracting parties, when entering into the contractual agreement, is to have the promised-for consideration pass not to her, but to some outside person
Informal Form
All non-formal contracts; agreements that meet all the requirements of valid contracts.
Valid Enforceability
An enforceable contract that meets all of the six requirements.
Hearsay
An out of court statement offered for the truth of the matters asserted therein.
Covenant
An unconditional, absolute promise to perform
Secured transaction
Any transaction, regardless of form, that intends to create a security interest in personal property or fixtures.
For the offer to have legal validity it must?
Appear to an objective, reasonable person that the offeror actually intended to make an offer.
Tender performance
Being ready, willing, and able to preform
All written contracts?
Bilateral
Summary: Type of Obligation
Bilateral and Unilateral
Under what when drafting the provisions of an offer?
Common Law
For an offer to be capable of acceptance the offer must be?
Communicated to the offeree.
The UCC is
Concerned with the sale of goods valued at over $500
What is the bargain of the contract?
Consideration
In a sales contract, when the seller bears no risk of loss it is a
Consignment contract
Divisible contract
Contract capable of being broke down into several equal agreements
Unilateral mistake
Contract provision that only one party believes is an error.
Release
Contract relieving the promisor from an obligation under and existing contract
Malum Prohibitum
Contracts that are not morally reprehensible or against public policy but are still minor violations of the law—a prohibited wrong, or something prohibited by statutory regulation.
Malum in Se
Contracts that violate public policy and are deemed bad in and of themselves
The Statute of Frauds does not cover
Contracts to be performed within one year
The price stated in the contract is an example of?
Contractual consideration
Specific performance
Court order to perform contractual promises
Injunction
Court order to stop engaging in a specific action
The Coronation Cases are examples of
Discharge by frustration of purpose
Financing Statement
Document filed in government office to protect a security interest under Article IX of the UCC.
Mitigation of damages
Duty imposed on injured party to lessen, by reasonable means, the breaching party's liability
Quantum Meruit is an example of
Equitable remedies
Business record exception
Exception to the hearsay doctrine whereby a document kept in the regular course of business, authenticated by the person responsible for maintaining such document, may be admitted into evidence.
Summary: Timing
Executory and executed
Summary: Method of Creation
Express, Implied in fact, and Implied in law (quasi)
Condition precedent
Fact or event that creates an absolute duty to preform
Breach of contract
Failure of a promisor to fulfill a contractual obligation
A Third Party Creditor Beneficiary's rights vest on his or her knowing of the contract.
False
A condition is an absolute duty to perform
False
A contract will be enforced even though one party has a unilateral right to decide the nature of the contractual performance.
False
A formal contract is a written contract.
False
All contracts are assignable.
False
All contracts are considered bilateral under the law.
False
An offer may always be revoked by the offeror before acceptance by the offeree.
False
An offeree of a unilateral contract never has to notify the offeror of his or her acceptance.
False
Anyone who knows of an offer may accept it.
False
Arbital awards can be appealed
False
Consequential damages are usually available to an injured party
False
Contracts inferred by the acts of the parties are known as quasi-contracts.
False
Equitable remedies never include monetary awards
False
Moral consideration may be legally sufficient to create a contract.
False
Novation is another term for assignment of rights.
False
Parol evidence may be used to explain the terms of a written contract.
False
Partial performance never discharges a party from his or her duty of full performance under a contract.
False
Promissory estoppel is an example of contractual consideration.
False
The Uniform Commercial Code covers contract for the sale of goods and services.
False
The Uniform Commercial Code is a federal statute.
False
The monetary value of the consideration is determinative of its legal value.
False
Article IX of the UCC covers
Fixtures
Waiver
Forgiveness of a contractual obligation
Summary: Form
Formal and informal
Warranty
Guarantee made by the manufacturer or seller with respect to the quality, quantity, and type of good being sold
Rules of construction
Guidelines used by the courts to interpret contractual provisions
The person with the highest priority in a secured transaction is the one who
Has a purchase money security interest
To be deemed sufficient, the consideration of a contract must?
Have legal value
Usually the identity of the offeror is readily ascertainable because?
He or she is making the proposal
Rescission and Restitution
If a party to a contract finds that fulfillment of the contract would be unduly burdensome, he can ask the court for rescission and restitution, whereby the court will rescind, or revoke, the contract in the interest of fairness
When Does Silence Constitute an Acceptance?
If the offer was solicited by the offeree or the contract is implied in fact
One party's unlimited right to decide the nature of the contractual performance is?
Illusory
When one party has subjective control of the contract terms, the contract is?
Illusory
A person may be discharged from his or her contractual obligations by
Insubstantial performance Tendering performance Complete performance
The difference between fraud and misrepresentation is the element of
Intent
Contract
Is a legally enforceable agreement that meets certain specified legal requirements between two or more parties in which each party agrees to give and receive something of legal value.
Offer
Is a proposal by one party, the offeror, to a second party, the offeree, manifesting an intention to enter into a valid contract.
The Statute of Frauds
Is concerned with perjury
Offers are not expected to?
Last indefinitely, nor are contracts intended to be performed forever
The what requires that these terms be certain, definite, and capable of being readily understood by a reasonable person?
Law
To perfect a valid security interest under the UCC you do not need
Lien
Formal Form
Limited group of contracts that different states have declared valid and enforceable if certain statutory requirements are met.
A contractual clause establishing an amount of prospective damages for breach is
Liquidated damages
A supervening illegality
Makes the contract unenforceable
An essential element of an offer is?
Manifestation of present intent, Certainty of the terms, Communication to the offereed
Under the UCC the parties to the transaction
May vary the terms of their agreement from UCC rules
Unilateral mistakes
Misconception of the subject matter of a contract by only one party to the contract; may be enforceable.
Misrepresentation
Mistakes of a material fact relied upon by the other party to his or her detriment; no intent to defraud.
Express Contract
Mutual assent of the parties is manifested in words, either orally or in writing.
A proposition made by one party to another, manifesting a present intention to enter into a valid contract and creating a power in the other person to create a valid contract by making an appropriate acceptance.
Offer
Elements of a Valid Contract
Offer, acceptance, consideration, legality of subject matter, contractual capacity, contractual intent
If the what indicates terms that are not objectively definite but are vague and ambiguous, the offer will not be considered valid?
Offeror
Some words of limitation must be expressed by the?
Offeror
Agent
One who acts for and in the place of another, known as the principal, in order to enter into contracts with third persons on the principal's behalf
Parol Evidence Rule
Oral testimony may not be used to vary the terms of a writing
An agreement whereby one party agrees to buy or sell all the goods produced by the other party.
Output Contract
An assignment of personal services is
Permitted with all the parties consent
Third party creditor beneficiary
Person who receives the benefit of a contract in order to extinguish a debt owed to him or her by the promisee.
Real party in interest
Person with enforceable contractual rights.
Forms of Duress
Physical, economic, mental
If a contract term is ambiguous the contract is?
Probably Enforceable
Guarantee
Promise to answer for the debts of another, must be in writing
Implied-in-fact Contract
Promises of the parties are inferred from their actions or conduct as opposed to specific words being used.
Collateral
Property subject of a security agreement under Article IX of the UCC.
Quantum meruit
Quasi-contractual aware; value of the service performed
Under Article II of the UCC a seller may not
Replevy the goods
Best evidence rule
Rule stating that the best evidence of a written agreement is the original of the agreement.
Consideration
Something that has legal value
Conditions
Specific promise made by the parties to the contract
Compensatory damages
Standard measure of damages, puts injured party in the same position he or she would have been in had the contract been fulfilled.
Statute of Fraudes
Statute mandating that certain contracts must be in writing to be enforceable
Uniform commercial code
Statutory enactment codifying certain areas of contract law, specifically with respect to sales contracts and security agreements
Novation
Substitution of a party to a contract-novated person takes overall rights and obligation under the contract.
Mailbox rule
The acceptance of a bilateral contract is effective when properly dispatched by an authorized means of communication
Consideration is also?
The benefit conferred or the detriment incurred
Equity
The branch of the legal system that deals with fairness and mercy
The bargain element of a contract is?
The consideration
The person who can accept an offer is known as?
The offeree
Who had the power to create a valid contract by making the appropriate acceptance?
The offeree
The requirement that the parties be specifically described in the offer generally refers only to?
The offerees
The what must be as specific as possible with respect to price, subject matter, parties, and timing of performance?
The offeror
Promisor
The one who gives consideration in a bilateral contract.
A contract terminating because of the destruction of the subject matter is an example of
The operation of law
Contractual Intent
The parties to the contract must actually intend to enter into a contract for the same bargain at the same time.
Contractual Capacity
The parties' legal ability to enter into a binding contractual relationship
Authentication
The process of proving the genuiness of a contract in court
Performance
The simplest method of being excused from contractual obligations is to perform these obligations
A contract is another example of the consideration for the contract.
The subject matter
Contract cannot be?
Thrust upon an unsuspecting person.
Assignment
Transference of contractual rights by the promisee to a third party.
"Necessaries" do not include
Transportation
A Third Party Creditor Beneficiary can sue the promisor of the contract for violating contract law.
True
A contract may be both valid and unenforceable.
True
A court of law never implies terms that the parties have imperfectly covered.
True
A hobbyist may be considered a merchant under the UCC.
True
A rejection is only effective on receipt by the offeror.
True
A security agreement may be filed as a financing statement.
True
A unilateral contract can never be accepted by words.
True
An injured party has a duty to mitigate the damages the breaching party caused
True
Assignment only covers rights, not duties.
True
Consideration is the bargain aspect of the contract.
True
Constructive conditions are the same as implied-in-law conditions.
True
Contracts of adhesion are examples of contracts induced by duress.
True
Every contract must contain at least one covenant.
True
Guarantees require no separate consideration.
True
If both parties to a contract are unaware of an ambiguity in the terms, the contract will be enforced according to what both think.
True
Lapse of time can act to terminate an offer.
True
Replevin is a contractual remedy available under the UCC
True
Silence is acceptance of an implied-in-fact offer.
True
The Mailbox Rule determines the timing of the acceptance of a bilateral contract.
True
The UCC establishes a statutory standard of custom and usage for interpreting contracts.
True
The difference between fraud and negligent misrepresentation is the intent of the parties.
True
The party who has the risk of loss of the goods in a sales contract has the right to insure the goods.
True
The purpose of the third party beneficiary contract is to benefit a person not a party to the contract.
True
Time is an essential term of an offer.
True
A model law adopted in whole or in part by each state as a statutory enactment that, among other things, has codified certain contractual concepts with respect to the sale of goods
Uniform Commercial Code (UCC)
Summary: Enforceability
Valid, void, voidable, and unenforceable
The Parol Evidence Rule prohibits oral testimony that
Varies the terms
A contract that one party may avoid with being in breach is?
Voidable
An example of excuse of conditions is
Voluntary disablement Anticipatory breach Insolvency
A non-essential term of an offer is?
Writing
Gaurantee
Written promise to answer for the debts of another that is enforceable against the guarantor
Specific performance
a court order requiring the breaching party to perform exactly what she promised under the contract
Injunctions
a court order to stop someone from engaging in a specific action
Death is self-evident
a person cannot be expected to perform from the grave
Legal Duty Rule
a promise to do what one is already legally bound to do is not consideration
Assignments come into existence
after the original contract is created
The parties to a contract are
always free to rearrange their contractual agreements by mutual assent
Covenant
an absolute, unconditional promise to preform
A novation is an example of
an assignment
Breach of Contract
break one's obligation made under the agreement
Reformation
can be considered a courtordered accord and satisfaction
Unilateral mistake
concerns a situation in which only one party to the contract is mistaken because of some typewritten or computation error.
Executor's Promise to Pay Decedent's Debts
concerns estate administration, not contracts, and is most appropriately discussed in a work dealing with that area of law
Duress
connotes some form of force or coercion exercised over one party to the contract in order to induce that party's promise to contract
First category
contains laws that support the very nature and fabric of society. Violation of these rules go against all public policy, and contracts violating them are completely void and unenforceable.
The waiver can be for a
contractual covenant or for any condition specified in the contract
Equitable remedies
designed to prevent unfairness and unjust enrichment
Conditions
fails to occur, the performance does not come into play; conversely, a condition subsequent can terminate the obligation to perform
Under certain circumstances a contracting party's performance may become
impossible to fulfill through no fault of his own
Second category
includes minor illegalities, those laws created by statute that bar actions which are not, in and of themselves, morally reprehensible. Contracts that violate this second category may still permit the injured party some form of quasi-contractual relief.
Exemplary damages
intended not only to compensate the injured party but to punish the breaching party
Caveat emptor
let the buyer beware
Caveat Venditor
let the seller beware
Undue Influence
mental duress by a person in a close and particular relationship to the innocent party
Consequential damages
monetary awards beyond the standard measure (compensatory damages) due to the special circumstances and expenses incurred because of the injury
Compensatory damages
monetary awards designed to put the injured party in the same position he would have been in had the contract been completed as originally planned
Punitive, or exemplary, damages
monetary awards granted by a court for a breach of contract that involves very unusual circumstances
Legal Remedies or damages
monetary awards granted to an injured party in a contractual dispute whenever money would be an appropriate method of rectifying the injury
FML
my life
If the subject matter of the contract is destroyed
obviously the contract cannot be fulfilled. This is true provided that the object in question is unique and is not destroyed by an act of one of the parties
Mistake
occurs when one (or both) of the parties is under a misconception as to the subject matter of the contract.
A contractual term that is ambiguous on its face is called a
patent ambiguity
Liquidated damages
reasonable damages that the parties themselves have agreed to in the contract itself
Usury laws
regulate the legal rate of interest that can be charged for extending credit.
Court doctrines used to interpret contracts are
rules of construction
The court determines
the amount of the monetary loss the injured party suffered because of the breach
Mutuality of consideration
the bargain element of a contract that requires each side to give and receive something of legal value
A promisee may not assign his rights without
the consent, express or implied, of the promisor
The effect of a mutual mistake in a contract is
the contract may be reformed
Frustration of purpose occurs when
the contract, on its face, is both valid and apparently capable of performance, but the underlying reason for the agreement no longer exists
Waivers
the forgiveness by a party to a contract of the other side's failure to meet a contractual obligation
Frustration of Purpose
the least common method of discharge, but the most interesting, is frustration of purpose
Contractual Capacity
the legal ability to enter into a contractual relationship
If a party to a contract breaches
the other side, the innocent party, has an immediate cause of action
As long as both parties agree to a change in the performances
the parties may be discharged from their original obligation without any negative consequences
Voir dire is
the process of challenging the authentication of a document
Third party donee beneficiary contract
the purpose is to confer a gift on a third person
Third party creditor beneficiary contract
the purpose is to extinguish a debt or obligation owed to some third party
Quantum valebant
the value of the property received
Quantum meruit
the value of the service rendered
A consequence, for a party to be entitled to punitive damages
there must be some statutory basis for the award under the state's law
Mutual mistake
this type of mistake goes to a basic assumption of the agreement, the mistake has a material adverse effect on the parties, and the mistake was of the type that could not be foreseen.
The law feels it would be unfair and unjust to hold the person responsible
to a contractual obligation that could not possibly be met
Assignment
transfer of a promisee's rights under an existing contract
Supervening Illegality
will discharge contractual obligations because, since the inception of the contractual arrangement, the purpose for which the contract was created has become illegal will not permit persons to engage in illegal activities, and therefore the parties are deemed discharged from their contractual duties
