Legal Environment of Business Contracts
Money Damages include:
1. Compensatory: Out of pocket. 2. Consequential: As a result of... 3. Liquidated: Pre-Determined 4. Incidental: Costs incurred 5. Nominal: Technical victory on principle 6. Punitive: Punishment
Condition Precedent
Condition met, triggers performance
Condition Subsequent
Condition occurs, terminates performance
Duress
Force or threat of force.
Performance Level: Substantial
Vast majority of the contract has been met.
Discharge
A party to a contract is discharged when that party is relieved from all further responsibility of performance.
Plain Meaning Rule
A principle used by courts in interpreting contracts that provides that the objective definitions of contractual terms are controlling, irrespective of whether the language comports with the actual intention of either party.
Mitigation of Damages
Affirmative legal duty to minimize
Contract Principles
Agreement between two or more parties to perform or refrain from performing some act now or in the future.
Voidable Contract
An agreement when at least one party has the right to withdraw from the promise made without incurring any legal liability.
Unilateral Mistake
Arises when only one of the parties to a contract is wrong, about a material fact.
Offer
Contains a specific promise and a specific demand.
Express Contracts
Contracts which arise from interactions in which parties actually discuss the promised terms of their agreement.
Bilateral Contract
An agreement that contains mutual promises, with each party being both a promisor and a promisee.
Best way to determine Intent of the Parties
Hand written words are the best way to determine the intent
Concurrent Conditions
Simultaneous conditions.
Consideration
The receipt of a legal benefit or the suffering of a legal detriment.
Valid Contract
When an agreement is enforceable because all the essential requirements are present.
Enforceable Contracts
When courts uphold the validity of promises in a contract.
Executory Contract
When the parties have not yet performed their agreement.
Performance Level: Complete
Where every part of the contract has been met.
Executed Contract
A contract in which the parties have performed their promises.
Unilateral Contract
A contract in which the promisor does not receive a promise as consideration; an agreement whereby one makes a promise to do, or refrain from doing, something in return for a performance, not a promise.
Void Contract
A contract that appears to be an agreement but lacks an essential requirement for validity and enforceability.
Mirror Image Rule
For an acceptance to create a binding contract, standard contract law requires that the acceptance must "mirror" the offer, that is, must match it exactly.
Implied in Law, a.k.a. Quasi Contract
A judicial remedy to prevent one party from receiving unjust enrichment.
Acceptance
Necessary to create a valid, enforceable contract.
Breach
Party fails to perform without legal excuse.
Implied in Fact contracts
Arise from the conduct of the parties rather than from words.
Consideration
-Receipt of Legal Benefit: Both parties must give and get. -Past Consideration: Such as gifts and promises -Preexisting Obligation -Agreement Not To Sue -Promissory Estoppel
Contracts
1. A promise or set of promises. 2. For the breach of which the law gives a remedy OR 3. The performance of which the law in some way recognizes a duty.
Privacy of Contract
1. Assignment: Transfer of rights to contract. 2. Delegation of Duties: Another person performs the obligation. 3. Third Party Beneficiaries: Persons not part of the contract benefit.
All contracts involve at least two contracts:
1. Bilateral 2. Unilateral
Offers do not exist from:
1. Expressions of opinion 2. Preliminary negotiations 3. Invitations to bid/advertisements
Contracts can be voided if they involve:
1. Fraud. 2. Duress. 3. Undue Influence. 4. Misrepresentation. 5. Mistake. 6. Lack of Mutual Assent.
Three elements of an Offer
1. Intent/Commitment 2. Definite Terms 3. Communication
Characteristics of Written Contracts:
1. Interest in Land 2. Sale of Goods greater than $500.00 3. One year or more for performance 4. Consideration of Marriage (Pre-nups) 5. Pay debts of Another (Collateral Contracts)
The court will not admit evidence concerning:
1. Prior Negotiations. 2. Prior oral or written agreements. 3. Contemporaneous oral agreements
Termination of offer occurs through:
1. Rejection. 2. Revocation. 3. Counteroffer. 4. Lapse of Time. 5. Destruction of Subject Matter. 6. Offeror's/Offeree's Death or Insanity. 7. Illegality of Performance.
Non-Monetary Damages include:
1. Rescission 2. Restitution 3. Reformation 4. Specific Performance 5. Negotiated Settlement
Contract obligations are terminated through:
1. Rescission: Cancelling 2. Novation: Replacement of the language 3. Accord and Satisfaction: Settlement 4. Operation of Law: Death, bankruptcy, insanity 5. Impossibility: Destruction of subject matter 6. Commercial Impracticability: Change in market conditions
Three questions to consider when dealing with Promissory Estoppel
1. Was the promise one which the promisor should reasonably expect to induce action or forbearance on the part of the promisee? 2. Did the promise induce action or forbearance by the promisee? 3. Can injustice to the promisee only be avoided by enforcement of the promise?
True or False: Silence=Acceptance
FALSE: Silence does not = Acceptance
Unenforceable Contracts
If a nonperforming party has a justifiable reason for noncompliance with a promise.
Fraud
Involves an intentional misstatement of a material (important) fact that induces one to rely justifiably to his or her injury.
Legislation
Laws passed by an elected body such as Congress, a state legislation, or local council/commission. Those laws enacted at the federal and state levels are called statutes. At the local level, such laws are often referred to as ordinances.
Capacity
Minimum Mental Capacity Required by law to stand trial. People that cannot stand trial on contract issues: 1. Minors 2. Intoxicated Persons 3. Mentally Incompetent
Capacity: Minors
Minors are under 18, can not be bound to a contract promise unless the promise involves necessaries of life, such as food, shelter, etc...
Undue Influence
Occurs when one is taken advantage of unfairly through a contract by a party who misuses a position of relationship or legal confidence.
Contractual Capacity
Refers to a person's ability to be bound by a contract.
Misrepresentation
Simply a misstatement without intent to mislead.
Material Breach
Substantial failure to perform
Common Law
That body of law deriving from judicial decisions as opposed to legislatively enacted statutes and administrative regulations.