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Governing law - Contracts
- common law of contracts for services only
- Mix? Which ever is more
Offer, acceptance, consideration, and no defenses
Manifested willingess by offeror to enter into a bargain with the offeree. The terms of an offer must be certain and definite, and the offer was apparently accepted by the offeree to give the power to assent and to conclude the bargain.
Advertisements are not offers.
Mirror Image rule
Acceptance must mirror the offer exactly, or else there is a rejection/counteroffer.
Rejects the offer and serves as a new offer that must be accepted.
Is the offeree's assent to the offeror's invitation to enter into a contract. The effect of acceptance is the creation of a binding contract.
May be communicated by words or conduct. THe person addressed or members of the class addressed by the offeror are the only ones who may accept it.
Bargained for exchange of something of legal value.
Statute of Frauds
Contracts that by their terms cannot be performed within one year from their inception are covered by the statute of frauds, and are unenforceable unless evidence by a signed writing.
Are considered terminable at will, unless otherwise specified within the contract itself
Intent of parties controls.
Berg rule: extrinsic evidence is admissible as to the entire circumstances under which the contract was made, as an aid in ascertaining the parties intent. Extrinsic evidence is not admissible if it shows only the unilateral and subjective beliefs of one of the parties.
Look for Parol evidence rule and comple, final, and unambiguous contract.
A contract that is imprecise (ambigous) or incomplete (indefinite) may be unenforceable.
Ambiguities are construed against the drafter. They are resolved consistently with the objectively manifested intention of the parties.
Courts may supply missing terms or clarify ambiguous terms if the parties have adequtely manifested an intention to creat a particular contract.
Parol Evidence Rule
Rule: A final written expression of the parties' agreement may not be contradicted by evidence of a prior written agreement or a prior or contemporaneous oral agreement.
Extrinsic evidence is admissible as to the entire circumstances under which the contract was made to help in ascertaining the parties' intent.
However, if evdience of the contract demonstraes the written contract is complete, final, and unambigous, parol evidence rule will apply.
Acts or events, the occurence of whic either triger or terminate a party's obligations under a contract.
The distinction between conditions and promises is made by examining the language in the contract and by looking to the intent of the parties. Intent controls.
Unclear? Law favors promise rather than a condition.
An overtly articulated and agreed upon condition that is part of a contract. Must be literally complied with, and failure to satisfy and express condition relieves the promisor of the duty to perform.
Modification is a discharge by an agreed-upon revision of contractual obligations.
Modification requires the elements of a contract (offer, acceptance, and new consideration). Mutual modification of obligations and rights under the original contract is adequate consideration.
A modification will replace the orginal obligations with modified obligations.
Preexisting Legal Duty Rule
No consideration given when a party is already under an obligation to do something.
However, if unforseen circumstances are encountered, an agreement to pay additional compensation for services will not be found unenforceable for lack of consideration.
Some persons are deemed, as a matter of law, to be incapable of mutual assent.
Minors lack capacity to enter a contract.
Contracts of a minor are voidable, but unless disaffirmed within a reasonably time after attaining majority, they become valid. If a minor disaffirms a contract, she must restore to the other party all remaining money and property recieved by her through the contract.
Performance cannot be done, and contract can be discharged.
Performance must be objectively impossible.
Must have been caused by an unforeseeable event that was unavoidable and could not have been guarded agaisnt in the contract.
Due to extreme difficulty, expense, injury, or loss because of an unforeseeable event that was unavoidable.
Usually are an express condition, which must be complied with, if possible, or a claim for damages may arise.
Reasonable delay in completion of a construction contract does not generally constitute a material breach.
Each party to a contract accepts the risk of error in judgment.
A contract is voidable for mutual mistake when both parties make a mistake as to a basic assumption on which the contract was made and the mistake has a material effect on the agreed upon performances.
A contract will not be voidable for mutual mistake when the adversely affected party should have foreseen the risk because of his expertise.
Frustration of purpose
Contract can be performed, but the central purpose of the contract is underminded.
Duty is discharged if the promisor was without fault in causing the frustration and the frustrating event was not forseeable.
Courts will not enforce contracts that arise out of an illegal act. An illegal contract is void.
Recovery may be allowed when the illegality involves a regulatory rather than a criminal or moral violation.
Misrepresentation (contract defense)
A contract is voidable when a party's manifestation of assent is induced by either fraudulent or material (even innocent) misrepresentation by the other party to the contract if the recipient of the misrepresentation is justified in relying on it.
A non-performance of a contractual duty when performance is due. Nonperformance includes both defective performance and the absence of performance.
Substantial benefit of the bargain is not recieved by the injured party. MAY suspend own performance and/or sue for damages
Injured party recevies substantial benefit of the bargain, but there was defective performance
Refusal to pay?
Do a breach analysis.
Form of repudiation when promisor states unequivically that he will materially breach the contract before performance is due.
It may be retracted, but only until the time performance is due or until the time relied upon, whichever is first.
Damages (Contracts, generally)
Generally entitled to benefit of the bargain (expectation), place party in same position had the contract been performed.
Includes: (1) direct damages, (2) foreseeable consequential damages, (3) incidental damages
Must be: (1) reasonably certain, (2) foreseeable consequential damages, (3) incidental damages
(Construction contracts: cost of remedying defects, or the difference between the value of the property as it is now and the condition it would have been in had the K not been breached)
Reliance Damages are appropriate where monetary damages are not sufficiently certaint.
The measure of recovery for reliance damages is the expenditure made in preparation for performance or in the course of performance, less any loss the injured party would have incurred had the contract been performed.
Consequential damages, or special, damages are recoverable when:
- (1) the con'l damages were foreseeable when the contract was made because they would accruse naturally from the breach, or the parties had special noitce such damages might arise (notice by generally foreseeable or special notice)
- (2) promximate result of the breaching party's non performacne
- (3) amount can be proven with reasonably certainty
Quasi contract (quantum meruit and restitution)
Remedy invoked to prevent unjust enrichment
Voidable Contract - Aggrieved party remedies
- (1) Recission and restitution
- (2) Ratification
- (3) Reformation
Alternative remedy for a total breach of contract. Prevention of unjust enrichment. Usually measured as the value of the benefit conferred.
Equitable remedy by which court order a party to perform contractual duties.
Only available if remedy at law is inadeqaute, administration would not be unfuly burdensome, and the K terms are certain and definite. (rarley ordered)
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