403 MT 2

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  1. 4 components of a contract
    • 1. agreement
    • 2. consideration
    • 3. contractual capacity (adults of sound mind)
    • 4. lawful object
  2. bilateral contract
    • promise for a promise
    • presume bilateral if ambiguous
  3. unilateral contract
    • promise for an act
    • can only be accepted by completing the contract performance
    • can be revoked by offeror any time prior to the start of performance
  4. express contract
    either stated orally or in writing
  5. implied-in-fact contract
    • implied from the conduct of both parties (rather than oral or written)
    • has evidence of an objective manifestation and a mutual assent to be bound to the terms of the contract
  6. implied-in-law contract (quasi-contract)
    • contracted created by law which is imposed as if the parties had entered into a contract to avoid unjust enrichment
    • no actual contract exists
  7. implied-in-law contract (quasi-contract) used when:
    • one person confers a benefit to another who retains the benefit
    • benefit provided with the "reasonable expectation" of compensation
    • it would be unjust not to require that person to pay
  8. what's recoverable in implied-in-law contract (quasi-contract)?
    • quantum meruit (reasonable value of the services rendered)
    • except when party conferred a benefit unnecessarily or party conferred a benefit as a result of misconduct or negligence
  9. 3 elements of an offer
    • 1. offeror objectively intended to be bound by the offer
    • 2. the terms of the offer must be definite or reasonably certain
    • 3. offer must be communicated
  10. 4 components of an offer
    • 1. who
    • 2. what
    • 3. consideration
    • 4. time of performance
  11. general ads and mass mailings
    • invitations to make an offer
    • price quote also invitation to make an offer
  12. specific ads
    when specific enough then it is an offer
  13. rewards
    • unilateral contract
    • offeree must have knowledge of the reward offer prior to completing the unrequested act, must perform
  14. auction with reserve
    • unless otherwise stated, it is this
    • invitation to make an offer 
    • seller reserves right to sell to highest bidder
    • bidder may withdraw prior to acceptance
  15. auction without reserve
    • seller is offeror
    • obligated to accept the highest bid and cannot withdraw the goods from sale
    • can set a minimum price
  16. revocation of an offer
    • offeror can withdraw anytime prior to acceptance
    • must be communicated, is effective upon receipt, made by express statement
    • if public offer, revocation must be made in same way
  17. exception to revocation
    • option contracts: created when offeree provides consideration to the offeror from being able to revoke his/her offer at the time
    • options don't terminate in the event of offeree or option holder's death
  18. rejection of offer
    effective upon offeror's receipt
  19. counteroffer
    terminates original offer and creates a new one, to be accepted or declined
  20. conditional acceptance
    • terminates the offer and creates a new one
    • "if" "provided" "so long as" "on the condition that"
  21. termination by operation of law
    • subject matter is destroyed prior to acceptance through no fault of either party
    • death or mental incapacity of either party prior to acceptance; notice not required; offer terminates immediately at event
    • supervening illegality prior to acceptance
    • lapse of time
  22. mailbox rule
    • acceptance is effective upon dispatch even if it is lost unless offer states otherwise
    • if offer says to send by overnight mail you can only accept that way
  23. 2 reqs for consideration
    • 1. something of legal value must be given (or legal detriment suffered)
    • 2. bargained-for-exchange
  24. gift promises
    • unenforceable -> lack consideration (unless met with consideration)
    • completed gifts: then can't be taken back
  25. types of consideration
    • performance of an act
    • promises to perform an act
    • forbearance of a legal right
    • promise to forbear a legal right
    • tangible payment
  26. written contracts special rule
    rebuttable presumption that consideration exists; can be rebutted by evidence
  27. 5 contracts lacking consideration
    • 1. illegal consideration
    • 2. illusory promises (where one or both parties can elect not to perform)
    • 3. moral obligation (promises made out of moral obligation, honor, love and affection)
    • 4. preexisting duty; exception: unforseen difficulties (if parties modify a preexisting duty then new consideration is created)
    • 5. past consideration
  28. accord
    a later agreement to accept performance different than originally promised (e.g. a settlement agreement)
  29. satisfaction
    • performance of the accord
    • discharges both the accord and original deal
    • if no satisfaction, party can sue on either accord or original deal but not both
  30. promissory estoppel
    • used to avoid injustice when a party relies on another's promise (an other elements of a contract aren't met)
    • reqs: a promise; actual reliance that is reasonable, detrimental, and foreseeable; enforcement is necessary to avoid injustice
  31. infancy doctrine
    minors can void most contracts entered into with an adult except necessities of life
  32. minors: disaffirmance of contract
    • executory: just need to disaffirm
    • partial or full performance: minor's duty to restore what they received in the condition that it is at the time of disaffirmance (unless minor intentionally harmed the stuff); competent party's duty to restore minor to status quo
  33. minors: misrepresentation of age
    minor who misrepresents age when entering into a contract owes a duty of full restoration
  34. minors: ratification at age of majority
    • if ratified, effective to inception of contract
    • if not ratified within minority or within a reasonable time of reaching majority, contract is ratified
  35. minors: parental liabilities
    • parents not liable for contracts made by minor acting on their own except necessities of life
    • if emancipated, parent has zero obligations
  36. mentally incompetent people
    must have mental incompetency at time of entering contract
  37. legal insanity
    • objective cognitive "understanding" test
    • person's mental incapacity must render them incapable of understanding the nature of the transaction
    • adjudged insane: contract is void
    • insane but not adjudged: contracts voidable
  38. when contracts with mentally incompetent people are voided
    • mentally incompetent persons must be placed back in status quo
    • 3rd parties (who didn't know) must be returned to status quo
  39. intoxicated persons
    • contracts only voidable by intoxicated person (have to be intoxicated enough to not understand)
    • if voided, both parties return to status quo
    • intoxicated person still liable for necessities they receive
  40. contracts contrary to statutes
    • void
    • usury laws: interest rates
    • contracts to commit a crime
  41. effects of legality
    • contracts are void
    • courts leave parties as they find them
  42. exceptions under legality
    • innocent person was justifiably ignorant of the law that made the contract illegal
    • persons induced into contract by fraud, duress or undue influence
    • persons enter into an illegal contract then withdraw before act is performed
  43. mistakes of fact (at time of contract formation)
    • may be grounds for rescission
    • unilateral and mutual mistakes
  44. mistakes of value or quality
    no rescission
  45. unilateral mistake
    • mistake about a material face made by ONE party
    • not grounds for rescission unless the other party to the contract knew or should have known about the mistake being made or because of a mathematical mistake not the result of gross negligence
  46. mutual mistake of material fact
    • rescission permissible where both parties are mistaken regarding the same material fact to a contract
    • voidable by either party
  47. mutual mistake of value or quality
    still not grounds for rescission
  48. 3 elements of fraud
    • 1. misrepresentation of material fact
    • 2. representation was meant to deceive 
    • 3. innocent party justifiably relied on the misrepresentation
  49. remedy to fraud
    • contract is voidable by innocent party
    • can recover damages
  50. fraud in the inception (fraud in the factum; fraud in the execution)
    • a person is deceived and doesn't know what they are signing 
    • contract is void
  51. fraud in the inducement
    • innocent party knows what they're signing but was fraudulently been induced into entering the contract
    • contract is voidable by innocent party
  52. fraud by concealment
    • specific action taken by a party to conceal a material fact from another party
    • contract is voidable by innocent party
  53. misrepresentation by silence
    • generally no duty to disclose material facts
    • except: knowledge of a serious defect or potential problem that can't be reasonably discovered; nondisclosure would cause bodily injury or death; there is a fiduciary relationship between the parties; federal or state statute requires disclosure
  54. misrepresentation of law
    • a party misrepresents what the law is
    • not actionable as fraud except when a pro deceives a less sophisticated person --> rescission allowed
  55. innocent misrepresentation
    • a mistake of fact, honest and reasonably made
    • not fraud but other party can rescind
    • treated like a mutual mistake
  56. duress
    • one party is forced to consent to a contract
    • contract is unenforceable
  57. threats to bring lawsuit under duress
    • criminal: even if well-founded, is duress
    • civil: no duress unless suit is frivolous or brought in bad faith
  58. undue influence
    • one person takes advantage of another's mental, emotional or physical weakness and unduly persuades them to enter into a contract
    • voidable by innocent party
  59. 2 elements of undue influence
    • 1. fiduciary or confidential relationship must have existed (doctor-patient, lawyer-client, etc.)
    • 2. the dominant party unduly used influence to persuade the other party
  60. SOF coverage (5 types)
    • 1. contracts creating/transferring an interest in land
    • 2. contracts that by its own terms cannot be performed within 1 yr
    • 3. surety agreements
    • 4. sale of goods $500+
    • 5. lease of goods w/payments $1000+ (and modifications if it changes it to be more than $1000)
  61. equal dignity rule
    if a contract must be in writing to be enforceable then the appointment of an agent with regard to that agreement must also be in writing (e.g. real estate agents)
  62. exceptions to SOF
    • promissory estoppel
    • full performance
    • partial performance if 2 of 3 are met: payment, possession, and/or valuable improvements made to property
  63. parol evidence rule
    evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary contractual terms are inadmissible
  64. merger clause
    prevents parol evidence from being introduced
  65. exceptions to parol evidence rule
    • to establish a defense to enforcement of the written deal (i.e. fraud, undue influence, etc.)
    • explains ambiguous language/term
    • concerns a prior course of dealing or performance between the parties
    • fills in gap of a contract
    • corrects an obvious clerical error or typographical error
  66. enforcement rights for assignment
    assignee can enforce performance of contract, assignor's rights extinguished
  67. assignment
    • must be present/current
    • no writing req'd unless subject of agreement req's one
  68. all contracts can be assigned except
    • contract provisions prohibiting assignment
    • personal service contracts (unless both agree)
    • future rights
    • substantial change exception (where assignment would substantially change the duties of the obligor)
    • assignments of legal action related to personal rights (but ok to assign contract actions only)
  69. notice (assignment)
    • assignor has to notify
    • if obligor does not have notice, may continue to render performance to the assignor (assignee cannot sue obligor for damages, has to sue assignor)
    • if obligor has notice but continues anyway, assignor can sue obligor and recover payment and obligor can sue assignor to recover damages
  70. enforcement duties (delegation)
    • delegator remains liable for his/her contract duties to the obligee if the delegatee fails to perform 
    • obligee can sue both delegator and delegatee (but recover once)
  71. all contracts can be delegated except
    • contract provisions preventing delegation
    • contracts calls for special skills (parties can agree)
    • contract calls for special reputation
  72. summary of assignment
    is the transfer by a party to a contract of his rights or benefits under the contract to a 3rd party
  73. summary of delegation
    is the transfer by a party to a contract of his duties or burdens under the contract to a 3rd party
  74. intended beneficiary
    • 3rd party is named in the contract or was intended to benefit in the mind of the promise
    • can sue to recover damages
    • incidental beneficiary is opposite
  75. covenant
    • unconditional promise to perform
    • non-performance is breach of contract
  76. conditions
    • an event which must occur before performance under a contract becomes due
    • becomes a covenant if condition met
  77. condition precedent
    where an occurrence (or nonoccurrence) of an event must occur (or not occur) before a party is obligated to perform
  78. condition subsequent
    an event that terminates an existing duty to perform
  79. concurrent condition
    • parties to a contract agree to render performance simultaneously
    • damages recoverable when one party fails to perform
  80. ways duty can be discharged
    • complete performance
    • agreement: rescission; substitution (2nd agreement); novation (substitute a 3rd party for one party); accord and satisfaction (agree on different performance)
    • impossibility of performance
    • force majeure clause: occurrence of extraordinary events excuse performance (acts of God, labor strikes, civil unrest, terrorism)
    • statute of limitations
    • bankruptcy
  81. minor breach
    • party has substantially performed and
    • party's performance deviates slightly 
    • non-breaching party still obligated to perform but are entitled to damages for value not received
  82. material breach
    • party fails to substantially perform, or
    • performance deviates substantially
    • non-breaching party excused from performance and can sue for damages; or continue with contract and sue for damages
  83. anticipatory breach
    • an unambiguous statement made to the other party that the party will not perform and that statement made prior to the time that performance was due
    • may be stated expressly or implied from circumstances
  84. remedies to anticipatory breach
    • excuses non-breaching party's duty to perform
    • may immediately sue for damages
  85. monetary damages available to:
    • non-breaching party
    • minor and material breaches
    • not available for IIED
  86. 4 types of monetary damage
    • 1. compensatory
    • 2. consequential
    • 3. liquidated damages
    • 4. nominal damages
  87. compensatory damages
    • place non-breaching party in position if contract had been fully performed; arise directly from breach
    • incremental costs
    • incidental costs
    • lost profits
    • must mitigate
  88. consequential damages
    those were foreseeable at the time the contract was performed and notice is given, caused by special circumstances beyond the contract
  89. liquidated damages
    • parties agree in advance what the amount of damages in event of breach
    • if there is this, this is the only remedy
    • damages must be difficult to determine at time of contract
  90. nominal damages
    pat on the back, yes, you were right, now here's a dollar go away stop wasting resources
  91. writ of attachment
    orders sheriff (or officer of gov't) to seize property in possession of breaching party and auction to satisfy judgment
  92. writ of garnishment
    orders that wages, bank accounts, or other property in the hands of a 3rd person to be paid over to non-breaching party to satisfy judgment
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403 MT 2
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