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What is a contract (K)?
- oral or written agreement that can be enforced in a court of law
- at least 2 people must be involved
What are the common law requirements for K?
what are the prerequisites to enter into a K?
- Legal capacity (3)
- lawful cause (legal in the eyes of the law)
What are the elements of legal capacity?
- can't be:
- mentally incompetent (autism, Alzheimers etc)
- below the age of 18
What constitutes an offer of a contract? (Step 1)
willingness of a party or person to do, or not to do something
What constitutes an acceptance of a contract? (step 2)
an affirmative action by one party who agrees to the offer being put forth
What constitutes a consideration of a contract? (step 3)
- usually involves money
- something of value being exchanged for a performance
An offer must have ____ and _____.
- serious intent
- definitive terms
What constitutes serious intent (step 1:offer)?
what a reasonable person in the offeree's position thinks of the offeror's words/conduct
what constitutes definitive terms (step 1:offer)?
- (there is no openess for interpretation)
- should identify parties to the K
- should identify object/purpose of K
- should identify payment & how much
- should include time of payment, delivery or performance
An offeror can revoke that offer by ____________. An offeree can ______ or ______ an offer.
- acting inconsistent with the offer
What is a counter-offer?
- another method of rejected an original offer
- should be communicated in the same medium as the original offer
- should have evidence of offer and counter-offers
The offer can be terminated by Operation of Law. What are the elements of Operation of Law?
- lapse of time (reasonable)
- what's the standard of the industry
- destruction of the object
- death or incompetence of the offeror or offeree
- supervening illegality (becomes illegal after offer is made)
An offeror can revoke their offer (generally) but it has to __________. The acceptance is effective upon ______. The revokation is effective upon ________.
- occur prior to the acceptance
- in the same medium of communication of initial offer
What are the requirements of acceptance?
- a voluntary act (words or conduct) by the offeree which reflects assent to the terms of the offer
- must be unequivocal and signifies a clear acceptance
- must be communicated to the offeror
What is the Mailbox Rule? It is only applicable to the ______ of a K and not to the ______.
- an acceptance is valid once placed in a designated U.S. postal receptical if mailing is an authorized means of acceptance of the offer
What is the consideration of an offer?
the value given in return for a promise
What are the two elements to consideration?
- has to be something of sufficient legal value
- must be a "bargained for" exchange
What is considered to be legal value?
- a promise to do something one does not have a legal duty to perform
- the performance of an action one is not obligated to partake
- refraining from an action one has a legal right to take
What is "bargained for" criteria?
promise given by the offeror which must induce the offeree to incur a legal detriment either now or in the future
What is Promisory Estoppel?
- detrimental reliance
- you rely on a promise which is generally unenforcable
Consent must be ____ given.
Lack of voluntary consent is a defense to __________.
breach of contract
What are the vices of consent?
- fraudulent misrepresentation
- undue influence
What is considered to be a mistake (vices of consent)?
- generally deals with math issue
- it is generally enforceable
What is considered to be fraudulent misrepresentation(3) (vices of consent)? Must have all 3
- [these occur by words or actions]
- - misrepresentation of a material fact must occur
- - must be an intent to deceive
- - innocent party must justifiably rely upon the misrepresentation
Misrepresentation (vices of consent) can also be ________.
- hiding a material condition
what is the intent to deceive (misrepresentation in vices of consent)?
the party making the misrepresentation must have knowledge of the intentional misrepresentaiton
What is scienter? (misrepresentation in vices of consent)
latin for guilty knowledge
What is considered to be undue influence (vices of consent)?
when you force someone into agreement *special relationship must exist. you must know or have a relationship with the person*
What is considered to be duress (vices of consent)?
the threat or force utilized to have someone enter into a contract (The Godfather uses this method)
What requires a contact to be written?
- any contracts involving an interest in land (immovable property)
- requires performance beyond a year
- promises to answer in debt or duty of another
- promises made in consideration of marriage
- uniform commercial code (UCC) filing over $500 [serves as mortgage on movables]
Each contract creates certain duties and right. What are they (2)?
- Assignment of Rights - transfer right to contract
- Delegation - transfer duties to K (generally any duty can be delegated)
What are duties the CAN'T be delegated?
- if an obligoer has been identified as the trustee of a special trust
- when the performance of someone (obligee) depends on the performance or skill of obligoer
- when the performance of a third party will vary materially from that expected of the obligee
- when the contract expressly prohibits a delegation of duty
What is a breach of contract?
- nonperformance of a contractual duty
- can be material or minor
- (all minor breaches can be remedied)
What are breach of contract remedies?
- equitable remedies (non-monetary)
What are the types of damages awarded for breach of contract?
- compensatory - loss of the advantage (bargain)
- consequential - compensation for a loss that does not directly or immediately result from the breach
- punitive - punishment (rare)
- nominal - no financial loss of actual damage as a result of the breach. it merely provides that the defendant acted wrongly
What is mitigation of damages?
requires a party to do whatever is reasonable to minimize the damages caused by the defendant (you can not play the victim)
What is liquidated damages?
damages (money) which is agreed upon in the event of a default or breach of contract
What are the equitable remedies rewarded for breach of contract?
- specific performance - requires party to act exactly as was specified in a contract (90%)
- restitution - the restoration of each party back to the original position they had prior to the breach
- reformation - a court ordered modification of the contract so it reflects the true intent of the parties (rare)
What are the two specific contracts?
- sales contracts - transfer title of ownership for a price
- lease contracts - allowed to posses/use something (goods) for a period in exchange for payment
Every K of sale and K of lease must have _______.
To transfer ownership of property (immovable) you can _________, ________, or ___________.
- donate [1. act of donation (intervivos - living) 2. Mortis causa - dead → last will and testament]
exchange (depends on the value)
What is a mortgage?
contract between borrower and the bank
What is a Multiple Indebtedness Mortgage (MIM)?
- 5 million (lands, movable, businesses)
- promissory note - what evidences the actual debt
In a promissory note, only the _______ can demand payment.
holder (physical possession) of the note
What is UCC mortgage?
generally involves movables (cars → UCC 9)
to make filings more convenient