Contract Law: Definitions, Capacity, Defenses, and Specific Contracts, Quizzes of Introduction to Business Management

Download Contract Law: Definitions, Capacity, Defenses, and Specific Contracts and more Quizzes Introduction to Business Management in PDF only on Docsity! TERM 1 function of Contract Law DEFINITION 1 A. Create expectations as to how parties to agreements will conduct themselves in the futureB. if a party to a valid contract doesn't carry out a promise, a court will enforce it and provide some kind of relief/remedy for the nonbreachersC. contract law provides stability & predictability and is the foundation upon which more specialized areas of the law are built TERM 2 Objective theory of contracts DEFINITION 2 contract can be enforced or not based on this/ by things that are manageable.Apparent intention of a party to enter a contract is determined by the objective, outward manifestation of their assent as it would be interpreted by a reasonable person TERM 3 what are the objective factors? what do object facts include? DEFINITION 3 1. WORDS- what was said going into contract2. ACTIONS- how the party acted/appeared (intent can be seen by conduct, oral, and written words)2. CIRCUMSTANCES- surrounding the transactionSometimes all present TERM 4 what are the requirements for a Valid Contract? DEFINITION 4 Agreement- mutual assent & agreement of parties must be evidenced by an offer & an acceptanceconsideration- legally sufficient & bargained-for (each is getting something of value) consideration must be exchanged forcontractual promisescontractual Capacity- each party to a contract must be recognized as being legally competent to enter into contracts (mental ability to understand)legality- purpose&subject matter of the contract must not be contrary to law or public policyNEED ALL 4; NOT VALID WITHOUT 1 TERM 5 Defenses to the enforceability of a contract DEFINITION 5 even though contract is VALID, 1 party claims court shouldn't enforce it- why contract isn't a contract1. genuineness of assent- things happened and parties don't know what they're getting intoex; fraud2. Form- written & signature requirements TERM 6 types of contracts: contract formation DEFINITION 6 Bilateral VS Unilateral (by formation)Express VS Implied TERM 7 formation: Bilateral contract DEFINITION 7 reciprocal promises are exchanged so the promise of 1 party is exchanged for the promise of the otherstarts the moment promises are exchanged"promise 4 promise" if offeree can accept by PROMISING to Perform"ill sell my watch for 15$, he says yes= promise contract is formed. don't need to pay for watch or give watch right there. if mind changes its breach of contract TERM 8 formation: Unilateral contract DEFINITION 8 one party makes a promise in exchange for the other party's actually performing some act/refraining from performing an act.offeree can accept offer by completing contract performance"promise 4 an act"if don't complete the act, its not a lawsuitill pay you if you paint the fence; with contests, competitions, lotteries TERM 9 revocation of offers for Unilateral contract DEFINITION 9 when promisor tries to revoke an offer a/f promisee has begun work but before act is finishedmodern view on revocation* TERM 10 modern view on revocation DEFINITION 10 offer is irrevocable once performance has begun; offeror can't revoke offer once it starts, or offeree can be susceptible to partial of the promise TERM 21 serious intention DEFINITION 21 offeror must manifest his/her objectives, ____ ___ to be bound by the terms of the offer (need to see the offer is serious)what a reasonable person in the offeree's position would conclude that the offeror's actions and words meant TERM 22 landmark case: Lucy v Zehmer DEFINITION 22 precedent on serious intentlucy wanted zehmers farm and finally one night they were hanging out drinking and got zehmer to write details about the farm and the amount he would sell it for on a napkin, he even signed it. when the time came zehmer said it wasn't serious, lucy sued and court sided with him seeing intent when they wrote down facts on napkin and signed like if it was a real contract TERM 23 need to distinguish offers from DEFINITION 23 1. expressions of opinion= not an offer2. statements of intention to make an offer in the future; planning something in the future doesn't mean you're planning to do it now3. preliminary negotiations, requests to negotiate, and incitations for bids4. ads, catalogues, circulars, and price lists TERM 24 defining terms of contract DEFINITION 24 need reasonable definite terms so court can determine if breach has occurred1. id of parties2. id of subject matter3. consideration (giving & receiving)4. time for payment, delivery, performancecourts can supply missing reasonable terms when parties have clearly manifested their intent on making a contract- when parties try to use a term, meaning is vague, courts won't supply "reasonable" term in its place TERM 25 communication DEFINITION 25 offeror must have intention of making terms known to the offeree and the terms must be received by offeree-offeree must have knowledge of terms of the offer- an offer may be made to a specific offeree to whom its communicatedreceived the moment it is sent not when its read TERM 26 how to terminate an offer DEFINITION 26 1. by the actions of the parties b4 acceptance by revocation rejection of the offer by the offeree counteroffer by the offeree 2. termination by operation of law lapse of time TERM 27 option contracts DEFINITION 27 irrevocable offersseparate contract that exists when an offeror has promised to hold offer open and the offeree has given consideration for this promise of the offeroroffer is irrevocable for the time stated, or for a reasonable time if no time is stated TERM 28 termination by actions of the parties: revocation by offeror DEFINITION 28 can be revoked any time by offeror before acceptance- expressly-by acts that are inconsistent with the existence of the offer & are known to the offeree-revocation is effective when received TERM 29 detrimental reliance DEFINITION 29 bc of promissory estoppel, person who relies on the promise of another may be able to recover in the absence of consideration if..offeror can't deny the existence of the offerif buyer needs to move in, but seller says he needs more time, buyer can say no b/c they rely on the promise of the seller TERM 30 types of contract: performance DEFINITION 30 Quasi- contractExecuTEDVS ExecuTORY TERM 31 types of contract: contract enforceability DEFINITION 31 Valid, void, voidable, and unenforceable TERM 32 agreement DEFINITION 32 requirements of offerwhats needed to distinguish offer from: expressions of opinion statements of intention to make an offer in the future preliminary negotiations, request to negotiate, invitations to bid ads, catalogues, circulars, price lists TERM 33 rejection of offer by the Offeree DEFINITION 33 offeree demonstrates intention to not accept offer-rejection is effective when received- an inquiry doesn't end offer or reject offer TERM 34 termination of offer: counteroffer by Offeree DEFINITION 34 taking on a new offer in place of the old one (terminates original offer)using "if" in the offermirror image rule:- offeree's acceptance must match the offeror's offer TERM 35 termination by operation of law DEFINITION 35 Lapse of time: when time expressed in offer expires; if time isn't stated then after a reasonable amount of time2. destruction of subject matter3. death/incompetency of offeror/offeree (except option contracts)4. supervining illegality of the proposed contract as a result of legislation/judicial decision TERM 46 gifts and consideration DEFINITION 46 person gives gift when doesn't receive anything in exchange of value TERM 47 Hamer v. Sidway DEFINITION 47 broadens idea of considerationrich guy tells nephew he will give him $ if he doesn't drink or gamble until he's 21. he does so, uncle gives money in his account and leaves it there. he starts gambling after 21 and gives rights to creditor who tries to get $ out for him. uncle dies, has exec. account with same name. creditor says theirs a binding agreement consideration. is there? yes, when uncle promised to give $ in exchange for good role. theres consideration b/c nephew did gambling and stuff after he had the right to do stand it was legal. TERM 48 adequacy of consideration DEFINITION 48 court won't evaluate adequacy (fairness of bargain) unless its absence indicates fraud, duress, incapacity, undue influence, or a lack of bargained-for exchange TERM 49 agreements that lack consideration DEFINITION 49 Pre-existing duty rulepast consideration TERM 50 pre-existing duty rule DEFINITION 50 doing something that one already has a legal duty to do/promising to do what one already has a legal duty to do is not legally sufficient consideration for another person's promiseif you're giving something up for one contract you can't give it up for another contract too TERM 51 past consideration DEFINITION 51 if event happens in the past and again in the present can't make contract because shpuldve of done it the first time it happened, theres no consideration TERM 52 detrimental reliance/promissory estoppel DEFINITION 52 person who relies on the promise of another may be able to recover in the absence of consideration if..1. promise is clear/definite2. promisee must rely on promise3. promisor knew/had reason to believe that the promisee would likely rely on the promise, and the reliance induced a change of substantial and definite character4. justice will be better served by enforcement of the promise TERM 53 capacity DEFINITION 53 legal ability to enter a contract TERM 54 capacity general rule DEFINITION 54 minor can get in any contract an adult can; as long as its not illegal,and can avoid liability under the contract TERM 55 minors right to disaffirm DEFINITION 55 minor can use words/conduct to show intent to not be boundcan disaffirm contracts while under age and for bit after agemust disaffirm the whole contract not just a partcontract is voidable by minor but not by adult TERM 56 minors obligation on disaffirmance DEFINITION 56 if minor disaffirms, each party must make restitution y returning consideration received from the other partymajority view- minor must only return goods that are in minors possession or control; even if goods are damaged, they still have the right to disaffirmminority view- if goods returned are damaged, they pay adult a reasonable amount for it TERM 57 intoxicated ppl DEFINITION 57 contract is voidable (can be avoided by 1 party) if it was made by a person who was too intoxicated that his/her judgement was impaired and he/she didn't know the nature of the transaction and legal consequences of entering into the contract- if the contracting party knows the consequences of contract, (even if intoxicated) contract won't be voidable- its voidable if other party induced the person in purpose to be intoxicated- a contract may be disaffirmed (denied) while a person is intoxicated/within a reasonable time a/f he/she is sober b/c:restitution must be madeand an intoxicated person must pay the reasonable value for necessities that were furnished TERM 58 mentally incompetent ppl DEFINITION 58 if person can't understand nature of transactionif guardian of this person enters contracts, they are void2 types of mentally incompetent:intervals of incompetenceandand born like thatcontract made by this person is voidable while in this condition or after gaining competency, or by guardian or rep; TERM 59 when is ratification for mentally incompetent person DEFINITION 59 after person is adjudged mentally incompetent and a guardian is appointed and ratifies contract TERM 60 necessaries contract: mentally incompetent DEFINITION 60 may be disaffirmed, but the mentally incompetent party is liable for reasonable value of necessaries furnished TERM 71 contract for the sale of business DEFINITION 71 seller of biz agrees not to open another competing store in the area of the store that he is sellingreasonableness of an ancillary covenant not to compete is determined by nature of business, period of duration, and geog. area covered TERM 72 employment contracts DEFINITION 72 a covenant that an employee won't start a competing biz for a certain period a/f termination of employmentits legal as long as the time and area restrictions are reasonable TERM 73 unconscionable contracts DEFINITION 73 contract may be this if party who's getting an unusually greater benefit has superior bargaining power (take it or leave it) looks like someone is being taken advantage ofcontract can be this if it "shocks the conscience" of the court, leans to one side TERM 74 exculpatory clauses DEFINITION 74 isn't enforced when party seeking enforcement engages in a biz thats important to publicabsolves party of negligence or wrongwon't be enforced either: employment contract relieving employer of liability for employee;s on the job injury rental of commercial property residential property leases TERM 75 stature of frauds DEFINITION 75 what contracts must be written to be enforced, how to avoid fraud (5 ways)must be signed by parties against whom the promises are being enforced TERM 76 contracts that must be in writing DEFINITION 76 those that fall under umbrella" to avoid fraud these contracts must be in __1. involving land * real property- anything permanently attached to land * other interest in land- mortgage contract, mineral rights2. those that can't be performed under 1 year of formation- need possibility of performance not probability- if takes more than 1 year need oral contract3. collateral promises- secondary promise in contract4. promises in consideration of marriage5- contracts for sale of goods under UCC TERM 77 collateral promises DEFINITION 77 secondary promise in contractobligee--> obligor (both ways)obligee--> guarantor (secondary promisor) (no legal obligation)in writing if: promise is made to obligee by person who isn't presently liable for debt/ doesn't have present duty to performliability of guarantor is 2ondary to principal obligatorif 2condary promise to a 3rd person (guarantor) is made to person who the primary obligation is owed (obligee) the promise is in Statute of Frauds. if secondary promise is made to obligor, promise is not in statute of frauds, and not needed in writing. TERM 78 promise made in consideration of marriage DEFINITION 78 prenuptial agreement: unilateral promises to pay $ or give property in exchange for marriage and prenups must be in writing to be enforced TERM 79 contracts for sale of goods under UCC DEFINITION 79 for a contract for sale of goods for a price of 500$ or more to be enforced, must be in writing to show it was made by parties and must be signed by the party to be charged TERM 80 3rd party rights DEFINITION 80 assignmentsdelegations3rd party beneficiaries TERM 81 assignment DEFINITION 81 if i had stayed at the old apartment i would pay new assignee (new owner)delegation of duty goes to new owner el mero merocan't assign to receive personal/confidential services without consent of person who is to perform servicesor if assigned assignment will alter risk of obligor TERM 82 anti assignment clauses DEFINITION 82 restrictions aren't effective to prevent assignment by operation of lawsome places don't allow subleasing because you would need to get a background check TERM 83 delegation of duties DEFINITION 83 me subleasing for jackie!transferring dutiesdoesn't relieve jackie from obligation to perform incase that i fail to performdelegator must only establish intent to make delegationduties that can't be delegated:personal duties that depend on skill/talents of obligor, w/o assent of party to whom performance is to be renderedwhen trust has been put on obligorwhen performance by 3rd party will materially vary from that of obligeewhen contracts prohibits delegation! TERM 84 3rd party beneficiaries DEFINITION 84 stranger to contractual relationship of parties to contract3rd party makes no promises/consideration to promisor who's to render performanceintention of parties to contract is to confer a benefit upon the 3rd party beneficiaryintended beneficiaries- has rights and may enforce contractual promises even if not a party in contractmade at time of contract bc it will benefit them TERM 85 orr vs orr DEFINITION 85 daughter suing dad for not paying for college like he agreed on divorce. she's complying with all he agreements. whats the standing, she has rights to benefit from this int he divorce clause and there was intent