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CM473 Exam 2
| Term | Definition |
|---|---|
| Contract | a set of legally enforceable promises - creates private law - helps determine who is liable |
| restatement of contracts | a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognize a duty |
| four elements of a contract | agreement, consideration, contractual capacity, legal object |
| agreement | valid offer and acceptance |
| offeror | party making the offer |
| offeree | party to whom the offer is made |
| 3 elements of an offer | serious intent by the offeror to be bound, reasonably definite terms, communications to the offeree |
| objective test | the test to determine whether an offeror's offer was serious, based on the outward manifestations of the offeror - reasonable person test |
| material terms | needed for an offer to be valid, enough information to allow a court to determine damages in the event of a breach of contract |
| 5 ways for offer termination | revocation by the offeror, rejection or counteroffer by the offeree, death of incapacity of the offeror, destruction or subsequen illegality of the subject matter of the offer, lapse of time or failre of other conditions |
| rejection or counteroffer | once the offeree rejects an offer, the offer is terminated, offeree cannot change mind, simultaneously termincates the orginal offer and creates a new one |
| requirements for valid acceptance | manifestation of intent to be bound by acceptance to the contract, agreement to the definite and certain terms of the offer, communication to the offeror |
| mirror image rule | the terms of the acceptance must mirror the terms of the offer, if not, the accecptance is treated as a counter-offer |
| autorized means of acceptance | list of ways to accept, but doesn't limit acceptance to those ways |
| required means of acceptance | limits acceptance to only the ways described. if acceptance is attempted by another means, the acceptance is not valid |
| mailbox rule | acceptance is valid when offeree places it in the mailbox. this does NOT apply to rejection |
| consideration | what each party receives in return for his or her promise or performance, often times but doesn't always invlove money |
| gift | if one party makes a promise with no consideration from the other party |
| promissory enstoppel | equitable legal doctrine that enforces a promise, even without a formal contract or consideration - to prevent injustice when a party reasonably and detrimentally relies on that promise |
| 3 elements for primssory enstoppel | one party makes a promise and knows the other party will reasonably rely on it, the other party does rely on the promise, the only way to avoid injustice is to enforce the promise |
| 2 principals of preexisting duty | performance of a preexisting legal duty is not valid consideration, performance of an exiting contractual duty is not valid of consideration for a new contract |
| change order clauses | allows the owner to modify cope of work after contract formation |
| force majure claue | acts of God - beyond control that prevent obligations |
| ecalation clauses | allocates risk of material price increases |
| contractual capacity | mental ability to understance rights and obligations established by contract, with the presumptive ability to understand how to comply with the terms of the agreement |
| incapacity or incompetence | minors, overly intoxicated person, suffering from mental deficiency that renders them incapable of understanding the nature and obligation of contracts |
| valid contract | contract that includes all 4 elements of a contract and is thu legally enforceable |
| voidable contract | contract that one or both parties can chooe either to withdraw from or enforce |
| void contract | contract that is not valid because its object is illegal, or it has defects that is serious enough to prevent it from becoming a contract |
| unenforceable contract | contract that cannot be enforced by the courts because of some operation of law |
| unconscionable contract | contract is so unfair that it is void of conscience |
| procedural unconscionability | unnecessarily long, small font, legalaleze, in a different language |
| substantive unconscionability | terms are overly harsh or one-sided |
| exculpatory clauses | contract clause that frees one party from all liability arising out of performance of the contract - not always enforced in court |
| legal assent | a promise that courts will require the parties to obey |
| major obstacles to legal assent | mistake, misrepresentation, undue influence, duress, unconscionability |
| mistake of fact | erroneous belief about the facts of the contract at the time the contract is concluded |
| unilateral mistake | one party to the contract is mistaken - contract is still valid |
| mutual mistake | both parties to the contract are mistaken - contract is voidable |
| elements for mutual mistake | basic assumption about the subject matter of the contract, material effect on the agreement, adverse effect on the party who did not agree to bear the risk of mistake at the time of the agreement |
| misrepresentation | untruthful assertion by one of the parties about a material fact that leads the other party to be in error about said fact |
| innocent misrepresentation | person making the false statement believes the false statement to be true |
| negligent misrepresentation | one party makes a false statement of material fact not knowing whether that statement is true or false - couldve known the truth by using reasonable care to discover it |
| fraudulent misrepresentation | consciously false representation of material fact intended to mislead the other party |
| elements to fraudulent misrepresentation | false statement about a past or existing fact that is material to the contract, intent to deceive, justifiable reliance on the false statement by the innocent party to the agreement |
| undue influence | legal assent is missing because one party was unduly pressured by another into entering the agreement |
| duress | one party forces the other into an agreement |
| contracts that fall under the statue of frauds | terms prevent possible performance within one year, promises made in consideration of marriage, one party to pay the debt of another if the initial party fails to pay, related to interest in land, sale of goods totaling $500 or more |
| one year rule | contracts that cannot be performed within one year from the date of their making by their own terms must be in writing - begins the day after the contract is created |
| promises in consideration of marriage | when one party promises something to the other as part of an offer of marriage, the contract must be in writing to be enforceable |
| contracts to pay debt of another | party outside a primary agreement promises to fulfill one of the original party's obligations if the orginal party defaults |
| contracts related to interest in land | all contracts involving the transfer of interest in real estate must be in writing to be valid |
| real estate | land plus anything permanently attached to it - homes, trees, buildings |
| sale of good $500 or more | required by the UCC to be in writing, more relaxed, just the quantity to be sold must be in writing |
| what needs to be in writing | names of the parties, subject matter of the agreement, consideration given for the contract, relevant contractual terms, signature of at least the party against whom the action is brought |
| parole evidence rule | evidence of agreements made outside of the parties integrated written contract is NOT admissible in court |
| subsequent modification | evidence outside of the integrated contract relating to agreements mde after integration |
| statute of frauds | contracts that have to be in writing fall under this category |
| breach | failure to perform in the manner and time required by the contract - failure of the bargained for exchange |
| material breach | significant violation that goes to the essence of the agreement, depriving the non-breaching party og the benefit of the contract |
| rights of the non-breaching party if a breach is material | terminate the contract, sue for damages |
| non-material breach | minor violation of the contract that does not affect the overall purpose of the agreement, allowing the non-breaching party to sue for damages but not to terminate the contract |
| rights of the non-breaching party in non-material | can sue to recover damages, can NOT void the contract, must still perform |
| anticipatory repudiation | occurs when a party to a contract indicates before their performance is due that they will not perform their contractual obligations |
Created by:
Grace.Jensen