exam 2 legal studies

contract

a set of legally enforceable promises

elements required for contract formation

agreement, consideration, capacity, legal

3 categories of questions in contact law

1. Valid contract is formed - meets all contract elements

2. Is anything in the way? meet all the elements BUT something interferes

3. Not all elements are met but could potentially be enforces as if it was a contract

lack of genuine assent

one or both parties did not truly, freely, or knowingly agree to entering into a contract.

lack of proper form

contract is invalid or unenforceable because it was not created in the specific format required by law.

what is proper form about?

• Not every contact has to be in writing to be enforced some oral agreements can be enforced

• Proper form is about those that are required to be in writing not happening 

What is the core rule of the Objective Theory of Contracts regarding whether a contract exists?

The existence of a contract is based on:

• the parties' outward manifestations of intent,

• interpreted through the perspective of a reasonable person

How do courts evaluate outward manifestations of intent?

By looking at objective facts—what the parties actually said, wrote, behaved, or did—rather than hidden thoughts

Whose perspective is used to interpret the words and actions of the parties?

A reasonable person in the position of the other party

Is the subjective (internal) intent of a party relevant in contract formation?

No - what matters is how they represented their intent through their actions and words

Two most important sources of contract law:

Common law and Uniform Commercial Code (UCC)

Common Law

creates precedents - court cases/decisions

Uniform Commercial Code (UCC)

uniformly adopted state law that governs contracts for the sale of goods. For international contracts, check current treaties.

What is a bilateral contract?

A contract that consists of a promise in exchange for a promise.

What is a unilateral contract?

A contract that requires a performance in order to form or activate. It is a promise for a performance, and you accept the promise by doing the performance.

What is the difference between a promise and a performance?

A promise is for the future, while a performance means you are acting on it currently.

expressed contract

with words - based on written or spoken words

implied contract

with behavior - based on the conduct of parties

Quasi-contract (implied-in-law contract)

not actually contracts, a liability a judge creates to stop one person from unfairly benefiting at another person's expense

valid contract

all elements of contract formation satisfied

void contract

has an illegal object or serious defect - missing one or some of the elements

voidable contract

one or both parties can withdraw from or enforce contract. something wrong with the capacity element

unenforceable contract

valid, but courts cannot legally enforce it

executed contract

all terms of contract fully performed

executory contract

some duties under contract not yet performed by one/both parties

What is the primary goal when interpreting a contract?

to give effect to the parties’ intentions at the time they entered into the contract, as expressed in the contract itself

if a contract has multiple possible interpretations, which one should be chosen?

the interpretation that makes the contract lawful, operative, definite, resonable, and capable of being carried out

What happens if a contract contains an ambiguity?

the judge interprets the ambiguous term against the interests of the party who drafted the contract (contra proferentem).

In a contract which prevails? numbers written in words or numerals

numbers written in words prevail

specific terms vs general terms

specific terms prevail

words, given commonly accepted in meaning, are generally interpreted in accordance with …

industry standards

What is the essential first element for contract formation?

agreement

what two events evidence an agreement?

an offer and an acceptance

does a contract agreements have to be in writing

No, not unless required in certain situations

What is an offer?

a promise or commitment to do (or retain) from a specified thing in the future

What is the first requirement of a valid offer?

manifestation of the offeror’s intent to be bound

how is an offeror’s intent judged by the court?

by an objective, reasonable person standard (not what they are secretly thinking)

Are preliminary negotiations and advertisements considered valid offers?

no

What condition must the terms of an offer meet?

they must be definite and certain

What is required regarding communication of the offer?

it must be communicated to the offeree so the offeree actually knows about it.

termination of offer

• Revocation by offeror – must be communicated before acceptance.

• Rejection or counteroffer by offeree.

• Death/incapacity of offeror.

• Destruction of subject matter of offer.

• Subsequent illegality of subject matter of offer.

• Lapse of time – if no time for acceptance is specified in the offer, the offer terminates at the end of a reasonable period of time.

• Failure of condition(s) specified in offer.

What is acceptance in contract law?

the offeree’s representation or intent to be bound by the terms of the offer, shown through either performance or a return promise

does silence count as acceptance?

• No action required: You do not have to reply or say "no" to an offer just because someone sent it to you.

• The main exception: If you happily use or accept a service—knowing you could have turned it down and knowing the person expected to get paid for it—your silence does count as an agreement

Mirror image rule

the rule that the terms of an acceptance must be completely identical to the terms of the offer

when does an acceptance become effective

when it is communicated by the offeree to offeror

What method can be used for communicating acceptance if none is specified in the offer?

Any reasonable means of communication is effective (telephone, mail, fax, or email)