BULE 303: (CH 10 The Formation of Traditional and E-Contracts)

Contract

A promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.

Uniform Commercial Code (UCC)

a comprehensive statutory scheme that includes laws that cover aspects of commercial transactions

objective theory of contracts

A theory under which the intent to form a contract will be judged by outward, objective facts

What are the four elements necessary to form a valid contract

Agreement, Consideration, Contractual capacity, Legality

Elements of an Agreement

Offer and Acceptance

Consideration

Something of value exchanged in a contract.

Contractual Capacity

Legal ability to enter into a contract.

Legality

the contract must be for a lawful purpose

Bilateral Contract

promise for a promise

Unilateral Contract

promise in exchange for an act

Formal contracts

An agreement that by law requires a specific form for its validity.

Express Contract

A contract in which the terms of the agreement are stated in words, oral or written.

Implied Contract

A contract formed in whole or in part from the conduct of the parties.

What conditions have to be met for an Implied Contract to arise

1. The plaintiff furnished some service or property.

2. The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected.

3. The defendant had a chance to reject the services or property and did not.

Executed Contract

A contract that has been completely performed by both parties.

Executory Contract

A contract that has not yet been fully performed.

Valid Contract

A contract that results when the elements necessary for contract formation are present.

Voidable Contract

A contract that may be legally avoided at the option of one or both of the parties.

Unenforceable Contract

A valid contract rendered unenforceable by some statute or law.

Void Contract

A contract having no legal force or binding effect.

Agreements

A mutual understanding or meeting of the minds between two or more individuals regarding the terms of a contract

What elements are necessary for an offer to be effective

1. The offeror must have a serious intention to become bound by the offer.

2. The terms of the offer must be reasonably certain or definite so that the parties and the court can ascertain the terms of the contract.

3. The offer must be communicated to the offeree.

Expressions of opinion

It does not indicate an intention to enter into a binding agreement or make an offer.

Definiteness of Terms

An offer must have reasonably definite terms so that a court can determine if a breach has occurred and give an appropriate remedy

What terms must a contract include

1. The identification of the parties.

2. The identification of the object or subject matter of the contract (also the quantity, when appropriate), including the work to be performed, with specific identification of such items as goods, services, and land.

3. The consideration to be paid.

4. The time of payment, delivery, or performance.

Rovocation

The offeror's act of withdrawing (revoking) an offer

Irrevocable Offers

Offers that cannot be withdrawn by the offeror

Rejection

Terminates the offer

Counteroffer

An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer.

Mirror Image Rule

A common law rule that requires that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be formed.

What must occur for an offer can be terminated by operation of law

1. Lapse of time.

2. Destruction of the specific subject matter of the offer.

3. Death or incompetence of the offeror or the offeree.

4. Supervening illegality of the proposed contract.

Silence as Acceptance

silence cannot constitute acceptance, even if the offeror states so

The Mailbox Rule

Acceptance takes effect at the time the offeree sends or delivers the acceptance not when it is received by the offeror

Legally Sufficient Value

1. a promise to do something that one has no prior legal duty to do

2. the performance of an action that one is otherwise not obligated to undertake

3. the refraining from an action that one has a legal right to undertake

Forbearance

The act of refraining from an action that one has a legal right to undertake.

Bargained-for Exchange

exchange that parties engage in that leads to an enforceable contract

Preexisting Duty

A duty that one is already legally obligated to perform and, thus, that is generally not recognized as a legal detriment.

Unforeseen Difficulties

If during performance of a contract, extraordinary difficulties arise that were totally unforeseen at the time the contract was formed, a court may allow an exception to the rule.

Rescission

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made.

Disaffirmance

The legal avoidance, or setting aside, of a contractual obligation.

Lucid Intervals

temporary periods of sufficient intelligence, judgement, and will

Usury

charging an illegal rate of interest

Covenant not to compete

A contractual promise to refrain from competing with another party for a certain period of time and within a certain geographic area.

Unconscionable Contract or Clause

A contract or clause that is void on the basis of public policy because one party was forced to accept terms that are unfairly burdensome and that unfairly benefit the stronger party.

Procedural Unconscionability

unfair or irregular bargaining

E-Contract

A contract that is formed electronically.