Legal Aspects of Contracts: Capacity, Legality, and Remedies

What is the legal ability to enter into a contractual relationship called?

Capacity

What types of contracts are considered voidable?

Contracts can be voidable by parties who are minors, temporarily insane or incompetent, or very intoxicated.

What defines a void contract?

A contract that is adjudged insane or incompetent by a court, thus lacking any capacity to contract.

What happens to illegal contracts?

Illegal contracts cannot be enforced by either party.

What was the significance of the 2011 Executive Order regarding contracts with Syria?

It made it illegal for US companies to sell products in Syria, leading Ford to terminate its dealership agreement with a Syrian company.

What are exculpatory clauses?

Also known as waivers or releases, they release one or both parties from tort liability for ordinary negligence but not for willful conduct, intentional torts, fraud, or gross negligence.

In the case of Lin v Spring Mountain Adventures, Inc., what was the main legal question?

Whether the release from liability signed by Lin was enforceable after she suffered injuries while skiing.

What are the benefits of having a written contract?

Written contracts provide evidence of the agreement's terms, legal obligations, excuses for non-performance, and remedies, reducing the risk of perjured testimony.

What are 'Reality of Consent' defenses in contract law?

Defenses such as fraud, duress, undue influence, and mistake that can negate the genuineness of assent.

What are the elements of fraud in contract law?

Misrepresentation or omission of a material fact, intent to deceive, justifiable reliance, and injury.

What constitutes duress in contract law?

An improper threat of physical force to induce another to enter into a contract.

What is undue influence?

Improper influence, often by a fiduciary, that induces another to enter into a contract to benefit the trusted person.

What happens if both parties are mistaken about a material fact in a contract?

The contract may be voidable.

What is the Statute of Frauds?

A legal doctrine requiring certain contracts to be in writing to be enforceable.

Which contracts must typically be in writing according to the Statute of Frauds?

Contracts for the sale of goods over $500, real estate, contracts that cannot be completed within one year, and contracts made in consideration of marriage.

What are the ways parties can be discharged from their contractual duties?

Complete performance, mutual agreement to rescind, performance being objectively impossible, or occurrence of an event covered by a force majeure clause.

What distinguishes a minor breach from a material breach?

A minor breach occurs when a party has substantially performed their duties, while a material breach impairs or destroys the value of the contract.

What are compensatory damages in contract law?

Damages awarded to compensate the non-breaching party for their loss of the bargain.

What are consequential damages?

Damages that may arise from foreseeable circumstances outside the contract, such as lost profits.

What are liquidated damages?

Agreed-upon amounts for damages in advance, typically used when actual damages are hard to determine.

What is the duty to mitigate damages?

The obligation of the non-breaching party to minimize the damages suffered as a result of a breach.

What is specific performance in contract law?

A court order requiring the breaching party to perform the contract when the subject matter is unique.

What is reformation in contract law?

A court action that rewrites a contract to correct clerical errors or typos to reflect the parties' intent.

What is an injunction in contract law?

A court order prohibiting the breaching party from performing an act that would cause irreparable harm to the non-breaching party.