from blaw exam 2

Chapter 11

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Contract

a legally binding argument, a promise, or set of promises, for the breach of which the law grants a remedy.

Elements of a contract

1. an agreement

2. between competent parties

3. based on the genuine assent of the parties that is

4. supported by consideration

5. made for a lawful objective

6. in the form required by law if any

Promisor

Person who makes a promise.

Promisee

Person to whom a promise is made.

Obligor

If the promise is binding it imposes on the promisor a duty or obligation and the promisor may be called the obligor. (promisor)

Obligee

Promisee who can claim the benefit of the obligation.

Privity (privity of contract)

The relationship between parties in a contract, relationship between the promisor and the promisee.

How a contract arises

When one person, the offeror, makes an offer and the person to whom the offer is made, the offeree, accepts. (there must both be an offer and an acceptance, if either is lacking, there is no contract)

Offeror

Person who makes an offer.

Offeree

Person to whom an offer is made.

Formal contracts

Written contracts or agreements whose formality signifies the parties intention to abide by the terms.

Formal contracts include:

1. contracts under seal

2. recognizance

3. negotiable instruments

Contracts under seal

Where a person's signature or a corporation's name is followed by a scroll, seal or L.S.

Recognizance

Contracts of record, which are obligations that have been entered before a court of record.

Informal contracts

Simple, oral, or written contracts. (all contracts other than formal contracts are informal)

Expressed contracts

Terms of the agreements of the parties are manifested by their words, whether spoken or written.

Implied contract (contract implied in fact)

A contract in which the agreement is shown not by words, written or spoken, but by the acts and conduct of the parties.

Valid contract

An agreement that is binding and enforceable.

Voidable contract

An agreement that is otherwise binding and enforceable, but because of the circumstances surrounding its execution or the lack of capacity of one of the parties, it may be rejected at the option of one of the parties.

Void agreement

Agreement that can't be enforced, is without legal effect.

Executed contract

Agreement that has been completely performed.

Executory contract

Agreement by which something remains to be done by one or both parties.

Bilateral contract

Agreement under which one promise is given in exchange for another. (a promise for a promise)

Unilateral contract

Contract under which only one party makes a promise. (promise for an act)

Option contract

Contract to hold an offer to make a contract open for a fixed period of time.

Right of first refusal

Right of a party to meet with the terms of a proposed contract before it is executed.

Quasi contract

A court imposed obligation to prevent unjust enrichment in the absence of a contract.

Quantum meruit

As much as deserved; an action brought for the value of the services rendered the defendant when there was no expressed contract as to the purchase price.

Chapter 12

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Offer

An expression of an offeror's willingness to enter into a contractual agreement.

Divisible contract

Agreement consisting of two or more parts, each calling for corresponding performances of each part by the parties.

Requirements contract

Contract to by all requirements of the buyer from the seller.

Output contract

Contract of a producer to sell its entire production or output to a given buyer.

Firm offer

An offer that states that it is to be irrevocable, or irrevocable for a stated period of time.

Counter offer

The offeree rejects the offer when it ignores the original offer and replied with a different offer.

Acceptance (acceptance of offer)

The assent of the offeree to the terms of the offer. (Enter into a binding agreement/contract)

Mailbox rule

Under the mailbox rule, revocations of offers are effective upon the receipt, but acceptances are effective upon posting (mailing).

Chapter 13

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Contractual capacity

The ability to understand that a contract is being made and to understand its general meaning.

Factual incapacity

A person who does not understand that a contract is being made or understand its general nature. (mental condition, drugs, alcohol, illness, or age)

Status quo ante

Original positions of the parties.

Necessaries

Things indisputable or absolutely necessary for the sustenance of human life.

Unilateral mistake

Mistake by only one of the parties.

Mutual mistake

When both parties enter into a contract under a mutually mistaken understanding concerning a basic assumption of fact or law on which the contract is made.

Reform (reformation)

Remedy by which a written instrument corrects a contract when it fails to express the actual intent of both parties because of fraud, accident, or mistake.

Fraud

Making of a false statement of fact with the knowledge of its falsity or with reckless indifference to its truth, the intent that the listener rely on it, the result that the listener does so rely, and the consequence that the listener is harmed.

Confidential relationship

Relationship in which, because of the legal status of the parties to their respective physical or mental conditions or knowledge, one party places full confidence in trust in the other.

Undue influence

Influence that is asserted upon another person by one who dominates that person.

Duress

When there is such violence or threat to violence that the person is deprived of free will and makes the contract to avoid harm.

Physical duress

Threat of physical harm to person or property.

Economic duress

Threat of financial loss.

Chapter 14

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Consideration

What each party to a contract gives up to the other in making their agreement.

Forbearance

Refraining from doing an act that an individual has a legal right to do.

Illusionary promise

If one party's promise contains either no obligation or only an apparent obligation to the other.

Mutuality of obligation

Both parties must have created obligations to the other in their respective promises.

Cancelation provision

May authorize a party to cancel the agreement under certain circumstances on giving notice by a certain date.

Conditional promise

A promise that depends on the occurrence of a specified condition in order for the promise to be binding.

Composition of creditors

Agreement among creditors that each shall accept a part payment as full payment in consideration of the other creditors doing the same.

Past consideration

Something that has been performed in the past and which, therefore, cannot be consideration for a promise made in the present.

Promissory estoppel

A doctrine that a promissor may be prevented from asserting that his or her promise is unenforceable because the promisee gave no consideration for the promise.

Promissory Estoppel is applicable when:

1. the promissor makes a promise that lacks consideration

2. the promissor intends or should reasonably expect that the promisee will reply on the promise

3. the promisee in fact relies on the promise definite in substantial manner

4. enforcement of the promise in the only way to avoid injustice

Chapter 15

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in pari delicto

Equally guilty; used in reference to a transaction as to which relief will not be granted to either party because both are equally guilty of wrongdoing.

Good faith

Implied obligation that neither party shall do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.

Procedural unconscionability

Has to do with matters of freedom of assent resulting from inequality of bargaining power and the absence of real negotiations and meaningful choice or a surprise resulting from hiding a disputed term in an unduly long document or fine print.

Substantive unconscionability

Focuses on the actual terms of the contract itself.

Contract of adhesion

Contract offered by a dominant party to a party with inferior bargaining power on a take-it-or-leave-it basis.

Public policy

Certain objectives relating to health, morals, and integrity of government that the law seeks to advance by declaring invalid any contract that conflicts with those objectives even though there is no statue expressly declaring such a contract illegal.

Lottery

Any plan by which a consideration is given for a chance to win a prize.

Elements of a lottery

1. there must be a payment of money or something of value for an opportunity to win

2. a prize must be available

3. the prize must be offered by lot or chance

Usury

When money is loaned at a higher rate of interest than the law allows.

Statute (statutory)

Provide that contracts of a given class must follow a statutory model or must contain specified provisions.