Legal Studies 3323 OU Sarah Lepak Exam 2 (Chapters 13-18 and 20)

4 things needed for a contract

Agreement

Consideration

Contractual Capacity

Legal

Defenses to Contract Enforcement

-Lack of genuine assent (fraud, duress, undue influence, misrepresentation)

-Lack of proper form requirements (lack a writing that is not enforceable)

objective theory of contracts

the existence of a contract is based on the parties' outward manifestations of intent and its interpretation is based on how a reasonable person would interpret it

Sources of contract law

common law

uniform commercial code

Bilateral Contract

promise for a promise

Unilateral Contract

promise in exchange for an act

Express Contract

Based on written or spoken words

Implied Contract

based on the conduct of parties

Quasi-contract

Not actually contracts, but a liability imposed by courts in order to avoid unjust enrichment

Valid Contract

All elements of contract formation satisfied

Void Contract

Has an illegal object or a serious defect

Voidable Contract

One or more parties can get out of contract for some legal reason

Unenforceable Contract

Valid, but courts can't legally enforce it

Executed Contract

All terms of contract are fully performed

Executory Contract

Some duties under contract not performed by one/both parties

Formal Contract

Has special form or must be created in specific manner

Informal Contracts

No other formalities other than the essential elements made in a simple contract

How should contracts be interpreted?

To give effect to parties' intentions at time they entered into the contract

Elements of a valid offer

Offeror's intent to be bound

definite and certain terms

communication to offeree

Auctions

Seller expresses intent to receive offers

Auctioneer may withdrawl item from auction anytime before hammer falls

Seller must accept highest bid

Mirror-image rule

Terms of the acceptance must match exactly (mirror) the terms of the offer

Mailbox Rule

When no acceptance method is specified, defaults to mailbox rule

Acceptance by mail

Effective when placed in mailbox

Revocation of offer

Effective when received by the offeree

Consideration

something of value exchanged for something else of value

For a promise to be enforced legally, there must be _______________

Consideration

What is the exception for a consideration to be legally enforced?

Promissory Estoppel

Adequacy of Consideration

Court rarely considers

Illusory Promise

Does not constitute consideration

Past consideration

Does not constitute consideration for purposes of present contract

Preexisting duty rule

Promise to do something you are already legally oligated to do is not valid consideration

Liquidated debt

No dispute as to amount of money owed

Unliquidated debt

parties, in good faith, either dispute fact money owed, or dispute amount owed

Accord and Satisfaction

Partial payment of disputed debt discharge remaining balance allegedly owed

Contractual Capacity

Mental ability to understand rights and obligations established by contract

General rule of law

Natural persons over the age of majority (18 in most states) are presumed to have the full legal capacity to enter into binding legal contracts

Individuals who have limited capacity

Minors

Those suffering from mental deficiency

Those intoxicated

Minor's contractual power of disaffirmance

Minors' right, until reasonable time after reaching age of majority, to disaffirm/ void their contracts

contract for necessaries

Contracts that supply minor with basic necessities of life

Ratification(minor)

Acceptance of terms of contract after reach age of majority

Express ratification

when, after reaching age of majority, individual states (either orally or in writing) intent to be bound by contract entered into while a minor

implied ratification

when the former minor takes some action after reaching the age of majority consistent with intent to ratify the contract

Individuals having no capacity

Adjudicated insane

Habitually intoxicated

Those with legal guardians

General rule of intoxication

Contracts made by intoxicated persons are voidable

If intoxication merely causes person to have poor judgement...

Contract not voidable unless the other party capitalized on the impaired judgement

When intoxicated person becomes sober...

Contract can be ratified or disaffirmed

Illegal contracts

Contract is void if illegal subject matter

Contracts violating state or federal statutes

- Agreements to commit a crime or tort

- Licensing statutes

- Usury: loan offered at an interest rate exceeding the legal maximum

- Gambling

- Sabbath laws

Contracts in contradiction to public policy

Price fixing

Unconscionable contracts or clauses

Substantive unconscionability

Exculpatory Clauses

Illegal Contracts

Severable Contracts

Indivisible Contracts