UNLV ACC 473 - EXAM 2 (2nd quizlet)

Who is the Promissor?

the one who makes the promise

Who is the promisee

the one to whom the promissor made the promise

What are bilateral contracts?

contracts under which the offeree must only promise to perform; promise for a promise

What are unilateral contracts?

contracts under which the offeree can accept the offer only completing the contract performance; a promise for an act/formed when performed

When are unilateral contracts irrevocable?

when substantial performance has been completed

What are formal contracts?

a contract that requires a special form or method in order to be enforceable

What are informal contracts?

a contract that does not require a specified form or method of formation in order to be valid

What is are express contracts?

the terms of the agreement are EXPLICITLY stated

When is a contract executed?

when the contract has been fully performed by both or all parties

What are executory contracts?

a contract that has not been fully performed by one or more parties

What are implied contracts?

when the conduct creates and defines the terms of the contract

What is an example of an implied contract?

when one party offers to furnish another's service or property for payment, if the party being furnished is aware of and declined the option to reject, then it is IMPLIED that they owe payment upon completion

What are quasi contracts?

contracts that are implied in law; intended to avoid "unjust enrichment"

When are quasi contracts not available?

when an actual contract exists

What is the implied covenant of good faith and fair dealings?

requires parties to perform in accord with the contract and the parties' reasonable expectations under it; included in all contracts

When is a contract ambiguous?

- the parties' intent cannot be determined from the contract's language

- the contract lacks a provision on a disputed term

- a term is susceptible to more than one interpretation

- when there is uncertainty about a provision

What is Extrinsic Evidence (Parol)?

evidence outside the four corners of the document

When can the court use extrinsic evidence in contract interpretation?

When the terms of the contract are ambiguous

What is the "Plain Meaning" rule?

a court will enforce a contract according to its obvious terms when it is clear and unequivocal

What are the rules for interpreting contract terms?

- interpret ambiguous terms against the drafted, or consider extrinsic evidence

- a reasonable, lawful, and effective meaning will be given to contract's terms as much as possible

- terms negotiated separately are given greater weight than standardized terms

What are the rules for interpreting contract wording?

- words will be given their ordinary, commonly accepted meanings

- specific wording given greater weight than general language

Can contracts be interpreted in parts?

No - contracts must be interpreted as a whole

Which is given greater weight - written/typewritten or pre-printed contracts?

Written and Typewritten contracts

What can be used to clarify contracts?

course of performance, course of dealing, and custom & usage of trade - in that order; express terms are given the greatest weight

What are the elements of a contract?

offer, acceptance, consideration

What are the elements of an offer?

- intention must be bound to the offer

- the offer's terms must be reasonably definite or certain

- the offer must be communicated to the offeree

Name seven statements that are NOT offers

- expressions of opinion

- statements of future intent

- preliminary or invitations for negotiation

- advertisements

- live or online auctions

- agreements to agree

- preliminary agreements

What should an offer generally express?

- identification of the parties

- object or subject matter of the contract

- consideration to be paid

- time of payment, delivery, or performance

Who can terminate an offer? When can an offer be terminated?

the parties involved or the operation of law can terminate an offer prior to its acceptance

What is revocation?

the ability to withdraw an offer prior to acceptance, unless offer is irrevocable

What is an option contract?

an irrevocable offer that is held open for a specified period of time, in return of consideration

What is rejection?

termination of an offer by offeree rejection

When is a rejection effective?

when the rejection is received by the offeror or their agent

What is a counteroffer

the rejection of an original offer and the simultaneous making of a new offer

What is the "mirror image" rule?

under common law, any change in terms automatically terminates the offer and substitutes as a counteroffer

How is a contract terminated by law via a lapse of time?

offer terminates when the period of time specified in the offer has passed; if no time is specified, then it terminates after a reasonable period of time

How is a contract terminated by law via subject matter?

if the subject matter of a contract is destroyed prior to offer acceptance, then the offer is canceled

How is a contact terminated by law via the offeror or offeree?

if the offeror or offeree dies, the offer is automatically terminated unless the offer is irrevocable

How is a contract terminated by law via supervening illegality?

automatic termination of a previously valid offer or the render of a contract as unenforceable

What is acceptance?

a voluntary statement or act from offeree agreeing to the terms of the offer

What is unequivocal acceptance?

the general rule that the acceptance cannot impose new conditions on - or change the terms of - the original offer

Can silence be used as acceptance?

Generally, no

When can silence be used as acceptance?

if the offeror and the offeree have prior dealings, the offeree has the duty to reject or risk being bound by their silence

Under the mailbox rule, when does acceptance occur if authorized means are used?

acceptance is upon dispatch

Under the mailbox rule, when does acceptance occur if unauthorized means are used?

acceptance upon receipt

Under the mailbox rule, when does acceptance occur if no method is expressly required but a reasonable method is used?

acceptance upon dispatch

Under the mailbox rule, when does acceptance occur if no method is expressly required but a slow or unreasonable method is used?

acceptance upon receipt

How can the mailbox rule be avoided?

if the offer states that acceptance is only on receipt

What kind of contracts does the mailbox rule not apply to?

Option Contracts

Under the mailbox rule, what happens to acceptance if it is lost in the mail?

acceptance is not affected and is effective in accordance with the mailbox rule

What is considered timely acceptance under a bilateral contract?

acceptance before offer is terminated

What is considered acceptance under a unilateral contract?

acceptance is by performance

What is consideration?

value given in return for a promise (bilateral) or in return for a performance (unilateral)

What are the elements of consideration?

- legally sufficient value

- bargained for exchange

What does "bargained for exchange" include?

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

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

- forbearance: refraining from an action that one has a legal right to undertake

What is the general rule regarding the adequacy of consideration?

the court will not normally question the adequacy of consideration based solely on the comparative value of the things exchanged

When is consideration unconscionable?

when the disparity in consideration exchanged is so one-sided

Why do preexisting duties lack consideration?

because those involved already have a legal duty to perform

What are the exceptions to preexisting duties?

rescission and new contracts

Why do past considerations lack consideration?

because the "bargained-for" exchange element is missing

Why do illusory promises lack consideration?

because there is no true obligation to act

Why do requirements contracts lack consideration?

because the buyer and seller agree that the buyer will purchase ALL of the goods of a designated type that the buyer needs or requires from that seller

Why do output contracts lack consideration?

because the buyer and seller agree that the buyer will purchase from the seller all of what the seller produces (output)

What is Accord and Satisfaction?

when the debtor offers to pay a lesser amount than the creditor purports to be owed; amount is in dispute

In Accord and Satisfaction, what is the accord?

the agreement

In Accord and Satisfaction, what is the satisfaction

the performance (payment)

What is release?

a settlement that bars any further recovery beyond the terms stated in the release

What is a covenant not to sue?

a substitute contractual obligation for some other type of legal action based on a valid claim

What is promissory estoppel (detrimental reliance)?

recovery if reliant on promise of another

What are the elements of promissory estoppel?

- must be clear and definite promise

- promisee must justifiably rely on the promise

- promisee reasonably relied on the promise by acting or refraining from some act

- the promisee's reliance was definite and resulted in substantial detriment

- justice will be served by enforcing promise

When is consideration established during the payment of debts barred by statute of limitations?

when a promise by debtor to pay a debt that was barred by the statute of limitations is made, it is enforceable without additional consideration; it is implied when a payment is made

Can minors enter into contracts?

Yes, a minor can enter into any contract that an adult can unless the contract is prohibited by law for minors

When are contracts involving minors voidable?

at the option of the minor EXCEPT when the contract involves necessities

How can a minor release themselves from a contract?

the minor may disaffirm a contract, but any adult party remains bound to the contract unless and until the minor's disaffirmance releases them

When are contracts formed by intoxicated parties voidable?

if the intoxicated lack mental capacity; they may disaffirm or ratify the contract

When are contracts formed by intoxicated parties enforced?

if the person understodd the legal consequences of the agreement despite intoxication

When is a contract formed by mentally incompetent parties void?

when the court previously determines mentally incompetence

When is a contract formed by mentally incompetent parties voidable?

if at the time of contracting, that person did not know they were entering into a contact OR lacked the mental capacity to understand its nature, purpose, and consequences

When is a contract formed by mentally incompetent parties enforceable?

if the mentally incompetent party understood the nature of the contract at the moment contract was formed

What is usury?

the maximum amount of interest allowed by statute

When are licensing statutes required for contract enforcability?

when competency based; not required for revenue license

What are the elements of covenants not to compete

- reasonable geographic restrictions

- reasonable period of time

What must be considered when dealing with unconscionable contracts or clauses?

- procedural: how the contract was formed

- substantive: whether the contract or portions of it are oppressive or overly harsh

What are exculpatory clauses?

clauses that release a party from liability in the event of monetary or physical injury - no matter who is at fault

When are exculpatory clauses enforceable?

when they are not...

- against public policy

- ambiguous

- shielding parties from intentional conduct

What is the state of a contract with a mistake of fact?

voidable

What are unilateral mistakes of fact?

a mistake by one of the parties; generally, does not give mistaken party right to relief from the contract

What are exceptions to unilateral mistakes of fact?

- the other party to the contract knows or should have known that a mistake of fact was made

- the error was due to an inadvertent, substantial mathematical mistake and not gross negligence

What occurs when bilateral mistakes of fact are made?

- either party can rescind contract

- when the parties reasonably interpret a term differently, a court may allow the contract to be rescinded

What mistakes generally do not allow for the rescind of a contract?

mistakes of value

What are the elements of Fraudulent Misrepresentation?

- a misrepresentation of material fact

- an intent to deceive

- the innocent party must justifiably rely on misrepresentation

- to collect damages, a party must have been harmed as a result of the misrepresentation

When can innocent parties be excused by misrepresentations of law?

when the speaker is a member of a profession that requires greater knowledge of the law than possessed by the average citizen

When is silence on contracts fraudulent?

when duty is created by common and statutory law OR in cases of a fiduciary relationship

What is innocent misrepresentation?

when a person makes statement they believe to be true but actually misrepresents fact; innocent parties can rescind but usually cannot seek damages

What is negligent misrepresentation?

when a party does not exercise reasonable care in uncovering or disclosing facts - or use the skill and competence required by his or her business or profession

Contract

-promise or set of promises

-For breach of which, the law provides a remedy, or the performance of which the law in some way recognizes as a duty.

Promisor

person making the promise

Promisee

person to whom the promise is made

Agreement

offer and acceptance; parties must show mutual assent to terms of contract.

Consideration

something of value received or promised